UPS unloads coyote to rxo

Chicago- based Coyote Logistics has found a new, and much swankier, home. Purchased in 2015 by UPS for $1.8 Billion, it was highly anticipated to help catapult UPS and its service offerings into a new stratosphere. Less than a decade later, it is sold at a loss of over three-quarters of a billion dollars.

Yet everyone is coming out of this deal as winners.

“As UPS positions itself to become the premium small package provider and logistics partner in the world, the decision to sell our Coyote Logistics business allows an even greater focus on our core business,” said Carol B. Tome, UPS Chief Executive Officer.

Coyote and UPS insiders have revealed that no legitimate plan was ever in place upon UPS’ acquisition of the truckload provider. Just as soon as the ink on the deal dried, Coyote became invisible to the UPS top brass as their attention was placed elsewhere. The technological integration that UPS had hoped to provide the brokerage was unsupported, underdeveloped, and remained a low priority.

“RXO’s highly accretive acquisition of Coyote will immediately increase the scale of our brokerage business, providing customers with more capacity across a wider array of power lanes,” according to Drew Wilkerson, chief executive officer of RXO. “RXO will realize significant synergies from the acquisition by quickly integrating Coyote’s business into RXO and leveraging our cutting-edge technology. The addition of Coyote’s customer base will diversify RXO’s vertical mix and will increase the number of customers that do more than $1 million in business with us by approximately 80%.”

“There’s minimal overlap across our largest customers” he said. The combined company will have a more diverse book of business and carrier base. Coyote’ s 2023 revenue of $3.2 billion consists mainly of two top verticals of food and beverage and transportation, while RXO leans mostly on manufacturing and retail. RXO has utilized a carrier base consisting of large fleets and courts larger organizations as customers, while Coyote’ s carrier base is small to medium, similar to their customers.

The deal could not be complete without the sales agreement highlighting UPS to remain as Coyote’s customer, and now RXO, through 2030.

RXO has signaled that they are bullish on the transportation market, and this could indicate the resurgence of mergers and acquisitions in the second half of the year. With a new comfortable position as the third largest provider of brokered transport in North America, RXO could draw up plans to continue its buying streak to secure greater dominance in the market.

Or Drew Wilkerson might be reading from another playbook; make RXO attractive for a sale. C.H. Robinson and Total Quality Logistics come to mind as potential suitors.

This move by RXO could be the spark that ignites the M&A activity that has been missing for a while now.