G2 Capital Advisors is pleased to present its Transportation & Logistics industry update for Q3 2022, providing commentary and analysis on M&A and market trends within the sector.
After continued momentum across global transportation services in 1H 2022, a 60%+ year-over-year decrease in global container freight rates (as measured by the Freightos Baltic Index) in Q3 has reinforced economic weakness. More specifically, the cost to ship products across the Trans-Pacific trade lane has cooled from record highs of over $20,000 per container in Q3 2021 to less than $3,000 per container by September 2022. These trends are signaling a drop in consumer demand amid rising inflation and a rebalancing of consumer spending to essential goods and services, while retailers manage bloated inventory levels and temper expectations for holiday spend.
As demand growth has stalled from a muted peak season, ocean vessels are not fully utilized causing spot rates to drop below contract rates. These carriers have increased blank sailings as a strategy to match supply with demand in hopes of establishing a pricing floor. It remains uncertain how quickly this imbalance will correct and whether carriers will be forced to maintain lower capacity in response to the declines experienced across most major shipping routes.
Pricing pressure remains the primary industry challenge which has forced freight forwarders to continue adopting and tailoring processes, technologies and service capabilities to further differentiate their solutions. Those providers with an automated, self-service solution that can provide real-time visibility portals, rate optimization engines, and effective analytics and reporting for customer milestone communication will differentiate their services, improve customer retention and drive future growth and profitability through an uncertain market.
Founded in 1928, MTC Logistics (“MTC” or the “Company”), a wholly owned subsidiary of Hoffberger Holdings, Inc. (“HHI”), is a diversified privately held investment company of the Hoffberger family out of Baltimore, MD. MTC is a fifth-generation family business and is recognized as one of the International Association of Refrigerated Warehouses (IARW) North American Top 25 Operations. The Company provides warehousing services including import/export services, repacking, blast freezing, transportation and rail transload services through an operational footprint that includes four distribution centers with more than 38 million cubic feet (over 113,000 pallet positions) of refrigerated and frozen warehouse capacity, serving the ports of Baltimore, MD, Philadelphia, PA, Wilmington, DE, and Mobile, AL.
SITUATION:After successfully navigating headwinds of the COVID-19 environment, generating strong business momentum, and completing construction of a brand-new operation in Mobile, Alabama, the Company’s stakeholders received interest from a key strategic player. This opportunity would allow HHI to realize its investment and enable management to accelerate the execution of future strategic growth initiatives.
G2 Capital Advisors, LLC (“G2”) was engaged by MTC Logistics as exclusive sell-side advisor. G2 lead a strategic and efficient sell-side transaction process focused on validating the potential interest, managing a fast-pace due diligence process, and closing the transaction under an expedited timeline.
The transaction was successfully executed through a sale to Lineage Logistics Holdings, LLC (“Lineage”), the world’s largest and most innovative temperature-controlled industrial REIT, and a portfolio company of Bay Grove. MTC will operate as part of Lineage’s existing footprint of over 400 strategically located facilities totaling more than 2 billion cubic feet of capacity across 19 countries. Accordingly, its customers and associates will benefit from Lineage’s scale, industry-leading technology, values, and customer-centric approach.
“G2 evaluated key strategic alternatives relative to current market conditions which helped us to determine our strategy. They were instrumental in supporting a sale process, navigating our team through a highly complex process, and exceeding our expectations as to their level of support and expertise. We couldn’t be happier with the selection of Lineage as MTC’s new partner who shares our values and customer-centric approach,” said Harry Halpert, Chairman of MTC Logistics and CEO of Hoffberger Holdings.
“With Lineage’s partnership, MTC is primed to continue an exciting growth trajectory thanks to the Company’s best-in-class services, strategic presence at key East Coast and Gulf ports, along with its dedication to partnerships with its customers. We are eager to see what opportunities the Lineage-MTC combination will unlock. It was an honor and privilege to represent a business with nearly a century-long family legacy of delivering significant value to the temperature-controlled segment. This transaction is a terrific example of G2’s strategy of partnering with market-leading organizations within our dedicated industry verticals.” said Christopher Casteleyn, Managing Director of Transportation & Logistics at G2 Capital Advisors.
ABOUT MTC LOGISTICS:
MTC Logistics is a wholly owned subsidiary of Hoffberger Holdings, Inc. (“HHI”) a diversified privately held investment company of the Hoffberger family of Baltimore, MD. MTC Logistics operates four distribution centers with more than 38 million cubic feet of refrigerated and frozen space, serving the ports of Baltimore, MD, Philadelphia, PA, Wilmington, DE, and Mobile, AL.
ABOUT LINEAGE LOGISTICS:
Lineage Logistics is the world’s largest temperature-controlled industrial REIT and logistics solutions provider. It has a global network of over 400 strategically located facilities totaling over 2 billion cubic feet of capacity which spans 19 countries across North America, Europe and Asia-Pacific. Lineage’s industry-leading expertise in end-to-end logistical solutions, its unrivaled real estate network, and development and deployment of innovative technology help increase distribution efficiency, advance sustainability, minimize supply chain waste, and most importantly, as a Visionary Partner of Feeding America, help feed the world. In recognition of the company’s leading innovations and sustainability initiatives, Lineage was listed as No. 17 in the 2021 CNBC Disruptor 50 list, the No 1. Data Science company, and 23rd overall on Fast Company’s 2019 list of The World’s Most Innovative Companies, in addition to being included on Fortune’s Change The World list in 2020. (www.lineagelogistics.com)
CONTACTS ON THIS DEAL:
Chris Casteleyn – MD, Transportation & Logistics: T: 415.531.3138 E: [email protected]
Connor Grogan – Vice President: T: 860.707.5754 E: [email protected]
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Jennifer Johnson, Vice President, Marketing T: 978.204.8050 E: [email protected]
Direct Connect Logistix (“DCL” or the “Company”) is a leading, non-asset based, multi-modal, third-party logistics company providing transportation solutions for customers of all sizes. Since its founding in 2009, DCL has developed expertise in the temperature-controlled, time and condition critical truckload segment serving the food, grocery, beverage, and related industries.
