Acquisition of Panther II

muleteam1 · Jun 13, 2005

Somehow,I see,we got completely off of PantherII andbegan a debate as to whether or not fed x was good for Roberts..On that issue,please remember that the the very next year after the merger we slid into a recession that put a lot of folks out of work and many blamed FedX over hiring practices (Including Financial Institutions) for their demise..Tisch-Tisch business is business..
I believe that the merger of PantherII by Fenway could go either way.
Fenway is making a very agressive move into the transportation industry.This could be very good for Panther drivers in the west.As you all know,delivering in the north west is kind of being asked whether you want to be hung or shot by firing squad.Fenway has a strong presence in the west.There's pro's and cons to the merger,but worrying yourself now? seems as though you have a choice in this merger..Which you do not!! Give the merger time to prove itself..
I was with North American when C.D.& R. took them over..It took 4 years to completely fail.They lasted as long as the statistics dictated they would. You've plenty of time to concern yourself.I would'nt expect a major change for at least a year,one way or the other.. Good luck and I wish the best comes from this for all concerned..

muleteam1

ATeam · Jun 15, 2005

The following is pure speculation. As with any speculation, it could easily prove to be wrong, and I'll be the first to admit it if it does. Nevertheless, the Fenway Partners purchase of Panther II presents an interesting set of dots to connect.

1. Prior to the Fenway purchase, Panther II has increased it's fleet 33% in just over a year, from 900 to 1,200 units.

Source: Fenway Partners June 13, 2005 press release http://www.fenwaypartners.com/news_f.html (states 1,200 units), and EO's Panther II profile, http://www.expeditersonline.com/cgi-bin/artman/exec/view.cgi/1/103/printer (states 900 units

Did Panther II increase it's fleet solely due to market demand, or was the upcoming Fenway purchase also a factor? A larger fleet may have been more attractive to Fenway and may have fetched a higher price.

2. The same Fenway press release states, " Panther is the latest of six acquisitions by Fenway in the transportation and logistics sector. The firm's largest transportation and logistics platform, Transport Industries Holdings Inc., is comprised of three primary businesses: Transport Industries, a leading provider of dedicated contract carriage services to the food, beverage & retail segments; Total Distribution, a full-service warehousing and logistics provider with a presence throughout the Western U.S.; and American Trans-Freight, the fifth-largest non-asset based truckload carrier with attractive one-way transportation service capabilities. TIH is one of the largest private third party logistics providers in North America."

3. Fenway Partners is not a trucking company. It is an investment company. While it's common for trucking companies to purchase other trucking companies (Yellow-Roadway buys USF, Swift buys M.S. Carriers, etc.), when an investment company buys a trucking company, it is fair to assume the investment company has something more on its mind than generating profits by transporting freight.

4. The Fenway game plan described on Fenway's web site states, " Fenway's investment strategy is to sponsor companies with leading franchises that offer significant opportunities for value creation through growth and improvements in operating performance."

It is important to ask, for who is the value being created? In the case of an investment company, the answer is easy. Fenway seeks to create value for the investors that contributed money to Fenway's investment funds. In other words, Fenway exists to create value (wealth, a positive return on invested funds) for it's investors.

5. Two of the most successful brands and business models in the transportation industry today are Landstar and FedEx.

6. If, in a hypothetical exercise, you brand all of Fenway's transportation holdings with the same name and establish a leadership hierarchy among them, that new company has a lot in common with Landstar and FedEx, and is well positioned to compete.

7. A new company emerging in this way would be very attractive to other players in the transportation industry such as UPS or DHL, and others that have the market leaders in their sights. The acquisition of such a Fenway-created battle-ready group would give the acquiring companiy a big and nearly-instant boost in their ongoing contest for transportation market share and profitability. Hypothetically, Fenway could sell the branded transportation company it built and deliver a handsome profit to its investors.

Again, this is pure speculation based on nothing more than personal observation. The scenario could turn out to be totally wrong.

However, if it is right, it is good news, I believe, for independent contractor expediters. In the above scenario the big players will continue to want what we have; trucks owned by independent contractors and good people to drive them.

As the unexpected acquisition of Panther II by an investment company shows, ours is a dynamic industry. Wise expediters with all carriers will have plans in place to change carriers and/or their business models on a moment's notice. Doing so will help them "keep on trucking" and do so profitably.

