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T&L deals set to rebound amid growing confidence and strategic supply shifts
The global transportation and logistics (T&L) sector recorded a total deal value of $51.5 billion with 71 disclosed deals for the six-month period ending November 15, 2024, compared to $39.5 billion and 69 deals for the prior six-month period ending May 15, 2024. While deal volume remains stable, the increase in deal value may be indicative of improving investor confidence, driven by anticipated profitability improvements amid rising demand and supply adjustments.
Subsectors such as trucking and maritime freight have recently contended with prolonged lower freight rates. However, these rates are now rebounding due to escalating consumer demand and strategic supply rationalization. The trucking industry in particular has seen distressed assets absorbed through mergers and acquisitions (M&A), while the maritime sector has gained advantages from trade route disruptions in the Red Sea and port congestion, which have collectively absorbed excess supply.
Note: The primary M&A data source used in the 2025 outlook is S&P Capital IQ.
These trends are expected to heighten investor interest in T&L mergers and acquisitions, as enhanced profitability bolsters valuation justifications. Nevertheless, investors should remain mindful of several macroeconomic factors:
- The incoming US administration's pursuit of tariffs could negatively impact ocean freight, though domestic North American trucking may gain from a renewed focus on onshoring strategies.
- Efforts to resolve geopolitical conflicts, including the Russia-Ukraine war and unrest in the Red Sea, may mitigate supply chain constraints while potentially increasing capacity.
- A focus on economic stability and growth may lead to greater Federal Trade Commission (FTC) tolerance for dealmaking, thus opening new avenues for sector consolidation.
- A soft landing in the US economy could spur higher consumer demand, further enhancing M&A opportunities as T&L activity rebounds.
These dynamics underscore a promising outlook for the T&L sector, with strategic M&A poised to capitalize on improving market conditions.
Strategic thinking
Like many other sectors, dealmakers in the T&L sector faced considerable uncertainty in the first half of 2024, grappling with concerns over the trajectory of interest rates and the likelihood of a soft landing for the economy. Low freight rates and capacity overhang persisted, posing challenges to valuations and tempering enthusiasm for M&A in the early part of the year.
Toward the end of the year, the US election introduced further complexities in predicting the future of the T&L sector and its attractiveness for deals. The trade policies of a new administration could significantly affect supply chains, nearshoring and importing activities. Shifts in regulatory stances might influence the sector's environmental trajectory and openness to large-scale M&A. Additionally, the energy policies of the new administration could lower fuel prices. Given these variables and valuation challenges, it is unsurprising that M&A activity, although starting to rebound, remains relatively restrained.
“T&L deals activity is set to rebound, driven by demand recovery and supply rationalization. However, macro factors such as trade policy and deregulation will continue to shape M&A opportunities.”
The bottom line
The transportation and logistics (T&L) sector is witnessing an uptick in dealmaking spurred by favorable economic conditions and investor confidence. Following the Fed's first rate cut in over four years and the incoming administration's deregulatory agenda, M&A activity is set to rebound. While financial buyers' participation has slowed, strategic participants are driving deals, especially as freight rates and profitability stabilize. Key trends to watch include trucking consolidation, railroad logistics innovation and advancements in logistics technology. For dealmakers, agility in funding, talent retention and a robust M&A playbook will be critical to capitalize on the anticipated market upswing.
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