A lot of pretty hefty deal-making within the transportation and logistics sector occurred globally in the second quarter of this year, and while a good bit of it went on in Asia, much of it occurred within the global trucking sector – and for some worrisome if understandable reasons.
For starters, look at the situation in the U.S., where trucking failures are on the rise – and that’s not much of a surprise, considering the current sluggishness in the freight markets combined with what’s been dubbed “Neanderthal” price-reduction efforts being undertaken by many shippers since the start of the year.
Though the big moves are happening overseas, particularly in China, at least according to the latest Deal Insights report compiled by global consulting firm PricewaterhouseCoopers (PwC), truckers are in the hot seat the world over, with many no doubt thinking now is the time to either "sell out" or "buy up" to build revenues until strong freight volumes and better rates return.
Here are a few global trends to take note of from PwC's latest report:
- The second quarter of this year had the third highest quarter by aggregate deal-making of the last three years and 20% higher than the first quarter of 2016.
- Although the volume of deal activity was slightly below the average of recent quarters, that was more than offset by an average deal value of almost $670 million, over 25% higher than that of the last three years.
- In terms of deal volume, Asia continues to be the leading geographic region for the majority of merger and acquisition activity, leading the globe over the past three years, with the region accounting for more than 50% of both deal value and deal volume in the sector.
- This uptick in deal activity in the second quarter was diversified across subsectors, with five “mega-deals” exceeding $1 billion in value, with the highest value deal occurring in the trucking subsector.
- Deal value in the Trucking subsector increased by 69% from the second quarter last year, primarily driven by Maanshan Dingtai’s acquisition of SF Holding for $16.83 billion in China.
- Logistics was the second largest subsector with a deal value of $5.8 billion in the second quarter, increasing significantly over the first quarter, though deal-making in this segment witnessed a decline of 26% on year-over-year basis.
Since freight conditions are stagnant in the U.S. for now, will more deal-making be on the horizon for U.S. truckers? We’ll have to wait and see.