Was the investment worth it?
It’s been a wild start to the year for the trucking industry, and TFI International dropped a bomb in acquisition news: It is purchasing UPS Freight for $800 million. Andrew Cox and Seth Holm break down this big buy, but first it’s “you care or nah?”
First up, Cox asks about the state of the housing market and Holm cares about the demand for housing and the movement of people from condensed city living to more rural areas.
Next, China has overtaken the U.S. as the place for foreign direct investment. Holm isn’t surprised by this but thinks it is just a good headline grabber as China comes out of the coronavirus pandemic before the U.S.
Aurora Innovation has made a link with PACCAR to bring an autonomous truck to the roads in the next few years. Holm cares and so does Cox as PACCAR is the leading manufacturer of Peterbilt, Kenworth and DAF trucks.
Last up, Costco is entering the curbside pickup game, testing out the service at several stores in New Mexico. The guys think this is important because the stores are always packed and there are not enough brick-and-mortar stores to keep up with consumer demand.
Cox and Holm jump into the discussion about UPS Freight with an analysis of the decision to sell by CEO Carol Tomé. Holm says when Tomé took over leadership, she had the idea of growing UPS in ways that made sense and also made money.
Holm lays out the pros and cons of the decision, saying for UPS and TFI International the $800 million in revenue is a drop in the bucket. He believes TFI will have to reimplement the traditional sales ideas to make its investment profitable.
The overall consensus is that this acquisition will take a long time to turn around, from handling the union format of UPS to reworking the existing contracts TFI is inheriting.
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