Transport Companies Plot Paths to Initial Public Offerings
Transportation and logistics firms are reportedly working to overcome a roadblock to initial public offerings (IPOs).
These companies are considering IPOs after a stretch of cooling freight demand and a dearth of funding, The Wall Street Journal (WSJ) reported Tuesday (June 4).
“This year we’ve seen more IPO pitches in the transport space than the last few years combined,” Dan Howard, a managing director and head of North America transport at Goldman Sachs, said in the report.
These efforts are being fueled by companies owned by founders, families and private-equity firms that paused their sale and public listing plans in recent years as the freight cycle grew more hectic, per the report.
Buyers grew reluctant when revenues soared during the pandemic, and owners have grown more reluctant recently to sell as freight volumes and earnings have declined, driving down company valuations, the report said.
Bankers and advisers argue that tech-focused logistics companies aren’t great IPO candidates in the current climate, which favors companies that have a strong record and that can demonstrate profitability, according to the report.
Freight forwarder Flexport, for example, said last year it was putting its IPO plans on hold.
Instead, the best candidates to go public are firms whose specializations “have enabled them to outperform broader freight market trends,” said Keith Prusek, global joint head of logistics and transportation investment banking at Jefferies, per the report.
While logistics companies seek paydays on Wall Street, their drivers hope to get paid faster, according to the PYMNTS Intelligence research report “Generation Instant: How Truckers Use Instant Payments to Support Their Lifestyles.” The trucking sector is suffering from high turnover, in part because drivers are expected to supply their own trucks and handle out-of-pocket costs like fuel and maintenance, leaving them waiting to get reimbursed.
However, instant payments could deliver some relief, with the report showing that 40% of truck drivers now use instant payments to collect their income and earnings, and 93% of truckers would use instant payments to receive their earnings if given the option.
“Surveyed truckers cited quick access to money and convenience as key factors driving their preference for instant payments, with nearly half of them saying immediate access to funds helps them manage their finances,” PYMNTS wrote last month.
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