Air cargo: Forward Air Solutions set to acquire Service Express Inc.

Deal will help Forward expand presence in pool distribution arena

Jeff Berman, Group News Editor -- Logistics Management, 9/3/2008

GREENEVILLE, Tenn.—Forward Air Corporation said yesterday that its wholly-owned subsidiary Forward Air Solutions Inc. has entered into an agreement to acquire certain assets of Service Express Inc., a Spartanburg, South Carolina-based provider of pool distribution and related services in the Mid-Atlantic and Southeastern United States.  

Service Inc. generated roughly $39 million in revenue for the year ending December 31, 2007, according to a Forward Air Corporation statement. Forward said that this transaction is expected to close on September 8. Financial terms of the transaction were not disclosed.

Forward said that Forward Air Solutions Inc. provides pool distribution services, including the consolidation and shipment of several smaller less-than-truckload (LTL) shipments to a common area or region at which point loads are deconsolidated and grouped with other shipments with common delivery points and delivered in a time-sensitive manner. With this acquisition, Forward’s pool distribution network is comprised of 20 terminals within the mid-Atlantic, Southeast, Midwest, and Southwestern regions of the United States.

Forward Air Corporation Senior Vice President and Chief Financial Officer Rodney L. Bell  told LM that one of the main reasons for acquiring Service is its locations from the Mid-Atlantic into the Southeast that fill out Forward’s geographic footprint very nicely. Bell added that Service provides Forward with similarities from both an operational and systems perspective when compared to Forward’s July 2007 acquisition of USA Carriers, which enabled the company to get into the pool distribution market. He also noted that these similarities should provide for a “relatively painless integration,” and he also pointed out that Service’s customer list is a good mix if new and exciting customers.

“The biggest benefit for our customer is expanding our quality service into new markets,” said Bell. “This allows our existing customers the opportunity to manage fewer vendors. As we develop better operational software this will also enable them to manage their supply chains more efficiently and reduce their costs.”

Service has approximately 330 employees, said Bell. And contingent upon normal employee vetting most of these employees, he said, will go to work for Forward, as these are markets where Forward don’t have any presence today.

Robert W. Baird transportation analyst Jon Langenfeld said in a research note that acquiring Service is consistent with Forward’s strategy to expand and add geographic coverage to its pool distribution capabilities.