The value and volume of deals in the transportation and logistics (T&L) sector declined by 82% and 33% respectively in the last 12 months through Nov. 15, compared to FY 2022, with both standing at about half of pre-COVID-19 levels, according to data from PwC.
Although average deal values remained at FY 2022 levels, there were only 7 deals over $1 billion in the 12 months preceding November compared to 29 of that size in FY 2022. Only the airfreight and logistics sub-sector recorded deal values approaching pre-COVID-19 levels.
“We believe dealmaking opportunities will continue to emerge in 2024. Technology-infused deals that carry the promise of transformational returns will likely continue to be attractive, and strategic buyers may be well positioned to take advantage of such opportunities. Additionally, investments in last-mile delivery capabilities are likely to remain a key focus for companies, as e-commerce purchases have shifted from traditional ‘big and bulky’ goods and non-perishables to food and beverage products and pharmaceuticals,” says PwC.
Key takeaways:
- Strategic investors far outpaced financial buyers in making deals, responsible for 80% of all deal value compared to about 50% in the years pre-COVID-19.
- In addition, dealmaking has yet to recalibrate after a cycle of increased demand, capacity constraints and historically high freight rates followed by a reverse in many aspects of those drivers.
- Current market conditions may continue to give strategic buyers an edge. Greater access to capital may encourage companies with strong balance sheets to acquire and consolidate smaller competitors challenged by the current cost of capital. Finally, strategic investors may be more inclined to pursue technology-driven deals that promise greater returns when scaled across a larger organization.
