Yellow Roadway Buys USF for $1.37 Billion
By Margo McCall -- Tradeshow Week, 3/14/2005
The line was already blurring between regional transportation companies that focus on speed and national operators that charge less for longer delivery times. But with Yellow Roadway's $1.37 billion acquisition of USF, the line could blur even further.
Once Yellow Roadway's merger with Chicago-based USF is completed, 29 percent of its business will be next-day service, another 29 percent second-day service, 23 percent third-day service and the remainder beyond that timeframe.
"It's a very good fit from a service portfolio standpoint," Yellow Roadway CEO Bill Zollars said during a conference call with analysts, adding that it will enable the company to "compete with anybody in the transportation business."
The acquisition comes less than two years after Yellow purchased Roadway, a fellow less-than-truckload carrier. Consolidated Freightways, another LTL carrier, closed its doors several months before that.
As with Roadway in the previous merger, company officials plan to continue to operate the USF brand. "We are not going to touch the customer interface," Zollars said. "There will be no change from a customer perspective."
Despite the burst of consolidation, there's still no shortage of transportation companies. In addition to large companies like Yellow Roadway, for which tradeshows represent only a portion of their business, the industry supports a number of transportation companies that specifically target exhibit transportation.
Michael Bandy, president of the Trade Show Exhibitors Assn., said he has no immediate worries about the pending merger. "Yellow and Roadway have certainly handled their merger very well," he said. "We've had no complaints from members. I would assume if they handle this merger in the same way, they'll be fine."
Mike Rosso, Freeman director of exhibit transportation, agreed. "As with Yellow Freight and Roadway Express, USF will operate independently, thereby maintaining their brand equity within the markets they serve," he said.
In today's environment, Bandy cautioned, exhibitors could balk if rates suddenly increase. "Everyone's aware that it's very competitive right now and exhibitors are really taking a look at what they're sending to shows. There are still a lot of choices," he said.
For smaller competitors, there's still apparently enough transportation business to go around, even in light of the trend toward lighter exhibits.
Tom Beard, vice president of marketing and sales for Champion Logistics Group, said his company's 2004 sales were up over 2003. "We don't see it affecting us in the near term. If USF was highly visible in marshaling yards and convention centers, it would be something we'd worry about more," he said.
According to ELITeXPO President David Mihalik, his company had its best year in 2004. A bigger worry than industry consolidation, he said, is exhibit-design companies going out of business and leaving transportation companies owed thousands.
Mihalik said his company's strategy of specifically targeting tradeshows has its advantages. "There are certainly a lot of people who want to move tradeshow freight, and while we all can move freight, it's how well we manage to get in and out of the tradeshow hall (that's important)," he said.
With the distinctions blurring between LTL and next-day regional carriers, what's important now, said Mihalik, are factors such as accountability, guaranteed service levels and tracking technology. "One tradeshow shipment goes bad and the marketing department screams," he said.
The merger, which must still pass antitrust scrutiny, is scheduled to close this summer.
