The new year has started with a bang with TFII's planned purchase of the LTL Freight division of UPS. TFII is a large Canadian freight transportation conglomerate and it's deal is unique in some ways but not in others.
The challenge for many Canadian LTL carriers has been to establish a solid arrangement with a profitable, reliable US LTL partner so they can jointly secure lucrative cross-border freight. Since the United States population is ten times the size of Canada’s, historically it has been financially difficult for a Canadian LTL carrier to purchase a major US LTL partner. Besides the cost, an acquisition of this nature only makes sense if the Canadian carrier is prepared to compete in the U.S. domestic LTL market.
As a result, most Canadian LTL carriers that have been interested in cross-border LTL freight, have formed partnerships with or more U.S. carriers. These partnerships typically last for a few years until one of the following things happen. The U.S. carrier decides to buy a Canadian carrier or cartage company in one or more Canadian cities and enter the market under their own banner. Alternatively, the one partner becomes frustrated with the other partner due to a lack of sales production. The carriers then must seek other partners or another group of partners as replacements. This partnership arrangement has been prevalent for decades.
A Brief History of Canadian Purchases of U.S. LTL Carriers
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