Suggestion: Create and maintain ongoing relationships with recruiters of two carriers other than your own. Stay current with the other carriers' contract terms and business activities. Talk to your "Plan B and Plan C" carrier recruiters every 3 or 6 months just to touch base. You never know when you might need to make a quick move. If you do, you'll want to be in line ahead of the rush if others start moving too. If you are so inclined, your personal Plan B and Plan C might include getting your own authority or being a fleet owner that runs trucks with multiple carriers.

Personally, my wife and I are very happy at FedEx CC. We'd love nothing more than to run for a decade or two with them as we're running now. But we live with the knowledge that - like Panther II - FedEx CC could go into play at any time. Consequently, while we have no desire to move, we have our Plans B and C just in case.

Finally, this is not by any means to suggest that people should leave Panther II. It could well be that Panther II expediters will be better off than ever a year from now. Only time will tell. Regardless, it's always wise to keep your ear to the ground and your options open.

kg · Jun 15, 2005

interesting hypothisis, but since this is just a holding company buying panther it may just be a case of buy low sell high.

that is the industry as a whole is slow but they look for improvement down
the line to make a profit. simple as that.

just speculation,it's fun sometimes.

samison · Jun 16, 2005

I am a past driver for Express-1. Maybe the Semi and Straight trucks got a raise but the Sprinters and cargo vans didn't. Segmentz are going with a Master Contract Accounts and that pays $.70 for loads under 2000 # but not necessary true. It is at their descretion. And supposely $1.00 for a 12foot rate or loads over 2000#. But guess what most of the loads are $.70. Seems that everyone is on the Master Contract list. Their regular rates are $.80 for loads under 2000# and $1.05 for loads over 2000#.

Express-1 is only a name now. The way it was before is not how Segmentz is doing it. I say that when the Welsh's are gone the company will be not different than the Bolt or the rest of them. The rate to them are the same as before but the O/O is the one that is suffering.

The o/o can not survive at running freight for $.70 maybe for a few years but when they have major items go wrong with their equipment they will not survive. Again it is greed. These companies expect O/O to buy good equipment but do not want to compensate the driver for their investment.

When Segmentz put their people in with Express-1's people you sure can tell the difference. They are greed all the way. You can hear it as they speak an talk to the o/o.

O/O that carrying cheap freight for these companies will see that in the future you will only get cheap loads. They are counting on the o/o being dump and ruining their expensive equipment for a company that doesn't care.

Yes their are plently of want to be expeditors out there but can they have the respect that the older o/o have. I don't think so. Can they afford to buy expensive equipment and keep it up not on cheap rate freight? Why do you think that the o/o is putting out all the expense if $.70 freight would be profitable for the expedit companies don't you think that they would have the equipment for the driver to drive? Sure but they know that they can't possible keep up the equipment and pay the driver a descent rate to drive for them. All the expense is on the driver therefore they can hire a driver and if he quits then hire 10 more and maybe 1 will work. These companies get paid to hire people and hold orientation this is given to them for creating jobs even it it is not a job that will profit the driver.

samison

bryan · Jun 16, 2005

Hi
My 2 cents: 1,Panther got to big to quick and their system couldn't keep up with their growth.2,to many 3rd party fingers in the pot so they can no longer afford to pay o/o under old contracts{$.90 for some vans compared to $.77 for higher unit #'s} look for new contract to come in the mail.
Can not see an increase in volume of freight as their are two many players in this game now and most expedited freight is handled by 3rd party logistic companies. Alot of van freight is being put on common carriers to get them back into regular freight areas.{One World Log. hauling 1 pallet from Laredo to Alliston on a 53' trailor} because their normal return load wasn't available and he was either going to come back mt or haul at a discounted rate. He has to be back in Alliston to continue his milk run.
7years ago revenue was divided 2 ways carrier and 0/0. Today revenue is divided by logistics company, carrier, investment co. and then o/o.
As you can see we are falling down in the food chain.So even if rates increase our revenue will not.Yes logistic companies improved the industry as no one company could have a truck to cover every load and the customer would have to keep calling carriers till they found one.And now all they have to do is call one logistics co and they can look through a long list of carriers to find a truck. Thus less bouncing for the o/o but less money.
On the bright side an influx of money could help P2 improve operations and become their own logistics company. Thus eliminating the outside log.co. We would have more freight and would make the same money. Maybe free up the phones a little bit. Long 2 cents .
Thanks have good one