Dive Brief:
- Canadian National Railway (CN) has acquired the intermodal division of Alberta-based H&R Transport, a Canadian logistics provider specializing in temperature-controlled and intermodal freight, according to a press release.
- This deal comes just weeks after the railroad's acquisition of TransX, a Manitoba trucking firm, closed in March. The H&R transaction is still subject to Canadian regulatory approval, which in the TransX case, took roughly five months.
- H&R calls itself the largest refrigerated intermodal carrier in Canada on its website, with 550 trailers and containers and 230 trucks. It's yet unclear if H&R will continue to operate independently, as TransX does, post-acquisition.
Dive Insight:
On CN's first-quarter earnings call CEO, JJ Ruest said future acquisitions would "feed the beast" — meaning bring new customers and more volume to the railroad. H&R appears to meet that standard while adding some geographic diversity to CN's trucking portfolio. With the TransX deal, CN became the second-largest truck fleet in Canada, according to Today's Trucking.
"CN’s goal with the acquisition is to expand its intermodal service offering, move more consumer goods, and convert customers to their rail network," wrote Morgan Stanley analysts in a research note emailed to Supply Chain Dive.
The revenue from TransX and H&R will be reported as intermodal revenue. This figure was up 4% in Q1 year-over-year without TransX revenue included.
Morgan Stanley described both deals, and CN's M&A strategy in general, "as a way to keep the topline afloat as traditional rail end markets mature."
