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October 2, 2017 12:15 PM, EDT

NFI Industries Purchases California Cartage to Increase Presence in SoCal Ports

Deal Projected to Generate $2 Billion in Revenue This Year
NFI truck David B./Flickr

NFI Industries has acquired California Cartage and all of its affiliated companies, a transaction that the New Jersey-based NFI’s CEO Sidney Brown said will be “the most transformative in our history.”

With the purchase, NFI strengthens its foothold into the port drayage and transloading market in California and other major markets, including Seattle, Savannah, Ga., Charleston, S.C., Norfolk, Va. and Houston. The deal also gives NFI access to expertise that can be used to automate processes in the company’s warehouses to provide e-commerce fulfillment services for major retailers, Brown told Transport Topics.

“Ports are a critical part of the supply chain,” Brown said, “This positions us as one of the largest players in the market going forward.”

Brown said that the California Cartage group will continue to operate as a separate division of NFI and will be headed by the company’s longtime chief operating officer Luke Lynch.

NFI and California Cartage, which rank Nos. 27 and 65, respectively, on the Transport Topics Top 100 list of the largest for-hire carriers in North America, had a combined revenue of $1.6 billion in 2016. NFI believes the total will grow to $2 billion this year, catapulting it into the top 20 for-hire carriers in North America.

With the deal, NFI’s distribution footprint reaches 41.5 million square feet, its dedicated transportation and drayage network grows to nearly 4,000 tractors and its brokerage and transportation management capacity rises to nearly 30,000 carrier partners.

“I am excited to welcome Cal Cartage’s employees and customers to our NFI family,” Brown said. “Together, we will expand our capabilities, better connect our domestic and international platforms and create true end-to-end solutions. With our employees’ collective expertise and shared commitment to exceptional customer service, NFI becomes a supply chain powerhouse that can deliver value at a new level to our blue chip customer base.”

Cal Cartage owner Robert Curry Sr., 86, will retire after handing the company over to the Browns, one of the longest-serving family-owned trucking names in the industry. The Curry family founded Cal Cartage in 1944 and the Browns started NFI in 1932.

“NFI is a perfect cultural fit for the Cal Cartage family and is why we sought them out since the beginning,” Curry said. “Our people have built up this company over its long history, and NFI is an ideal organization to grow with and provide more opportunities for our employees, independent contractor partners and customers.”

His message echoes what he wrote in a letter to employees in late September, a copy of which was obtained by TT.

“After a great deal of thought, I realized that if we were to keep this company moving forward and keep all of the people employed, we needed a strong national partner,” he stated.

California Cartage transloading facility at Port of Los Angeles (TT File Photo)

With the acquisition, NFI secures a strong foothold into the supply chain of retail clients moving cargo in containers primarily through the ports in Los Angeles and Long Beach. Until now, NFI didn’t offer drayage at the ports, which process more than 15 million industry-standard 20-foot-equivalent units, or TEUs, per year, combined. NFI noted it will bolster its service in the e-commerce, footwear and apparel sectors.

“This is consistent with the consolidation in the drayage market taking place with the desire of national firms without operations at the ports of Los Angeles and Long Beach to enter the market,” Harbor Trucking Association Executive Director Weston LaBar said.

In 2014, XPO Logistics made a similar entrance into the drayage industry when it purchased Pacer International for $335 million. Last year, IMC Cos. improved its Southern California presence when it acquired Progressive Transportation Services for an undisclosed sum. While terms of the NFI deal also were not disclosed, Cal Cartage generated $440 million in revenue in 2016.

“It just so happens here that NFI bought the largest player in the market, a behemoth. When someone acquires the largest provider, it sends some ripples through folks,” LaBar said. “Cal Cartage was the last piece of the puzzle for NFI to have a fully integrated operation that can service customers nationally.”

NFI’s Brown said the company would continue using independent owner-operators to haul containers at ports, despite criticism from the International Brotherhood of Teamsters and other groups that would like to see those drivers classified as employees.

Frederick Potter, director of the Teamster’s port division, asked to meet with Brown and, in a letter, urged the company to “rethink” its use of owner-operators at ports.

Brown declined to comment specifically on Potter’s letter, but said NFI would continue to use owner-operators in all of its port operations. “The model has been very successful and will continue to be successful,” he told TT.