Business & Investment

How software enables industry integration

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With the proliferation of acquisitions, the truck industry has become more integrated and software has made much of it possible.

“In my opinion, more and more carriers are getting access to the software and running bigger and better tracklines,” Lee A. Clair, managing partner of Transportation and Logistics Advisors, told Transport Topics. I did. Easy funding is available so you can add more and grow to your fleet. As a result, many rollups are taking place and there are many opportunities for light truck routes to reach larger ones. “

Claire said it would result in carrier specialization. This allows you to do bigger things and do better, such as improving back office management in a cost-effective way. He said the other side is that more companies understand how to drive the economic end of growth, which is driving strategic moves. This is consistent with the availability of capital and financing in the current environment.

Claire

“There are companies that are bigger and know how to do this, and then how to bring the two companies together to reduce back office costs, internalize and reduce backhaul mediation,” Claire said. I am. “Just do something to create value.”

John Anderson, operating partner of the Greenbriar Equity Group, said it would be useful to think of software or systems in two ways. The first is software that supports career businesses such as transportation management systems, back office, accounting, and recruitment. The other is logistics and market-oriented software that helps you manage the commercial parts of your business, such as load acquisition, load fulfillment, billing, and price discovery.

Jon Anderson

Anderson

“You had truck operating software for years, and it’s more sophisticated,” Anderson told TT. “There is a new entrance, you have [software-as-a-service]-Type operations. There is cloud operation. They are priced down for smaller carriers. I don’t think it will have much impact on the M & A market in terms of increasing potential. “

Anderson says that just because they have these systems, they have been around for some time and everyone already has them, so small carriers can easily merge or acquire. He added that it was not the case.

“I couldn’t do M & A without it,” Anderson said. “But everyone has it anyway, so it’s necessary, but it wasn’t a real contributor to change. For other types of software: truck mediation, optimization, price discovery. I think it’s what we call connected commercial and market-based software. Then we start AI. That’s where you are for me. We’ve seen the fastest growth in the last five years. , A much more effective factor for companies to consider M & A. “

Anderson does not see software as a central driver for truck mergers and acquisitions, enabling more important factors such as economies of scale, customer diversity, and the pursuit of more efficient capabilities. I think it was useful for.

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“I don’t think that’s the only way companies can enter the more sophisticated areas of supply chains, logistics and real mediation,” Anderson said. “So I can see the effect, so I think it could have an impact on the M & A market in the surroundings. It raises the possibility. But it leads to a lot of M & A activities. I don’t think it’s one of the main drivers. “

Anderson, on the flip side, pointed out how software can help make carriers more desirable to buyers. It is more valuable to mean a carrier with a properly integrated and running system. But still, he said, it’s still not the main impetus.

“Do buyers want to buy a company that doesn’t have good software?” Anderson said. “No, it obviously helps to make the enterprise more attractive. The better the system and software, the better the usage in the enterprise, the more value the enterprise can get.

“But on the other hand, some buyers see companies that don’t have the best cutting-edge software and find it a bargain for us.”

Anderson added that these buyers are likely to think they can get such carriers at a lower price and later add better software and systems.

“I will always see it from the buyer side,” Anderson said. “Do they have a good system? Are they well integrated with each other? Will they add value to pricing, flexibility, and more business acquisition?”

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How software enables industry integration

https://www.ttnews.com/articles/how-software-helps-enable-industry-consolidation How software enables industry integration

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