Sunteck Transport Group and TTS LLC said today they have merged to form a nearly $1 billion a year third-party logistics (3PL) provider controlling nearly 2,000 trucks and managing more than 700,000 customer shipments annually. Terms of the transaction were not disclosed.
The new entity, to be known as Sunteck TTS, combines companies that each rely on a network of agents, rather than company employees, to sell and service accounts. Each company has 100 agents. Truckload carrier Landstar System Inc., based in Jacksonville, is the most well known example of the agent model in transportation. Sunteck and TTS compete with Landstar's brokerage unit, as well as with all other traditional brokers.
Sunteck TTS will be based in Jacksonville, Sunteck's current headquarters. TTS is based in Dallas. Sunteck CEO Ken Forster will become the merged company's president and CEO. Andy Cole, TTS's president and CEO, will become chairman. The deal is expected to close within the next 30 days, the companies said.
The combined company will have an annual gross revenue—or revenue before the costs of purchased transportation—of between $900 million and $1 billion. In a phone interview today, the executives declined to disclose "net revenues," which are revenues after the costs of purchased transportation, other than to say that number was meaningful.
In the interview, Messrs. Forster and Cole said a merger made sense because the two companies already have similar operating models and are about the same size. The firms will likely combine IT and back-office operations, they said.
TTS has significant intermodal exposure, while Sunteck's intermodal business is relatively limited. Sunteck focuses on small to mid-size businesses, while TTS' customer base skews toward larger companies, the executives said. Sunteck has a strong drayage component that TTS can leverage when selling intermodal services, according to the executives. Sunteck is stronger east of the Mississippi, while TTS has a deeper footprint in Texas and in the western region.
The ace in the hole, according to the executives, will be the merged companies' "asset-light" fleet, where the firm controls the equipment's utilization but does not own the assets or employ company drivers. No other pure broker is able to bring truck assets to the table, and that will give the combined entity an edge in the event that truck capacity tightens and customers need access to wheels, they said.