UPS has decided to get out of the less-than-truckload (LTL) business, and has sold its UPS Freight division to Canadian-based TFI International for $800 million. Back in 2005, UPS acquired Overnite Transportation (which would become UPS Freight) for $1.25 billion, which when adjusted for inflation would be approximately $1.7 billion in 2021 dollars. Putting it another way, UPS sold off the LTL business for about half of what it paid for it.
Carol Tomé, UPS’s CEO since June 2020, explained in a statement that the sell-off is part of the company’s “better not bigger” strategy, which involves divesting businesses that weren’t a good fit for the company’s current and future plans. The sale, she said, will allow UPS to be “more laser-focused” on the core parts of its business that drive the greatest value for its customers.
UPS Freight had revenues of $3 billion in 2020, which reportedly was breakeven in terms of operational performance. The newly acquired business will be renamed TForce Freight, and among the assets obtained by TFI are a network of nearly 200 facilities. As Alain Bédard, chairman, president and CEO of TFI explained, “TForce Freight will continue to serve UPS’s ongoing LTL distribution needs, and UPS will continue to provide freight volumes and other services to TForce Freight after the transaction for a base term of five years.”
The transaction is expected to close during the second quarter of 2021.
