At the beginning of October, we attended the Memphis World Trade Club’s annual Memphis Logistics Summit. In conjunction with the New Orleans Port Night, the Memphis Logistics Summit gathers players from a wide cross section of the transportation industry to discuss the industry, current events, and new technology. The Summit began on October 2nd and the schedule was filled with excellent panels and speakers. The space between sessions was filled, of course, with discussions of the ILA strike and how it was impacting different aspects of the transportation world.
The ILA Strike
The 50,000 workers covered by the strike handle between 40% and 50% of all U.S. imports. Negotiations between the ILA and the U.S. Maritime Alliance (USMX) were in troubled waters by June 2024, with the two sides disagreeing about contractual raises and rules for port automation. The shipping industry was wary of a full strike beginning in the middle of peak season, and many shippers took action to move cargo to alternate ports or shift to off-port storage locations in advance of the expected strike.
The strike was suspended on October 4th – in time for the New Orleans Port Night Gala. The contract negotiations were not fully resolved – the ILA is working under a contract that runs through January 15, 2025 — but the ILA and the USMX have gotten considerably closer in negotiations than they were on September 30. There is a good chance that the industry will have to prepare for East Cost Strike, Part 2 following the Christmas season.
Industry Data Implications
Valuation multiples rose to stratospheric levels and do not fully reflect ongoing valuations of companies. We have presented the guideline public data as usual, but we note that is it not as reliable as in other time periods. You may also notice some differences in the transaction overview section of this newsletter. With only 30 acquisitions reported by publicly traded companies during the third quarter and no valuation data available from those transactions, we elected to present summary data from an alternate source. We have long used GF Data® to review PE sponsored middle market transactions. While the presentation of the data does not allow analysis on a transaction-by-transaction basis, the aggregate data can be used identify trends based on time period, company size, and industry. We hope you enjoy this quarter’s edition of the Transportation and Logistics newsletter. As always, feel free to reach out to us to discuss any valuation questions you may have in confidence.
Originally published in Mercer Capital's Transportation & Logistics Newsletter: Third Quarter 2024