Heavy Duty Trucking, March 2020

Hotlinenews TRUCKINGS MOST RESPECTED BUSINESS REPORT Brokers and logistics The operating environment for brokers deteriorated in the fourth quarter as lower spot rates resulted in a revenue decline of 124 despite shipment levels only 29 lower implying continued double digit yield declines The spot rates also helped companies reduce purchased transportation expense by 95 but that still resulted in a decline in overall net revenue margins and 28 percentage points in lower operating profit margins Net takeaway Overall fourth quarter results for most freight companies were worse than expected largely the result of a slower than expected December Some companies attribute the weakness to the holiday timing At press time January had shown the industry some potential green shoots from a volume perspective However the impact of the Coronavirus could be a weaker thanexpected March volume ramp up as ships are not leaving Chinese ports as frequently full of goods for U S consumers that must be transported when they reach the U S The greatest incremental deterioration will likely be in over the road truckload realized pricing as some shippers have been under shipping contractual freight in order to make greater use of spot truck markets This also caused lower thanexpected revenues in much of the brokerage space The inventory overhang on truckers will probably remain through the spring with capital expenditure and hiring plans likely to continue to moderate as margins continue to deteriorate Traton makes bid to acquire Navistar N ews broke late Jan 30 that Volkswagens global truck unit Traton SE was finally making its long anticipated bid to fully acquire all stock holdings of Navistar International Since 2016 Volkswagen through subsidiary Traton has acquired a nearly 17 stake in Navistar Now the company has made an unsolicited bid to acquire the remaining Navistar stake for 35 a share representing a 45 premium on the companys closing price of 2407 a share on Jan 30 according to a report in the Wall Street Journal This would put Navistars total valuation at 35 billion WSJ added Shares in Navistar rose 51 in after hours trading Traton was formed in 2018 out of Volkswagens Truck and Bus Group in order to spearhead the German automakers push to become a major player in the global commercial vehicle market That bid included establishing a presence in North America the worlds highest volume commercial vehicle market To further that goal Volkswagen had already developed a close relationship with Navistar in 2016 announcing a strategic alliance that included various research and development projects That alliance has helped lead to Navistar introducing a version of Volkswagen truck brand MANs diesel engine as the International A26 engine for International Class 8 trucks and more recently a prototype electric medium duty truck In a press statement Traton said that as the global commercial vehicle industry continues to evolve it believes that the proposed transaction is the logical next step to build on that alliance Traton said the combined company would be better able to meet the demands of new regulations and rapidly developing technologies in connectivity propulsion and autonomous driving Combining Tratons leading position in the European and South American markets with Navistars presence in North America would create a leader with global reach and complementary capabilities it said Navistar issued a news release confirming the news of the offer saying it would carefully review and evaluate the proposal and advised its shareholders to take no action at this time A report in Barrons noted that one stumbling block could be the need to win over Navistars largest shareholder Carl Icahn whose fund controls 169 of Navistars shares Jeffrey Kauffman managing director for Loop Capital and a Navistar shareholder told HDT in a statement that the Traton offer feels light We believe the unsolicited proposal by Traton SE to take over the remaining 832 of the company that it doesnt own is inadequate Jack Roberts Since 2016 Volkswagen through subsidiary Traton has acquired a nearly 17 stake in Navistar The company has made an unsolicited bid to acquire the remaining Navistar stake for 35 a share HDT MARCH 2020 20 WWW TRUCKINGINFO COM PHOTO TRATON