RXO Acquires Coyote Logistics, Becoming Third-Largest Freight Broker in North America

In a major move reshaping the logistics industry, RXO has completed its acquisition of Coyote Logistics from UPS, cementing its position as the third-largest freight broker in North America. The $1.025 billion deal not only bolsters RXO’s market share but also provides significant growth opportunities by enhancing its lane density, adding new power lanes, and expanding its presence in the food and beverage sector.

With this acquisition, RXO’s annual revenue skyrockets to $7 billion, creating a robust network of 150,000 carriers. The deal strategically benefits both companies as it introduces minimal customer overlap; Coyote primarily serves large carriers and private fleets, while RXO’s network is rooted in smaller carriers and segments such as retail, e-commerce, and manufacturing.

RXO CEO Drew Wilkerson emphasized the advantages of acquiring a scaled asset like Coyote at a strategic point in the market cycle. Speaking at a Morgan Stanley conference, he highlighted potential cost reductions from the combined entities’ $5 billion to $6 billion in transportation expenses, in addition to $25 million in synergies announced earlier in the year.

This acquisition is part of RXO’s broader expansion strategy, following UPS’s decision to divest non-core assets under its “better not bigger” philosophy, a shift that began under CEO Carol Tomé. UPS originally acquired Coyote in 2015 for $1.8 billion but is now focusing primarily on its core parcel business.

As the newly enlarged RXO integrates Coyote, it promises enhanced capacity and more freight options for carriers, positioning itself for long-term growth and market dominance.

Financial Desk