Pivot Point: Transportation & Logistics M&A Outlook

New Year, New Opportunities

As we embark on a new year, our Industry Group leaders reflect on the changes spurred by 2020 — stories of novel products and services, shifting market trends, and new M&A strategies — and consider the implications for 2021. Access more industry perspectives in our related insights tab. 

tl_gh.jpgMountcastle: We’ve always known that 3PL and automotive aftermarket business models were inherently resilient, but the degree of that resilience throughout 2020 still came as a pleasant surprise, particularly in the latter half of the year. When the dust finally settles on 2020, we’re going to see it as a growth year for many companies in both sectors.

For 3PLs, we saw just how critical these businesses are to their customers and to the global supply chain, especially in times of disruption. And with everything related to COVID-19 happening, from lockdowns to toilet paper shortages, I’m not sure supply chains have ever been more disrupted.

Bass: It’s amazing to look at how many new product categories have accelerated their shift to online retail during the pandemic, and how many consumers have increased the volume of what they have delivered to their homes. Some things may revert back to brick-and-mortar post-pandemic, but we think more will stay online in perpetuity. That increased volume has boosted 3PL margins by helping them optimize scale, density and utilization of trucks in their fleets.

Mountcastle: For the auto aftermarket, the performance we’ve seen reinforces how essential the industry is to consumers even in tough times. Despite being in a year in which miles driven declined as a result of the pandemic, demand for aftermarket products and services remained incredibly robust, and the category outperformed many other sectors. There’s still so much potential to consolidate and professionalize the sector, and we’re continuing to see strong interest from investors looking to apply experience from other consumer-facing sectors.

It’s also been a good year for transportation infrastructure. The sector is now on the radar of a larger and more diverse group of buyers and investors, who appreciate its steady performance and predictability. Being designated as “essential” during the pandemic certainly helped businesses in the space withstand the challenges of 2020. We see great potential for transportation infrastructure deals as the recession abates and global trade continues to ramp back up.

Click here to explore our transportation and logistics industry experience. 

Which aspect of "regular life" are you most excited about returning to?

 

Mountcastle: Having dinner with our clients, and continuing to develop those friendships.

Bass: Going to conferences and dinners, and seeing colleagues face to face. One thing I’m really looking forward to is the 2021 Harris Williams 3PL Conference.

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