Transportation & Logistics Industry Update
Harris Williams Deal Spotlight
Appalachian Railcar Services
Harris Williams advised Appalachian Railcar Services (ARS), a portfolio company of GenNx360 Capital Partners, on its sale to Cathcart Rail and its financial partner, Star America Infrastructure Partners. ARS is one of the largest railcar repair companies in the U.S. and provides a range of industrial logistic services.
What We’re Reading
The COVID-19 pandemic and the resulting supply chain disruptions have driven companies to seek visibility solutions that allow them to track products from origin to delivery. Real-time visibility platform FourKites has seen a 200% increase in international load volumes tracked via its visibility platform and a 50% increase in customers in 2020. This growth is driven not only by new customers but also by existing customers ramping up their interest in visibility solutions. To improve their platforms, visibility providers are investing in global expansion, capabilities to link rail, ocean, and over-the-road shipments with real-time estimated times of arrival, and real-time vessel and railcar position data measured against transit times while factoring in speed, weather, port, and terminal congestion.
The trucking industry has been working diligently since March to replenish inventories depleted during the coronavirus, and now truckers face an additional challenge – meeting holiday season demand in a year where 83% of U.S. consumers said they will shop online for more of their gifts. The trucking market has tightened up quickly, keeping the pressure on intermodal as companies look for capacity. Trucking is likely to see the exceptionally high demand spill over into next year with the likelihood that gift returns will be high and that retail inventories will still be depressed.
Rail | Import Gains Fuel Intermodal
Weekly U.S. rail intermodal volumes rose 10.5% year over year in the first week of December. Rail intermodal volumes have gotten a push from higher U.S. imports, which remain strong as retailers rush to fill warehouses for the holiday season and meet fast turnarounds for online orders. With this surge in volume, railroads are experiencing capacity and storage issues, but they are working with intermodal marketing companies on finding long-term solutions.
The continued rise in U.S. trans-Pacific cargo imports during Q2 and Q3 2020 is expected to continue into 2021. Inbound volumes are on pace to hit a new peak in December at the port of Los Angeles, and the port of San Pedro Bay has become a container ship parking lot as trans-Pacific volumes exceed terminal capacity. SeaIntelligence Consulting CEO Lars Jensen predicts that this wave will last through at least March 2021 and will only begin to normalize when Americans shift their spending from services to goods. This shift will depend on increasing consumer confidence and less restrictive lockdown measures.
While passenger airlines are struggling to survive, the air cargo market is poised to recover to pre-crisis levels in 2021, driven by the rebound in international trade and huge growth in e-commerce. The IATA projects air cargo demand to fall 11.5% in 2020, but the year-over-year cargo gap is narrowing each month. Cargo throughput could reach 2019 parity in the first quarter of 2021. Analysts and airfreight specialists expect air cargo volumes to stay at peak levels through the Chinese New Year in February and the rest of the first quarter, a period that typically sees a lull in air cargo following the holiday season in many parts of the world.
Harris Williams is a leading advisor to the transportation and logistics M&A market. Our Transportation & Logistics Group serves companies in a broad range of attractive niches, including third-party logistics (3PL), truck, rail, marine and air transportation, transportation equipment, and the automotive and heavy duty vehicle market.
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