Outlook 2025: Transportation & Logistics

As we head into 2025, we're seeing many reasons for continued strengthening in the M&A and private capital markets. Over the past year, there has been steady improvement in the rate environment, the GDP outlook, consumer spending and financial health, and corporate earnings.

Against this backdrop, we believe 2025 will see ongoing growth across several areas of transportation and logistics, and we're excited for the opportunities to come. See our perspectives on the overall M&A and private capital markets.

Transportation & Logistics: On the Upswing

Against a backdrop of a recovering economy, sentiment is improving across the transportation and logistics industry. M&A activity is picking up across several appealing segments of the automotive and heavy-duty aftermarket, third-party logistics (3PL), and transportation infrastructure services sectors.

Looking to 2025, our senior professionals are excited to see the industry's established and emerging growth drivers create new opportunities for innovative companies and their investors.

Below, our senior professionals share the trends behind this momentum, key categories particularly well positioned for success, and recent clients that exemplify the industry's investment potential.

Automotive & Heavy-Duty Aftermarket: Dynamic Stability

Investor interest in the automotive and heavy-duty aftermarket remains high, with industry participants optimistic about growth in 2025. And despite challenges like discretionary spending pressure and potential new tariffs, factors such as interest rate reductions and economic improvement bode well for businesses going forward. 

The aftermarket has long been an attractive industry for investors, featuring stable, non-discretionary, non-cyclical demand, especially for consumable items like fluids, filters, and replacement parts. More recently, higher new car prices have pushed many consumers and businesses to keep their current vehicles longer, increasing the need for a wide range of aftermarket products and services. This trend is helping support companies like Mevotech, a recent Harris Williams client, which supplies steering, suspension, and drivetrain products for both ICE and EV vehicles.

Another key market drawing investor attention is aftermarket service, which includes quick lube, tire, maintenance and repair, car wash, and collision repair—all areas with steady, predictable demand across economic conditions and healthy M&A activity. We advised two notable players in the aftermarket service sector, Cascade Collision Repair and VIVE Collision, with Cascade focusing on growing its presence in the Mountain West as part of Quality Collision Group and VIVE leading consolidation in the Northeast.

The fleet vehicle subsector also continues to see robust activity, with related parts and services seeing strong recurring demand. Fleet vehicles are revenue generating assets for fleet operators. If a fleet vehicle is out of service, the fleet operator's business is severely impacted, which places a premium on vehicle reliability and up time. In this space, Safe Fleet, another client, has an especially relevant value proposition, partnering with fleet upfitters and operators to maximize vehicle performance. In addition, it integrates technology that improves productivity and operator, passenger, and pedestrian safety. 

Overall, businesses across the automotive and heavy-duty aftermarket with proven business models and defensible market positions are ready for growth. "Supported by long-term fundamentals and encouraging trends, investors are eager to deploy capital in this space," says Frank Mountcastle, a group head and managing director.

Third-Party Logistics: Increasing Sophistication

Heading into 2025, the long-term fundamentals of the logistics sector remain strong, and the supply chain challenges of recent years have reinforced the value that leading 3PL providers offer to their customers. To optimize spending, reliability, sustainability, performance, and on-time delivery, shippers are elevating the importance of logistics and looking to 3PLs for guidance.

"Sophisticated 3PLs are developing new, tech-driven capabilities and are playing a larger role in helping shippers turn data into actionable strategies," says Jason Bass, a group head and managing director.

Multiple Harris Williams clients exemplify these dynamics. RJW Logistics changes how consumer packaged goods companies and brands efficiently move their products to retailers while leveraging proprietary technology to better predict industry trends and meet customer needs. Similarly, ConData uses proprietary technology and experienced audit talent to deliver client savings and provide spend management solutions across multiple modes of freight and parcel on a global scale.

As the world becomes more complex and dynamic, forward-looking 3PLs like RJW and ConData can pull ahead by embracing change and uncertainty. Focusing on customer value and core strengths will be essential to taking full advantage of this opportunity.

Transportation Infrastructure Services: Mission-Critical Solutions

The infrastructure underlying the world's transportation networks and supply chains creates ample opportunities for service providers that solve complex problems for different customers and end markets. Companies in the transportation infrastructure services (TIS) sector provide mission-critical solutions to the marine, rail, and road ecosystems through a diverse range of business models. Investors continue to be drawn to such businesses as they often exhibit steady, predictable cash flows and contracted customer bases while participating in stable end markets.

"As companies in the manufacturing economy across North America continue to sharpen their focus on core competencies, there will continue to be opportunities for best-in-class service providers to deliver solutions that reduce costs and increase efficiencies," says Mountcastle.

Recent client PSC Group, an embedded logistics services provider to the petrochemical, specialty chemical, refining, and marine industries, illustrates this potential, benefiting from resilient demand for its critical, high-cost-of-failure services. Regardless of underlying economic conditions, earnings visibility, defensibility, and stable long-term demand are highly appealing traits. These characteristics are common among many companies in the TIS ecosystem, given the criticality of their solutions to customers' operations. "Because of these factors, high-quality businesses like PSC that serve a diverse base of customers will continue to attract a broad base of investors," notes Bass.

Rolling Forward

With many long-term fundamentals poised to strengthen in 2025, a range of transportation and logistics companies are positioned to capture investor attention. From the proven auto aftermarket, to the critical 3PL sector, to the diverse TIS ecosystem, there are a variety of encouraging trends in each segment that will drive future growth. 

"The transportation and logistics industry's mix of established and emerging growth drivers will continue to attract a wide set of investors," says Mountcastle. "The future is bright for businesses that embrace technology to create efficiencies and add more value while bringing specialized capabilities and a broader array of solutions to their customers."

Learn more about the Harris Williams Transportation & Logistics Group.