Subscribe to our free, weekly email newsletter!


Roadrunner Transportation Services acquires Morgan Southern

Deal will help RRTS make inroads in intermodal sector
By Jeff Berman, Group News Editor
February 09, 2011

Non asset-based third-party logistics services provider Roadrunner Transportation Services (RRTS) recently announced it has acquired all of the outstanding stock of Morgan Southern, a privately-held provider of intermodal transportation and related services for roughly $20 million.

Based in Conley, Georgia, Morgan Southern serves several key intermodal markets with 19 terminals in the United States and a customer base comprised of direct shippers, intermodal marketing companies (IMC), steamship lines, and other port and rail related transportation industries.

During its fourth quarter earnings conference call yesterday, RRTS President and CEO Mark DiBlasi said that the acquisition provides a new service offering to the company’s truckload segment and expands its geographic profile.

“It also enables us to capitalize on favorable trends in the intermodal sector driven by growth in international trade and continued improvements in rail efficiency,” he said. “Aside from these overall strategic factors, our rationale for acquiring Morgan Southern is as follows: the domestic intermodal drayage market has generated approximately $4 billion in annual revenues, with several companies—or IMCs—having internal operations and the balance being fragmented.”

This, said DiBlasi, presents both risk and opportunity in the sector. And he added that in RRTS’ view high-quality companies will have growth opportunities at the expense of competitors. Morgan Southern, he added, has an excellent industry reputation for quality and service. He cited how even in instances where customers have internal drayage operations and plans to expand them, they still anticipated growth with Morgan Southern, which he expects to grow significantly with the backing of RRTS.

Morgan Southern management will continue to be led by Ben Kirkland, head of operations since 1996. DiBlasi explained that the fit with the management team and the culture of Morgan Southern eliminates one of the largest and most underappreciated risks of any acquisition.

In 2010, Morgan Southern generated approximately $57 million in revenue and $4 million in EBITDA. RRTS expects the acquisition to be accretive to its net earnings in 2011 and beyond.

Stifel Nicolaus analyst David Ross wrote in a research note that this deal has multiple potential benefits for RRTS.

“Due to seamless management transition, the company believes it can grow the [Morgan Southern] revenue base in 2011,” wrote Ross. “Roadrunner will give them more resources to grow (in addition to a much bigger account base) than they had in past under conservative private owner, and MS can leverage the company’s salesforce and provider relationships.”

Morgan Southern was advised during the sales process by EVE Partners, an Atlanta-based transportation and logistics M&A firm.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

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. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The value of exports from America’s Foreign-Trade Zones increased by 13.7 percent in 2013, to a record-high 79.5 billion in merchandise exported, according to figures released by the U.S. Foreign-Trade Zones Board in its Annual Report to Congress.

While summer may be nearing its end, the climate in the manufacturing sector remains very warm, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management.

When publicly-traded Class I freight railroad and intermodal service providers issued second quarter earnings results earlier this summer, the topic of less than ideal service on the rails was a common theme within the earnings releases and question and answer sessions with top management at those companies.

Supply chain security provider Freightwatch International has released its semi-annual report on cargo theft in the Asia Pacific region for the first half of 2014, which contains some heartening news for U.S. shippers reliant on trucking, warehousing and retail.

FedEx Ground, a subsidiary of FedEx Corporation, reports today that a decision by a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed previous rulings by the District Court for the Northern District of Indiana in three class action cases involving mostly former independent contractors for FedEx Ground

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA