Canadian transport and logistics provider, TFI International is gearing up for a significant acquisition in the United States towards the end of 2025 or early in 2026. In November 2024, the LTL-specialist acquired Manitoba-based road freight carrier Keystone Western for an undisclosed sum. Keystone Western is the most recent tuck-in acquisition (a transaction in which a large company fully absorbs a smaller company), one of nine so far in 2024. In 2023, the company signed 12 deals, including the $1bn acquisition of flatbed carrier Daseke. According to TFI, this addition strengthens its service offerings and fortifies its North American network.
CEO Alan Bédard, who managed the 2021 acquisition of UPS Freight’s operations—now known as TForce Freight—has made expanding TFI’s LTL presence a top focus. However, Bédard stated that TForce Freight’s integration hasn’t been a huge success. Infact, Bédard openly highlighted the company’s ongoing service and pricing issues in the Q3 2024 earnings call. With a 35% loss in GFP revenue and a 2% drop in tonnage, the US LTL segment had a decline in both revenue and operating profitability in Q3 2024.
The combined Canadian and US LTL operations currently handle around 22,900 shipments each day, according to TFI earnings data. Bédard argues that if the company can acquire 22,000 to 25,000 shipments each day, it will benefit the company’s cost structure. Bédard, earlier stated in TFI’s Q2 2024 conference call that the company was deploying a new billing system, which it hopes will have a substantial impact on efficiency. The invoicing processes acquired from the UPS merger have been a particular issue, putting TFI in an extremely noncompetitive position. Another critique he had at his own network was that there is insufficient density in US operations, which he contrasted with TFI’s Canadian LTL operations.
Bédard added that TFI has moved roughly 30% of its freight traffic to rail, which he termed “an excess,” due to worries about the company’s service levels in the US LTL sector. The objective, however, is to reduce it to around 20%, which is about comparable to its LTL equivalents.
With the North American trucking market navigating economic headwinds, regulatory challenges could impact operations. Opportunities for TFI, however, include the possibility of considerable earnings growth over the following three years, as the company looks to expand into new markets. This strategic aim may lessen dependency on current markets and diversify sources of income. It is anticipated that investments in automation and artificial intelligence will improve customer satisfaction and operational effectiveness, setting TFI up for future expansion. With an emphasis on logistics and LTL in the US, the company intends to invest $200-$300m a year in tuck-ins and M&A, going forward.
Source: Ti Insight
Author: Shruti Sasidharan
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