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Intermodal and logistics company Hub Group announced it acquired Choptank Transport Inc., which was founded in 2000 and is a provider of non-asset refrigerated transportation solutions.
Hub Group reported it funded the $130 million acquisition with cash on hand. That included contingent compensation to the owners and senior management team of Choptank to incentivize their retention and drive continued growth of the business. Preston, Md.-based Choptank expects to generate over $450 million of annual revenue in 2021.
Oak Brook, Ill.-based Hub Group said its addition of Choptank is an important strategic milestone toward achieving the company’s goal of over $6 billion of revenue by 2025. Currently, its revenue stands at $3.6 billion.
Choptank is proud to announce we're joining the @HubGroup family! For 50 years, #HubGroup has been dedicated to serving customers with innovative, premier supply chain solutions built for long-term success. https://t.co/FI8udPKCE6#HubGroup50 #Acquisition pic.twitter.com/O352hbxhpP— Choptank Transport (@ChoptankTranspt) October 19, 2021
Hub Group ranks No. 12 on the Transport Topics Top 50 list of the largest logistics companies in North America. It ranks No. 13 on the TT Top 100 list of the largest for-hire carriers in North America.
“This acquisition delivers on our strategy to provide the industry’s premier supply chain solutions, and will advance our position in the growing cold-chain segment,” said Hub Group Chairman and CEO David Yeager in a release.
Choptank has a network of over 20,000 carriers throughout North America specializing in chilled and frozen solutions.
Choptank’s 400 employees will join Hub Group, which has about 5,000 employees.
Hub Group expects the acquisition to result in numerous complementary cross-selling opportunities for both Hub’s and Choptank’s customer bases. With this transaction, Hub’s non-asset business lines will contribute over 40% of total revenue.
The acquisition also enhanced Hub’s over-the-road refrigerated transportation solutions offering, and complements its growing fleet of 450 refrigerated intermodal containers. Hub Group reported it intends to purchase an additional 550 refrigerated intermodal containers in 2022, bringing the size of its fleet to 1,000.
In the second quarter, Hub Group posted gains in all business units:
- Intermodal revenue increased 23% to $550 million, helped by a 7% rise in volume and a 15% gain in revenue per load. The segment’s gross margin increased as higher prices, cost recovery and volume growth more than offset increased purchased transportation costs and higher equipment repositioning expenses, the company said.
- Logistics revenue rose 25% to $222 million.
- Truck brokerage revenue grew 62% in the quarter to $140 million due to a 55% increase in revenue per load and 5% volume growth. Hub said that contractual freight accounted for 51% of total brokerage volume in the second quarter compared with 64% in the 2020 period.
- Dedicated transportation revenue rose 1% compared with the prior year to $69 million.
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