UPS CEO calls sale of UPS Freight to TFI a ‘win-win’
February 4, 2021
(Freight Waves) UPS Inc.’s (NYSE:UPS) sale of its less-than-truckload business, UPS Freight, to Canadian firm TFI International Inc. (NYSE and TSE: TFII) works out well for both parties as it relieves UPS of a noncore, low-margin asset and puts the business in the hands of a more freight-centric carrier, UPS CEO Carol Tomé said Tuesday.
The $800 million all-cash deal, which was announced last week, is expected to close at the start of the second quarter, Tomé (pictured) told analysts on a conference call Tuesday to discuss UPS’ fourth-quarter and full-year results. UPS will use the proceeds to pay down debt, she said. Montreal-based TFI will rebrand the unit as TForce Freight. UPS will sell the new TFI service for no less than five years and will provide back-office services for three years. All 14,500 UPS Freight employees, including 11,500 Teamsters union members, will join TFI.
Tomé said she made the disposal of UPS Freight a top priority as soon as she started the job on June 1. Tomé, who was named to UPS’ board in 2003, watched as UPS acquired Overnite Transportation Co., the forerunner of UPS Freight, two years later for the then-lofty price of $1.25 billion, only to take an impairment charge shortly after the acquisition was completed.
“It’s never turned out to be what we thought it would be,” she said, referring to UPS Freight. “It’s a capital-intensive, low-margin business that we don’t need to own” to make money by offering an LTL solution to shippers, she said.
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