Airline Pilot Central Forums - FedEx Corporation

Memphis newspaper carried this article today.

FedEx Corp. is buying Watkins Motor Lines -- the largest privately run less-than-truckload carrier in the nation -- and the best ticket it has for bulking up in a market showing impressive gains. Neither FedEx or Watkins would confirm details, but sources say FedEx will announce the acquisition -- internally dubbed "Convoy" -- as early as June 1. Analysts say the price could range up to $1 billion.
Watkins, about a third the size of FedEx Freight, gives the division 139 terminals, 10,000 employees and trailers, 3,400 tractors and all its customers across its North American network. "If the deal does take place, Watkins gives FedEx the ability to build density and do long haul, which is where Watkins is strongest," said Satish Jindel, transportation analyst in Pittsburgh.
The buy would also give FedEx Freight seamless services into Mexico and Canada -- which it now serves through contractors -- and a truckload division. Last year, Watkins' revenue exceeded $1 billion, up more than 7 percent from 2004. "Most of FedEx Freight's business is one-, two- or three-day. But in the last few years, customers have been wanting them to do longer-haul stuff," said Art Hatfield, Morgan Keegan analyst. "Watkins is more set up for long-haul distances."
The less-than-truckload (LTL) leader is YRC Worldwide -- formerly Yellow Freight Corp. -- which controls about 30 percent of the roughly $35 billion LTL market. No. 2 and No. 3 are Con-Way and FedEx Freight. The acquisition would move FedEx Freight firmly to the No. 2 spot.
Watkins is part of Watkins Industries, which includes SunCo Carriers Inc., an LTL with refrigerated trailers; Watkins Canada Express Inc., Land Span, the truckload line; and Highway Transport Inc., a line of tanker trucks. Family-owned Watkins, based in Lakeland, Fla., has emerged as one of the nation's 10 largest LTL carriers in a period of intense carrier consolidation. And just as attractive to FedEx is the fact that Watkins is a nonunion carrier, one of a small handful of LTLs -- with origins mostly in the South -- "that has survived as nonunion companies," said Dick Armstrong, principal in Armstrong Associates in Stoughton, Wis.
UPS didn't have an LTL carrier until it bought Overnite in 2005 to get into the game.. "So far, Overnite has not done for UPS what FedEx Freight did for FedEx."