Issue #30: Monthly Digest – June
Coyote is being acquired by RXO as we approach the end of Q2.
We’re coming up on the end of the month and the end of Q2. Summer is finally here and things are getting hot in Chicago, both in terms of the temperatures (it’s been in the 90s!) and M&A, with RXO acquiring Coyote Logistics for just over $1B from UPS. And speaking of M&A, earlier this month, NFI acquired the brokerage unit of Transfix, narrowing the original field of “digital freight brokerages” down to Uber Freight and Loadsmart.
Back in February, I wrote “Issue #11: The Freight Industry is Changing” about the fact that every brokerage was becoming digitized. Everyone is investing in technology, whether it’s something they built from scratch, something they bought and customized, or they’re using an off-the-shelf TMS. There’s something for most people, although I stand by the fact that most TMSs don’t support Mexico the right way (and no, this is not a lead-up to a story about building a Mexico-focused TMS).
It’s becoming increasingly clear that you have to pick a path: you can either be a technology company or a service provider (aka logistics company). It’s way too expensive to try doing both unless you’re one of the big guys and have the cash to invest. And even at that size, is your core competency running a profitable brokerage or building software? You can’t be great at both, they’re just too different.
With how things are evolving, and a lot of people realizing that you can build a more valuable standalone software company than you can trying to build software and eat the service providers at the same time, I’m curious where we’ll see Uber Freight and Loadsmart long-term. Uber Freight manages so much volume that I believe we could eventually see them spun out as a standalone business. However, Uber is all about the movement of people and goods, why wouldn’t moving freight be part of that concept?
RXO + Coyote thoughts
RXO (#7) acquiring Coyote (#4) will position the combined brokerage as the third largest in the industry. Coyote has built a long-enduring contract-heavy brokerage business that lasted through every major freight cycle over the last eighteen years. It endured the UPS acquisition and mix of cultures. Yet somehow, there are still people there who I remember working with as far back as 2007 when I was an intern.
Unlike when UPS acquired Coyote but kept it as a separate entity, I imagine RXO is going to fully integrate the business, across every single aspect. It won’t be long before we no longer see the Coyote logo on the Green Exchange from the highway, sitting in non-stop traffic on the way to downtown Chicago. There is likely a ton of everyone’s least favorite M&A term, “synergy”, as these two companies are eventually fully integrated. The combination of those two networks and customer bases with Drew Wilkerson leading the charge and with RXO's newer tech is going to make a big difference.
Mexico Market Update
Last week, Tropical Storm Alberto took quite a toll on the highway between Monterrey NLE and Nuevo Laredo TAM, impacting capacity and rates out of northern Mexico temporarily.
Produce season has been calmer than expected, with continued availability in Mexico from refrigerated carriers in the market.
Dry van volume out of Mexico continues to climb, creating more demand out of Mexico for door-to-door capacity.
Cargado Update
We’re inching (sprinting?) closer and closer to sharing more about what we’re building at Cargado. We have some of our own internal milestones, mostly product-related, that we want to accomplish before we feel comfortable sharing more. I say sprinting because it’s felt like a sprint since Day One but we have no intention of slowing down.
If you’re actively moving cross-border freight or want to expand into it but aren’t using Cargado yet, you’re falling behind the teams who are leveraging our software. I’ve seen most brokers pay for their seats within the first few days of using our platform and love seeing people win because of our technology. Reach out and I’ll do the demo myself!
Hiring
We’re hiring for two critical roles, Software Engineers and Border Partnership Managers. The software engineering roles are open to anyone in North America (no overseas, no agencies please) and the Border Partnership Manager roles are open in nearly every border city, including San Diego, Calexico, Nogales, Pharr/McAllen, and Brownsville, along with the corresponding Mexican border cities. Please apply online or reach out if you have any questions!
Upcoming Travel
Are you based in a border city? If you are, chances are that I’ll be in your town sooner than later. I’m writing this newsletter as I get ready to head to Laredo today with the newest team members from Cargado. We want to get every new hire to Laredo sooner than later so they can experience the epicenter of cross-border freight, where 40% of all cross-border shipments move on a daily basis.
We’ll also be attending a few events in border cities coming up:
7th Annual Reliance Partners' Modernization of Cross Border Trade (Laredo, TX) on 8/6/2024
8th Annual LMCA Golf Classic (Laredo, TX) on 9/6/2024
8th Annual MVT Charity Golf Tournament (El Paso, TX) on 10/4/2024
If you’re going to be attending, send me a note and we can meet up at these events!