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September 19, 2016 1:45 AM, EDT

CRST Buys Gardner to Broaden Services

Russ MacNeil

This story appears in the Sept. 19 print edition of Transport Topics.

CRST International Inc. last week announced it has acquired Gardner Trucking Inc., the largest trucking acquisition announced so far in 2016, a move that lets CRST broaden its service offerings.

The transaction adds regional trucking, warehousing and drayage services, and could allow CRST to reach its $2 billion annual revenue goal as early as next year, CEO Dave Rusch told Transport Topics on Sept. 13.

Terms of the deal weren’t disclosed.

“The acquisition of Gardner Trucking further complements CRST’s service offerings,” Rusch said. “We do a lot of longhaul in our other businesses, and customers have been asking us about the regional market.”

With annual revenue of about $400 million, Gardner, based in Ontario, California, is the fifth acquisition by CRST in the past five years, expanding the Cedar Rapids, Iowa-based buyer’s revenue base by about 30%.

The acquisition was the largest in 2016, as measured by the seller’s revenue — more than double the size of truckload specialist Schneider’s June acquisition of Watkins & Shepard Trucking Inc.

CRST’s move was designed to fill company-specific needs and doesn’t appear to be a signal of stronger activity in the truckload sector, John Anderson, advisory director at Greenbriar Equity Group, a private equity company, told TT last week.

Gardner is California’s largest truckload carrier, whose offering include specialized equipment to serve makers of plastic and metal containers, said the statement from CRST, No. 24 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.

Gardner’s customers include the paper, packaging, and food and beverage businesses. It runs 2,400 trucks and has 500 nondriving employees, using offices in California, Oregon, Washington, Arizona and Texas.

Rusch said that the regional van business operated by Gardner will be “a steppingstone” toward expanding into new markets. Gardner recently established Phoenix and Dallas area offices. A new service location east of the Mississippi River could be opened next year, Rusch said, since Gardner’s customers also have been pressing for a broader national presence.

Another expected benefit, Rusch said, is the ability to retain drivers from CRST’s team operations, where typical assignments require three consecutive weeks on the road before returning home.

“A lot of drivers come to us and say, ‘I like you guys, but I am tired of the team environment,” Rusch said. “If a driver gets tired of that kind of assignment, instead of losing him, we now can move him into regional.”

Tom Lanting, previous owner and president of Gardner Trucking, will continue as president of the company founded by his family in 1989.

Rusch also noted that adding Gardner enhances CRST’s market positioning as the most diversified truckload company, with offerings that include flatbed and expedited, creating the ability to offer a broader spectrum of services to new and existing customers.

CRST’s previous acquisitions since 2011 are Specialized Transportation Inc., North American Van Lines’ specialized division, BESL Transfer Co. and Pegasus Transportation.

“The [mergers and acquisitions] market for asset-based deals has not been as active in recent years as non-asset-based deals, but it is still a very relevant strategy for strategic buyers,” said Matt Schickel, a vice president at investment banker EVE Partners.

Anderson said that the truckload business is less active than other transportation and logistics sectors because it’s not directly connected to fast-growing e-commerce that is transforming package, local delivery and to some extent less-than-truckload companies. Schneider, No. 7 on the for-hire TT100, cited e-commerce as a reason for buying Watkins & Shepard.

However, there still is interest in truckload acquisitions, as shown by No. 10 carrier TransForce Inc.’s stated desire to purchase a U.S. fleet with between 1,000 and 3,000 trucks.

Third-party logistics acquisitions also continue to be active, Anderson said. A recent move was the $225 million purchase by C.H. Robinson Worldwide, which ranks No. 4 on the Transport Topics Top 50 list of the largest logistics companies in North America, of Australia-­based APC Logistics.