On M&A activity in 2023: “It’s pretty striking if you look at the slowdown that we saw last year with an 80% reduction in deal value and almost a third less transactions in terms of overall activity. But there were certain pockets within the sector where we continued to see activity, particularly led by strategics, who took advantage of a lot of private equity groups sitting on the sidelines, just given the challenges in terms of the interest rate environment and a higher cost of capital, where you did see some larger higher-profile deals get done. But certainly the rationale for those deals [was] much more airtight than what you may have seen in the past few years where everyone kind of was in this drunken frenzy if you will.”

On M&A’s future direction: “What we are seeing is that groups are being much more thoughtful in terms of where they’re spending their time in terms of M&A. There’s very little room for air, given the high cost of capital. And what we are hearing from a lot of our private equity relationships is that they are encouraged that it’s going to be a better environment to make deals in 2024 and moving into ’25. We’ve seen a lot of normalization in terms of the freight rates, a little bit more stability in terms of volumes, which should lead to a better environment and hopefully just a better alignment in terms of valuation expectations between sellers and buyers. One other interesting stat I’ll share with you which I thought was pretty alarming was in 2023, of the deals that went to market, less than a third of them actually got done. So there was a high rate of failure, oftentimes driven by either company performance, or more often than not just this gap in valuation expectations, which I think is starting to narrow, which should promote a better landscape to make deals happy.”

On what deal-makers are looking for: “While some of the acquisitions are being driven by increasing scale, the vast majority of activity we’re seeing is being driven by diversifying businesses. So having that volatility that a lot of the larger players in the market experienced over the last few years [has] taught very painful lessons, that it’s important to be able to diversify the business into areas that help soften and insulate the inherently cyclical parts of their business. So, for example, if you look at a lot of the shipping lines, they have moved very significantly into contract logistics and other value-added logistics in order to be able to not only provide a higher value prop to their customers, but importantly, provide more stability and higher margins in certain pockets. You’re also seeing some of the other more asset-light players in the space also recognize that in order to be more relevant and stickier with their clients, they need to invest behind the assets. It allows them to control more of the assets and provide more reliability of capacity. And while there is more capacity in the market today, we know disruption is going to be the constant theme within the supply chain.

“I do think we’ll continue to see a lot of interest and activity within the contract logistics market, … a ton of investment that goes into areas like health care and pharmaceutical logistics, as well as e-commerce. It’s a great time to consider investing within differentiated freight brokers that have really proven themselves in the downturn.”