RXO Becomes Third Largest Freight Forwarder Through Coyote Acquisition

The acquisition adds nearly $4 billion in revenue and new market opportunities.

RXO’s loading dock in Laredo, Texas (RXO via YouTube)

RXO has completed its acquisition of Coyote Logistics from UPS, a $1.025 billion deal that positions RXO as the third-largest freight forwarder in North America. The transaction was announced on June 23 and finalized on September 16.

UPS sold Coyote Logistics, founded in 2006, as part of its strategy to focus on core small-package delivery services. UPS acquired Coyote for $1.8 billion in 2015; however, this sale seems to indicate a refocus on what CEO Carol Tomé described as “premium small package” services.

For RXO, the acquisition offers significant growth potential for its transportation network. The company focuses on asset-light transport and expects to benefit from Coyote’s existing customer base and carrier relationships. Drew Wilkerson, RXO’s CEO, describes this acquisition as an opportunity to provide more capacity to customers and additional freight opportunities for carriers.

“We are thrilled to welcome Coyote employees, customers, and carriers into the RXO family,” said Wilkerson in a statement.

Wilkerson

RXO states that customers may see improvements in network density and more capacity lanes, while carriers could benefit from increased freight opportunities. The company also anticipates that carriers will be able to reduce empty miles, which refers to the distance trucks travel without cargo. RXO views these operational advantages as one of the reasons for the acquisition, although broader market impacts will depend on the successful integration of Coyote’s systems and workforce.

RXO is headquartered in Charlotte, North Carolina, and operates as an asset-light transportation service provider offering technology-enabled truck brokerage, managed transportation, and last-mile delivery services.

Before the acquisition, RXO ranked 20th among the largest logistics companies in North America and seventh in the freight forwarding sector. Coyote was previously ranked fourth in the freight forwarding segment. Post-acquisition, the combined entity’s total annual revenue exceeds $6 billion, positioning the new company as third on the freight forwarding list.

The transaction is financed through a combination of equity and debt. Goldman Sachs & Co. served as RXO’s financial advisor, while J.P. Morgan provided advisory services to UPS. Paul, Weiss, Rifkind, Wharton & Garrison acted as legal counsel for RXO, with King & Spalding representing UPS.

UPS ranks first among the largest carriers in North America and fourth on the TT Logistics 100 list.

This acquisition adds to the trend of consolidation in the freight forwarding market, where companies are seeking ways to improve efficiency and scale. RXO states that this deal will immediately increase its share in the brokerage market and add more capacity to its network.

Source: Transport Topics