DCL’s unique HUSTLE culture has fueled its growth by defining how the company serves its customers, carriers, investors, employees, and the community at large by providing high performance logistics management solutions that enable sustainable, responsive, and efficient customer supply chains. For more information, please visit: www.dclogistix.com.
DCL’s management team established a growth strategy focused on the acquisition of complimentary partners who provide talent and expertise in specialty markets. DCL is focused on four core criteria to evaluate acquisition opportunities: (a) service capabilities which overlap DCL’s core operations; (b) skills or technologies that provide capability outside of DCL’s internal skillset; (c) exploit industry specific scalability; and (d) attract growth-oriented business owners that are seeking to partner with a larger organization.
G2 Capital Advisors, LLC (“G2”) was engaged by DCL as the exclusive buy-side advisor to identify, source and engage with targets that provide transportation and logistics services supporting food, beverage, and grocery market sectors and fit with the Company’s asset light acquisition profile.
The transaction was successfully executed on February 17, 2022, through an acquisition of Performance Logistics (“PL”) by DCL. The combination of Performance Logistics’ refrigerated and frozen food transportation services and large customers in the Mountain West strengthens DCL’s capabilities, customer base and geographic reach.
“G2 identified and sourced a target that was not only a perfect fit but also met all four of DCL’s acquisition criteria. G2 formed a unique relationship with the target’s ownership, who, at the time of initial engagement, were not seeking a transaction. Through the establishment of genuine trust and deep credibility, the target moved forward with discussions. “We couldn’t be happier to partner with Performance Logistics. We believe that both companies will benefit as we continue to execute our strategic growth plan. ,” said Richard Piontek, CEO of DCL.
“Performance Logistics fits perfectly into DCL’s unique HUSTLE culture which made the business combination a logical fit. Given PL’s location in the Mountain West region and deep expertise in refrigerated and frozen food capabilities, the groups will be able to attract talent in a dynamic, growing city and generate a transformative growth curve”, said Christopher Casteleyn, G2’s Managing Director for Transportation & Logistics. “Our team thoroughly enjoyed working with both groups and we look forward to observing the success of what we feel will be a highly accretive acquisition.”
About G2 Capital Advisors
G2 Capital Advisors provides M&A, capital markets and restructuring advisory services to the middle market. We offer integrated, multi-product and sector-focused services by pairing highly experienced C-level executives with specialist investment bankers. We aspire to be the trusted advisor of choice to our clients including corporations and institutional investors.
CONTACTS ON THIS DEAL:
Chris Casteleyn: Managing Director, T&L: T: 415.531.3138 E: [email protected]
Andrew Keleher: Director, T: 860.748.6480 E: [email protected]
Matt Ball: Sr. Associate: T: 978.914.4421 E: [email protected]
Noah Johnson: Sr. Analyst: T: 717.598.8558 E: [email protected]
A capacity crunch amidst high demand
A capacity crunch throughout the transportation, logistics and warehousing sectors continued through the end of 2021. Shifts in consumer spending, tight capacity, supply shortages and ongoing coronavirus threats have impacted how shippers and carriers do business.
Demand for goods and materials continues to outpace the supply needed to produce and transport goods from points of production to consumption. U.S. consumers have shifted their consumption habits from services to durables, driven by the pandemic and more time spent at home. Closely related is the trend toward faster and more frequent deliveries, which continues to spur growth in final mile.
We’ve highlighted some of the key themes that impacted the transportation & logistics industry in 2021 and where shippers and carriers have focused their efforts to combat the supply chain challenges and capitalize on the heightened demand.
G2 Capital Advisors (“G2”), a leading full-service financial advisory firm, is pleased to announce the promotion of Christopher Casteleyn to Managing Director. Since joining G2 in 2016 as a Vice President, Casteleyn has been instrumental in the growth of the platform bringing significant experience, dedication, and continued leadership to the firm.
During his 20-year career as an investment banker and advisor within the Transportation & Logistics space, Chris has advised business owners, shareholders, and C-level executives across every aspect of growth and value realization through mergers, acquisitions, divestiture transactions, as well as strategic assessments. His contributions have been vital to cultivating the success of our firm.
“We are thrilled to announce Chris as our newest Managing Director on the G2 team,” said Matt Konkle, President of G2 Capital Advisors. “He has worked tirelessly to scale the Transportation & Logistics practice, deliver for our clients, collaborate across the business, as well as attract, grow and develop our investment banking team. This promotion exemplifies G2’s commitment to growth and exceptional leadership positioning us to best serve our client’s needs. I look forward to watching Chris continue to grow and succeed on the G2 platform as he embarks on this next chapter with the firm.”
G2’s Transportation & Logistics practice supports founder/entrepreneur owned and private equity clients adapting to the ever-changing markets and industry dynamics. Our practice focuses on five core sub-sectors: final mile delivery, warehousing & fulfillment, freight brokerage, domestic transportation, and international logistics. Our clients benefit from leveraging G2’s C-level operational experience, market intelligence, and comprehensive understanding of our core industries in the pursuit of long-term growth & maximizing value.
Christopher holds a Masters in Business Administration from the University of Wisconsin-Madison with a specialization in Corporate Finance and Investment Banking. He graduated from the University of San Diego with a Bachelor’s Degree in Accounting as well as earning the Certified Public Accountant designation.