Hub Group acquires Exel Transportation Services
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Freight transportation services provider Hub Group Inc. said today it has acquired asset-light transportation company Exel Transportation Services (ETS), a subsidiary of Deutsche Post World Net.
The acquisition total was $83 million and was made official late last week.
Hub officials said Exel is now a wholly-owned subsidiary of Hub and will be re-named as Mode Transportation.
Mode is comprised of roughly 300 Independent Business Owners (IBO) that sell and operate the business throughout North America, with corporate offices in Dallas and Memphis, a company-managed operation in Dallas, and a temperature-protected services division called Temstar in Lombard, Illinois, which has 500 temperature-controlled trailers. Mode will be based in Dallas.
The core focus areas of the company, which had $717 million in 2010 sales, are intermodal ($294 in revenue), truck brokerage ($279), and less-than-truckload ($85 million). Other services provided by Mode include boxcar, service part logistics, and manufacturing and packaging, among others.
“These services are very complimentary to Hub’s and will give us more scale,” said Hub Group Chairman and Chief Executive Officer David Yeager on a conference call today. “This is exactly the kind of acquisition that we have been patiently awaiting: a strong operating and sales organization that compliments Hub’s core competencies. Mode has been on our short list for quite some time, and we are very excited we prevailed in a competitive bidding process for this industry leader.”
Yeager said bringing Mode into the fold will help Hub increase its market share, with Hub and Mode cumulatively accounting for roughly 20 percent of domestic intermodal market share. What’s more, he said this deal will add to more than $1 billion in highway spend and $250 million in LTL spend.
The concept of having a strong third-party agent network with high growth potential was attractive to Hub from the outset, according to Yeager, and it is Hub’s intention to help Mode grow and prosper.
“Mode’s agents have solid customer relationships with small- and mid-size customers, as well as larger accounts, which is particularly attractive to us as the small- and mid-size customer base is an area where Hub wants to expand,” said Yeager. “We will offer Mode’s agents with direct access to our dedicated intermodal network, as intermodal capacity will be a critical issue for 2011 and beyond. And as a result of their relationship with Hub, Mode’s agents will be able to offer Hub’s capacity to their customers.”
And to accommodate its growing needs, Hub said it will increase a new container order from 3,000 to 4,000 this year, which will be acquired under a ten-year capital lease, in conjunction with plans to offer Mode access to Hub’s growing contract branch operations, which includes more than 1,700 drivers and will help provider better customer service and be more competitive in the market.
“This is significant deal and bolsters Hub’s position as the second largest U.S. domestic transportation management 3PL after C.H. Robinson Worldwide,” said Evan Armstrong, Chairman of supply chain consultancy Armstrong & Associates. “ETS and Hub’s combined company revenues for 2010 were approximately $2.6 billion. It also ties in nicely with another strategic move Hub Group made recently combining its Unyson network transportation management 3PL and Hub Highway’s freight brokerage operations under the new Hub Supply Chain Solutions brand. Its logistics and non-intermodal revenues with this acquisition go from $549 million in 2010 to approximately $913 million, a 66 percent increase. This makes Hub an even greater over-the-road carrier capacity procurer domestically and improves its ability to secure carrier capacity at competitive rates as the U.S. economy continues to rebound.”
For related articles, please click here.Logistics Management April 4, 2011
About the AuthorJeff Berman Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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