NFI has made the largest non-asset acquisition in its history, buying CAI Logistics, the non-asset logistics division of CAI International.
The purchase price was not disclosed.
Acquisitive NFI has bought a three-pronged logistics service that David Broering, the president of non-asset at NFI, said had “roughly” $110 million in revenue last year. The acquisition “falls into the middle size-wise relative to NFI’s overall acquisitions over the past 20 years,” he told FreightWaves in an email. But relative to the two other non-asset acquisitions the company has made in its history, CAI Logistics is the biggest.
Revenue in CAI Logistics fell in the second quarter to $22.6 million, down from just under $30 million in the second quarter of last year.
CAI Logistics, according to CAI documents, consist of three key parts: ClearPointt Logistics LLC, Challenger Overseas LLC, and Hybrid Logistics Inc., along with its affiliate General Transportation Services. ClearPointt was described by CAI as an intermodal logistic company focused on the domestic intermodal market; Challenge is a non-vessel operating common carrier; and Hybrid along with General are asset light truck brokers.
NFI describes itself as an asset and non-asset intermodal provider.
In his email to FreightWaves, Broering said the acquisition will help NFI grow in three specific areas it is looking to expand in. The first is intermodal, which Broering said would “substantially improve” the existing NFI operation, in particular by bringing on the expertise of the existing CAI staff. Combining the CAI operations with what NFI already is doing in intermodal, Broering said he expects the company’s intermodal carrier business will be $100 million in 2021.
Broering added in talking about the staff NFI is taking on that “the experience, success, and market knowledge on the IMC side is going to be extremely accretive to NFI’s existing IMC business which really starts with their people. They have a great team that executes superbly.”
The second is in the flatbed brokerage business. Broering said 25% of the CAI Logistics business is in that sector “and this will help us grow this niche service that we have been growing organically for years.” The combined entity will move 15,000 flatbed shipments next year “which is a big step forward for us,” Broering said.
Finally, Broering said, Challenger Overseas “is heavily focused on export of refrigerated and over-dimensional products. This expertise will pair well with our existing imports-focused freight forwarding operation.”
The respective sizes of the three divisions are in that order: intermodal, brokerage and the global operations, according to Broering.
The acquisition is the 20th in the history of privately held NFI. Some recent acquisitions NFI cited in its prepared statement announcing the CAI Logistics purchase are G&P Trucking late last year, SCR Air in March 2019 and drayage company Cal Cartage.
All of the acquired entities will be rebranded as NFI, the company said in a prepared statement announcing the acquisition.
BGSA Holdings was the exclusive advisor to NFI.
On an operating basis, CAI Logistics had a $19.46 million loss in the quarter ended June 30. But that included an expense charge of $18.47 million related to the shift of the division within CAI’s books as a discontinued business.
However, it wasn’t profitable in the first half of 2019. In the second quarter of last year, the operating loss was $1.6 million and for the six months it was $3.6 million.
Asked about the challenges of acquiring assets that have faced financial headwinds, Broering said in his email that NFI is “looking at the value in this deal connecting to the scale we can bring with the incorporation of these businesses into our existing organization. There is no doubt that one of the biggest challenges to any of these deals is connecting employees from different organizations meaningfully.” He added that COVID magnifies that issue.
“We are going to work really hard culturally to bring the teams together the right way to make a better business as one cohesive unit rather than a group of disparate acquired businesses,” Broering added.