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

UPS today announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 4.4 percent from August 2013 to August 2014 at $100.6 billion.

As expected, global trade dipped from August to September but still saw annual gains, according to data issued this week by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

Transportation and logistics merger and acquisition (M&A) activity in the third quarter saw annual gains, which were driven by smaller deals in the trucking logistics, shipping, and passenger air sectors, according to data issued in the Intersections report by PwC this week.

With the holidays rapidly approaching, it appears retailers are not quite done getting inventory set up and on the shelves in time for what is expected to be a fairly active shopping season. That much was evident based on recent data for September volumes issued by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

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