Tra Nsportation & Logistics
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TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ JULY 2016 www.harriswilliams.de Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ JULY 2016 WHAT WE’RE READING CONTENTS LOGISTICS | RETAILERS LEASE WAREHOUSE SPACE AT RECORD PACE . M &A TRANSACTIONS . PUBLIC M ARKETS OVERVIEW Firms leased 70.1 million square feet of industrial space in the second quarter of 2016, the most in ov er 30 years of data and up 6% from the same quarter last year, . STOCK PRICE PERFORM ANCE real-estate brokerage Cu shman & Wakefield Inc. said in a report Monday. In a . OUR GROUP separate report, brokerage CBRE Inc. said warehouse availability declined for a 25th consecutiv e quarter to 8.8%. Wall Street Journal CONTACTS TRUCKING | BUSIER SPOT MARKET MAY SIGNAL A U.S. TRUCK RATE SPIKE UNITED STATES Pricing trends in the late second quarter may foreshadow a spike in higher transportation costs ahead for U.S. shippers. T ruckload spot market capacity got a Frank Mountcastle bit tighter in June, and pricing climbed higher, as a seasonal increase in freight M anaging Director v olumes, coupled with the produce season and a nationwide roadside truck [email protected] inspection program, filled more trailers. D AT ’s average dry van port market rates, +1 (804) 915-0124 excluding fuel su rcharges, rose from the mid-$1.30s into the $1.40s in June and shot Jason Bass th up to $1.49 in the week ending July 9 . This should be a warning to brokers and M anaging Director shippers that the excess layer of truck capacity depressin g transportation rates in jbass@harrisw illiams.com the U.S. is not v ery thick or deep, and could dissipate quickly, especially as freight +1 (804) 915-0132 demand picks up this fall. Joe Conner Journal of Commerce M anaging Director jconner@harrisw illiams.com MARINE | LONG BEACH VOLUME RISES AS PEAK SEASON BEGINS +1 (804) 915-0151 Jeff Burkett Laden containerized imports in Long Beach increased 5.5% in June from the same Director month in 2015 to 313,526 twenty-foot-equiv alent units as the second-largest port [email protected] transitions to the su mmer-fall peak-shipping season. Total container v olume in Lon g +1 (804) 932-1334 Beach, including laden export containers and empties, increased 3.4% compared with June 2015 to 603,339 TEUs. Loaded export containers declined slightly by 0.1% Jershon Jones Director to 128,009 TEUs. Exports could remain weak if the dollar strengthen s against other jjones@harrisw illiams.com curren cies as it has done in recent weeks, which would make U.S. exports more +1 (804) 932-1356 costly for ov erseas buyers. Journal of Commerce Jeff Kidd Vice President jkidd@harrisw illiams.com RAIL | RAIL PICKS UP STEAM +1 (804) 915-0178 From consu mer goods to automobiles and perishable products, an increasin g James O’Malley Vice President number of shippers are findin g that transporting products v ia North America’s [email protected] Class I railroads remains a cost-effectiv e method of transport.Rail and intermodal +1 (804) 915-0165 transportation prov iders say they are supporting the supply chain with faster deliv eries, infrastructure improv ements and improv ed tracking capabilities. At the same time, rail and intermodal prov iders are seein g an uptick in demand driv en by increased regulations within the trucking industry. SDC Executiv e EUROPE AIR | AIR CARGO FIRMS FEEL PRESSURE FROM LOWER FREIGHT PRICES Jeffery Perkins M anaging Director jperkins@harrisw illiams.com Following a sharp fall in freight prices, air cargo companies are set to trim their +49 (0) 69 3650638 00 fleets and jobs further to battle ov ercapacity while looking for new partnerships and products to carry, industry executiv es and analysts say. Global trade volumes fell for the first time since 2009 by 1.7% between the final quarter of 2015 and the first quarter of 2016 and the International Air Transport Association has lowered its growth forecast for air freight demand in 2016 to 2.1% from 3%. And while the impact of Britain's Brexit v ote on the UK air freight market remains un certain, p rices for air freight generally are down about 15-20% compared with last year due to capacity outstripping demand by a factor of three. Reuters www.harriswilliams.de PAGE | 1 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ JULY 2016 M&A TRANSACTIONS RECENT M&A TRANSACTIONS1,2 Date Sector Target Business Description Acquirer 7/18/2016 Logistics Span Alaska Provides LCL freight consolidation and forwarding services to Alaska. Matson Logistics, Inc. 7/16/2016 Logistics Farren International, LLC Provides transportation, rigging and related value-added solutions EZE Truck Holdings, Inc. such as warehousing and kitting. 7/7/2016 Logistics Global Transportation Provides freight forwarding and 3PL logistics. American Fast Freight Services, Inc. 7/5/2016 Logistics Jones Motor Group Provides flatbed, heavy haul, dry van, refrigerated and LTL Transport Investments, Inc. transportation services. 6/29/2016 Marine R.S. Stern, Inc. Provides custom, last mile logistics services to supply critical Ship Supply International perishable goods and required deck and engine products. 6/21/2016 Logistics Dematic Provides supply chain optimisation and automation. KION Group 6/20/2016 Logistics G-Force Shipping Provides transportation management services. Blue-Grace Logistics LLC 6/9/2016 Logistics American Global Provides customized logistics solutions and offers end-to-end ocean NexPhase Capital Logistics LLC and air transportation. 6/3/2016 Logistics Isotank Transport Provides container transport, cleaning, and depot services. Quality Distribution, Inc. Services Ltd. 6/2/2016 Trucking Lodeso, Inc. Provides last-mile delivery services. Schneider National, Inc. 6/2/2016 Trucking Watkins & Shepard Provides LTL, dry van, flatbed, and freight management services. Schneider National, Inc. Trucking, Inc. 6/1/2016 Marine Apex Maritime Co., Inc. Provides ocean, air, customer brokerage logistics, and freight Kerry Logisics Network Ltd. solutions. 6/1/2016 Logistics Hybrid Logistics, Inc. and Provides logistics services including flatbed, rail-intermodal, LTL, TL, CAI International, Inc. General Transportation and freight management. Services, Inc. 5/12/2016 Equipment Direct ChassisLink, Inc. Provides chassis leasing and chassis / container management EQT Infrastructure Partners services. 5/11/2016 Rail Heart of Texas Railraod Operates railway track between Lometa and Brady in Texas. BROE Management Co. LP LLC 5/9/2016 Rail UNITRAC Railroad Designer and manufacturer of railcar and railroad track products. Westinghouse Air Brake Materials, Inc. and Pride Technologies Corporation Bodies Ltd 5/2/2016 Logistics LeanLogistics, Inc. Provides SaaS transportation management system applications and Kewill plc supply chain services. 4/29/2016 Logistics pixi* Software GmbH Provides software solutions and applications for logistics businesses. The Descartes Systems Group Inc 4/14/2016 Marine Maher Terminals USA, Owns and operates a multi-user container terminal in Port Elizabeth, Macquarie Infrastructure LLC New Jersey. Partners Inc. *Denot es pending t ransactions PAGE | 2 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ JULY 2016 PUBLIC MARKETS OVERVIEW TEV / LTM EBITDA TEV / 2016E EBITDA Logistics Providers 10.6x Rail & Rail Services 9.1x Rail & Rail Services 9.0x Logistics Providers 8.6x Marine 7.4x Marine 7.0x Trucking 5.5x Trucking 5.4x Transportation 4.8x Transportation Equipment 5.3x Equipment AVERAGE REVENUE GROWTH (2012 – 2015) AVERAGE REVENUE GROWTH (2015 – 2017P) Rail & Rail Services 7.2% Logistics Providers 5.7% Trucking 5.3% Trucking 1.7% Transportation Logistics Providers 4.7% 1.2% Equipment Transportation 3.4% Equipment Marine (5.2%) Marine (0.0%) Rail & Rail Services (6.6%) AVERAGE EBITDA GROWTH (2012 – 2015) AVERAGE EBITDA GROWTH (2015 – 2017P) Transportation 17.0% Logistics Providers 12.6% Equipment Trucking 15.9% Marine 5.2% Rail & Rail Services 14.5% Trucking 2.6% Transportation Logistics Providers 8.3% 0.1% Equipment Marine 2.7% Rail & Rail Services (6.0%) PAGE | 3 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ JULY 2016 STOCK PRICE PERFORMANCE MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH) Trucking 3.9% S&P 500 2.5% Rail & Rail Services 3.7% Logistics Providers (6.1%) S&P 500 2.7% Rail & Rail Services (13.1%) Logistics Providers (0.6%) Marine (22.1%) Transportation Equipment (4.3%) Trucking (24.6%) Marine (6.3%) Transportation Equipment (28.3%) TRAILING TWELVE MONTHS (Indexed to July 15, 2015) 10% 5% 0% (5%) (10%) (15%) (20%) (25%) (30%) (35%) (40%) (45%) Jul-15-2015 Oct-15-2015 Jan-15-2016 Apr-15-2016 Jul-15-2016 Logistics Providers Trucking Rail and Rail Services Marine Transportation Equipment S&P 500 Index PAGE | 4 TRANSPORTATION