At the Benesch conference’s panel on the M&A outlook, from left to right: Peter Shelton, Benesch; Mark Fornasiero, Clarendon; Kristopher Hopkins, BMO Capital Markets; Jonathan Adams, Capstone; Paul Martins, Ascent Global Logistics
NEW YORK – The Benesch private equity in transportation conference held each December brings together a huge swath of key private equity, venture capital and general dealmakers focused for a full day of discussion on the state of the market for buying and selling logistics companies.
Formally the “Investing in the Transportation & Logistics Industry Conference,” the event has witnessed in its four years of existence (it informally succeeded a similar New York gathering) the strongest freight market in recent history, followed by a spectacular collapse that led panelists in previous years to caution owners that if they wanted to sell their companies, they had better get real about their valuations.
But the 2024 gathering held earlier this month may have marked a turning point. General sentiment is that the market for logistics and transportation properties has probably reached its nadir and there’s plenty of pent-up capital looking for a place to go – but changes in political governance inevitably are raising uncertainties about the 2025 market.
Kristopher Hopkins, managing director and head of transportation and logistics banking at BMO Capital Markets, said on the M&A Outlook panel for 2025, “Private equity is sitting on something like a trillion dollars in dry powder.”
“They need to redeploy those funds and realize some investments,” Hopkins said. But even with that, he added, after the weak performances of 2023 and 2024, next year will probably only be up “a bit.”
Jonathan Adams, the managing director for transportation and logistics at Capstone Partners, expressed a similar sentiment among investors, which he called “frustrated optimism.”
“There are people who want to do stuff and there are great companies that people have invested in,” Adams said. Such companies have invested in automation and brought in new equipment. They are “finally paying their drivers, as they should have many years ago.” With all that done, he said, “they’re ready to hit the market.”
Adams, like Hopkins, referred to the buildup of funds looking for opportunities. “There are PE funds that raised billions of dollars in capital, and they’re ready to deploy it,” he said.
On the other side of the ledger, Adams said, “there are other PE funds that have been sitting on portfolios for six, eight, 10 years and they’re ready to realize it. So the good news here is that I think the factors are going to combine in a way that enables us to take advantage of that, and the people that want to sell are going to finally be able to sell, and people that want to deploy capital will be able to do so.”
It’s a business that has been hoping for a turnaround for a long time. Mark Fornasiero, managing partner of Clarendon Capital, said on the same panel that 2023’s market for merger and acquisition activity in logistics was “like a falling knife through the whole year.” Activity in 2024 “was just as bad a year, but it didn’t feel as bad because it was kind of slowly creeping up, a lot slower than everyone wanted, but still kind of skating at the bottom.”
Fornaserio did say Clarendon has had some success as an adviser in acquisitions and sales in niches, “and we’re able to find ways to do positive things in niches during these times,” with success in particular logistics fields that “weren’t as badly hit.” He cited one unidentified company that has specialized in wine and spirits logistics.
Over the years, discussions on M&A at the Benesch conference seem to come back frequently to getting owners to more realistically value their companies. Paul Martins, the CEO of Ascent Global Logistics, said something similar but with a twist: The niches don’t set the market.
“What we have to be careful of is for both private equity companies and sellers out there not to get fixated on a niche company that sold for high multiples,” he said. “That is not the norm. And I think you’ll see expectations of valuation coming down to what I would call more realistic numbers.”
2025, Fornasiero said, “is going to be a better year. The question is, will it be kind of a more slow and steady getting better, or are we going to have that kind of rocket turnaround that we had post-COVID?”
Brian Bourke, chief commercial officer at Seko Logistics, sat in for company CEO James Gagne on the opening panel of CEOs. Bourke was generally optimistic about the strength of the freight market in 2025. The tender rejection rate is “going up, though somewhat modestly.”
Jason Provonsha, CEO of Steam Logistics, was cautious about the chances for a rebound in the 2025 freight market.
Data about rejection rates and per-mile rates bolstered his confidence, he said. But Provonsha added, “I just don’t think it’s going to be a swift recovery.”
He conceded that he did not expect the sharp fall in the freight market that first settled in during early 2022, “but I don’t think we’re going to see a sort of roar back to the industry. I expect to see some incremental improvements.”
Still, he said, he might be optimistic because “I’m just so tired of being pessimistic.”
While several speakers were hopeful for a freight market rebound this year, Hopkins raised one concern. He noted that the Purchasing Managers’ Index (PMI) remains below 50, which indicates contraction, not growth. Manufacturing activity “certainly is not going to be the key to recovery,” Hopkins said.
Martins said one area that is particularly ripe for deals is consolidation of brokerages. “I think you’ll see companies or investors who have seen that it’s not really where they want to be,” Martins said.
He cited the UPS sale of Coyote Logistics – Martins is a former UPS executive – which was notable because UPS “never wants to admit they ever made a mistake.”
“We went in and gave them the brown blood transfusions and the story was really good when we were talking to you,” Martins said. But eventually, UPS (NYSE: UPS) management realized “this is not working well” and ended up selling the company to RXO (NYSE: RXO) for a little more than $1 billion after paying $1.8 billion for it in 2015.
“I think you’ll see more of that,” Martins said.
Bourke said the number of individual brokers who have left the business in recent years can be measured in the thousands.
Any discussion of what might happen in 2024 took place against the backdrop of a second Trump administration and the tariffs that might come with that.
Bourke said at a recent meeting of Seko customers, “the biggest concern were 60% tariffs,” a reference to one of President-elect Donald Trump’s policy proposals to implement tariffs of that size on certain types of imports, particularly from China.
Those clients included “seasoned veterans that kind of understand what this can do for a business, but also how to navigate it,” Bourke said.
“I’ve been told by them that with President Trump, as with the first term, the best way to navigate a second term is to never take him literally but always to take him seriously.”
Provonsha said the introduction of tariffs in the first Trump term occurred soon after Steam had signed annual contracts to secure ocean freight. “And then all the rates went through the roof because capacity got super tight as importers were trying to pull shipments forward,” he said. “And it just created an environment of some very challenging conversations with customers that ultimately went OK, but it’s certainly an uncomfortable thing to have to go to your customers and try to walk … through these things that maybe at that time they didn’t fully understand.”
Among other points made about logistics in 2025 at the Benesch conference:
The possibility of another port strike on the East and Gulf coasts in January is a big concern, Bourke said. And while a Republican president will be five days shy of inauguration when the strike could resume Jan. 15, the response might not be traditional, he said. In the past, a Republican administration might invoke the Taft-Hartley Act to put an end to such a walkout. But given the nomination of Rep. Lori Chavez-DeRemer as secretary of labor, whom Burke called “the most pro-union Republican in Congress today … it makes you wonder what will happen.”
Fornasiero raised another issue in the short term under a Trump administration: “pushing back on the independent contractor model.” The Wage and Hour Division of the Department of Labor has adopted a definition of independent contractors (ICs) that is seen as leaning toward defining a worker as an employee rather than an IC. But that rule displaced a Trump administration rule that only went into effect as the first Trump administration was ending. “I think there’s going to be volatility in a number of areas, and this is one of them” he said.
