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Acquisition shows tHAt small truckers STILL have room to grow
William B. Cassidy, Senior Editor | Aug 09, 2016 5:42PM EDT
Times are tough for truckload carriers and, especially, smaller trucking companies. Trucking bankruptcies rose in the first quarter, nearly doubling year-over-year. Fuel prices are down, but the costs of drivers, equipment and compliance with U.S. regulations is climbing.
There are still opportunities for growth, however, for smaller trucking operators as well as the largest U.S. fleets. Kottke Trucking, a family-owned business based in Buffalo Lake, Minnesota, seized one such opportunity when it recently acquired competitor Walbon & Company.
“We believe smaller companies may have continued long-term issues with success, and we’re trying to gain a little scale to get ahead of those issues,” said Kyle Kottke, general manager and grandson of founder Elmer Kottke, who founded the original company in 1938.
Kyle Kottke runs the company with his brothers Kurt, president, and Kory, senior vice president. “Acquiring Walbon allows us to make offerings today we couldn’t make two weeks ago,” he said. “It’s broadened our offerings and has given us the scale we set out to find.”
Kottke’s acquisition of Walbon — the terms of which were not disclosed — is an example of the type of merger and acquisition activity reshaping the small carrier market as well as the playing field for large carriers. Companies are acquiring businesses to add or expand services, or to reinforce existing services, add freight density and bolster relations with important customers.
Recent large-scale trucking and logistics acquisitions include the Schneider National purchase of Watkins & Shepard and NFI’s purchase of United Express. Acquisitions by smaller companies often go unheralded and unreported, but they do happen, and are likely to happen more often as small trucking company owners struggling to stay profitable decide they want to cash in and sell, often to the owners of other small trucking companies they know. To read the full article about potential growth for small trucking companies, click here.