Canadian trucking company TFI International Inc. (NYSE and TSX: TFII), which has said it will acquire less-than-truckload carrier UPS Freight from parent UPS Inc. (NYSE:UPS) for $800 million in cash, will consider renting out space in UPS Freight’s terminals to other trucking companies, TFI Chairman, President and CEO Alain Bedard told analysts.
On a conference call to discuss Montreal-based TFI’s fourth-quarter results, Bedard said that TFI will look at renting space in terminal yards and docks to other carriers should the appropriate situation present itself. TFI considers UPS Freight’s real estate to be valuable and will look at expanding the properties as a way to generate more revenue from its real estate portfolio, Bedard said on the call Monday. TFI has no plans to sell any of the UPS Freight real estate assets, Bedard said.
TFI leases out space in its terminals in Canada, where it operates 53 facilities. For example, 70% of one of its Toronto terminals is leased, while TFI’s operations occupy the rest, Bedard told analysts. A TFI spokesperson declined to comment beyond Bedard’s remarks.
UPS Freight’s network of 197 terminals (147 owned), most of which are in excellent condition and in prime locations, may be the jewel in the crown for TFI. “There is an active market” for real estate transactions such as those TFI is pursuing, said C. Thomas Barnes, head of global network partnerships at logistics IT provider project44, who has spent most of his career in the LTL industry. Barnes agreed that UPS Freight’s facilities would be in strong demand because of their high-value locations.
The deal, which gives TFI control of the United States’ fifth-largest LTL carrier, is expected to close early in the second quarter. The former UPS unit will be rebranded as TForce Freight. The transaction will vault TFI into what could be the pole position in combined LTL and truckload operations in North America.
In a related development, trucking and logistics executives participating in a recent virtual event with Cowen & Co. Analyst Jason H. Seidl said TFI’s acquisition may have been perfectly timed because strong demand will allow TFI to reprice traffic that was, in some cases, 15% below the market rate. An unidentified participant with a lot of LTL freight under management said that TFI repricing the UPS Freight business at favorable rates “would not be a problem at all,” Seidl said in a note.
UPS Freight’s consistently low rates stems from UPS’ strategy to offer bargain-basement LTL pricing if shippers would also tender their small-package traffic, which is a higher-margin business and an exponentially more important part of UPS’ business. Bedard has said that TFI will not continue UPS’ bundling strategy. In the virtual event hosted by Seidl, one participant said that TFI may lose some business from shippers that would still want that option, and that some of that business could migrate to rival FedEx Corp. (NYSE:FDX).
TFI operates a final-mile delivery business but is not a player in the package-delivery segment.
(Nate Tabak contributed to this story)
Tome
All the corporate capitalist are on cocaine. They can’t stop fikin up jobs. Amazon Alexa can do their jobs now.
Misael RODRÍGUEZ
Yo
Last real trucker
I see the same thing happening to ups as it did with Conway when xpo took them over and that one guy they wanted to talk to and he wouldn’t say anything whats he hiding ? And as far as the small package stuff fedx is gonna jump on that u know that think if it was me I’d put my application with fedx now cause once habbeb shad and Canadian Charlie start showing up at the yards its over
Mrbigr504
Lol….damn driver, tell us how you really feel! But you may be right and that’s a damn shame!
Mrbigr504
And Conway was a pretty good outfit too! Shame on the mess!
Misael RODRÍGUEZ
Yo
Ian Boyington
I currently work for ups freight and loved my job. Now that TFI is taking over I’m worried that all the time and energy it took me to get to the top was for nothing. TFI can you share with us freight employees a little more about how it will affect us after the current contract? Will we still be a union shop? Will our insurance, pension and salary stay the same? These would be the biggest questions most of us have.
Mrbigr504
WoW, God bless you guys and we really hope they don’t put the screws to y’all! Dassum cold sh-t!
Bill Marx
The days of the “family oriented trucking businesses” are no more. Large profit driven, stock holding corporations are swallowing the so called ‘mom and pops’. The “Overnites, Estes, Southeastern, Old Dominion” styles are no more… non union truckers are quickly sliding into oblivion. Those old “hands’ that traversed the country in the old days of personal, CB connected ‘good buddy’ drivers are no more. I started with Overnite in the early 80’s and watched as it bounced between Union Pacific, then stand alone, then UPS… now yet another… I’m thinking Harwood Cocrane is turning over in his grave… but this is all simply progress… no problem for me…. I’ll shortly join the global trucking company in the clouds. Just airing my thoughts and views of a great industry and a great company… long live Overnite.
Info
UPS freight terminals are old overnight terminals . And everyone is in the international brotherhood of teamsters union