Chris Wofford, founder and managing partner at Wofford Advisors, describes the current state of mergers and acquisitions in transportation and logistics, and what that says about the condition of the economy.

Transportation and logistics provide the connectivity between product origin and consumption, and as such are an early indicator of how the economy is trending, Wofford says. M&A, by contrast, is viewed as a lagging indicator, dependent on such economic factors as inflation, interest rates and the lending environment, which together govern valuation and the pace of deals.

The industry displayed some confidence just prior to the advent of the second Trump administration, as seen in deals such as the selloff of Coyote Logistics by UPS to RXO. That gave a “shot in the arm” to the ground freight market, and caused other companies to begin interviewing investment banks about prospects for their own deals. Then came the heating up of the U.S.-China trade war, Trump’s threat to impose widescale tariffs, and upheaval in the government employment sector — all of which created significant volatility in markets, and put many acquisition deals on hold. “You don’t want to buy if you don’t know what next year looks like,” Wofford says.

Ground freight providers found themselves saddled with excess capacity, which they had introduced during the COVID-19 pandemic in response to a surge in consumer demand. As a result, pricing suffered. The warehouse logistics sector, on the other hand, has proved more stable, with demand staying steady and providers not flooding the market with new capacity.

M&A activity in transportation and logistics also differs depending on whether deals were funded by private equity or public investment. In the case of the first, equity providers are holding off on selling their businesses until the supply-demand balance corrects. On the public dealmaking side, Wofford believes deals will continue for now “at a moderate pace. It’s going to depend on the macro environment,” he says. “We’re holding our breath.”