Proving the Business Case for the Internet of Things

UPS plans $1.8bn takeover of Coyote Logistics

Reuters and Steve Rogerson
July 29, 2015
 
Package delivery company United Parcel Service (UPS) is in talks to buy Chicago-based Coyote Logistics for at least $1.8bn, a source familiar with negotiations said last week. The move would give UPS access to Coyote’s home-built logistics technologies.
 
According to the source, Coyote is backed by Warburg Pincus, the New York-based private equity firm, which may instead opt for an initial public offering as a way to sell its stake in the transportation logistics services provider.
 
The source was unauthorised to talk publicly about the deal, which was first reported by Bloomberg.
 
Representatives of Atlanta-based UPS and Warburg Pincus declined to comment, while Coyote Logistics could not immediately be reached for comment.
 
Coyote coordinates the movement of freight across North America for around 40,000 shippers of all sizes and a variety of industries including consumer goods, industrial goods, retail and healthcare. It prides itself on designing and building its own logistics technology rather than buying it in.
 
The technologies, which it customises to customers’ needs, include capacity development and predictive modelling; collaborative planning and execution; mode optimisation and execution; real-time load tracking; real-time metrics; and customisable benchmark-based reporting.
 
Coyote’s technology is focused around each user’s role and relationships. Carriers can track payment schedules and search for loads. Customers can view load statuses and read tracking updates. The intelligent technology presents valuable and relevant data for each interaction. Carriers are notified of opportunities that fit their network, and can provide feedback on the quality of opportunities, thereby allowing the system to refine its rules engine. The technology allows automation of routine tasks for both internal and external users. Customers can create nuanced rules for routing guide management that avoid manual intervention. Carriers can create nuanced rules for load acceptance, eliminating significant manual work.
 
The company also has a mobile app – Coyote Go – that lets drivers check in, view load details, send updates, and submit PoD and BoL photos with one touch.
 
The company had revenue of around $2bn last year.
 
If it goes through, this will be the third largest logistics acquisition this year.
 
In April, UPS's main rival FedEx announced a tentative deal to buy Dutch delivery service company TNT Express for €4.4bn. European regulators blocked a 2013 takeover of TNT by UPS due to concerns it would stifle competition. But analysts and executives have said FedEx, with its strong air fleet, would complement TNT's sizeable European road network and not pose any threat to competition.
 
In June, FedEx asked the European Union's competition regulator to approve its bid for TNT.
 
And XPO Logistics is in the process of acquiring Norbert Dentressangle for $3.5bn.
 
• UPS is making collision mitigation technology standard equipment on every new class eight tractor the company orders. Each of the more than 2600 classeight8 tractors that UPS takes delivery of in 2015 will feature this accident mitigation technology, which alerts drivers to moving and stationary objects in front of the tractor and moving objects surrounding the vehicle.
 
“Safety is of the utmost importance to UPS,” said Randy Stashick, president of engineering for UPS. “We’re investing in technology that provides UPS drivers with opportunities to increase visibility of their surroundings in constantly changing environments. The safety benefits of these technologies make incorporating them into UPS’s fleet the right thing to do for our employees and fellow motorists.”
 
The collision mitigation systems feature lane departure warnings, electronic stability control,and anti-lock air disc brakes. Stability control monitors the tractor trailer’s motions and, especially during turns and slick conditions, automatically distributes braking power to each wheel for a more precise control.
 
“Collision mitigation systems make good drivers even better,” said Paul Savill, UPS freight driver and a captain for the American Trucking Association’s America’s Road team. “Traffic conditions can change quickly as other vehicles change lanes. These technologies are an excellent complement to safe driving techniques.”