business
Five years after buying UPS’s freight business, TFI is struggling to turn it around
TFI International is struggling to turn around the UPS freight unit it bought five years ago for US$800-million.
Key points
- TFI shares tumbled 17 per cent to close at $130.05 on the Toronto Stock Exchange.
- TForce Freight's operating income fell 43 per cent in the quarter, made worse by high fuel costs.
- TFI's fourth-quarter forecast was softer than expected, and CEO Alain Bédard says the unit has the wrong people.
Why it matters. The setback exposes the risks of the acquisitions that have fuelled TFI's growth over nearly two decades, and the company plans to soon name a new executive to lead TForce Freight.
TFI International's shares fell 17 per cent to close at $130.05 on the Toronto Stock Exchange after its third-quarter earnings missed analyst estimates on Friday. The main drag is TForce Freight, its U.S. less-than-truckload unit, whose operating income fell 43 per cent in the quarter, worsened by high fuel costs. The unit earned barely US$44-million in operating profit on US$882-million of revenue, and CEO Alain Bédard blames density problems.
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Five years after buying UPS’s freight business, TFI is struggling to turn it around
TFI International Inc. TFII-T bought United Parcel Service’s freight business five years ago for US$800-million, betting it could revive the neglected unit and drive it to healthy profitability. Now, Canada’s biggest trucking company is finding the task a lot harder than it first thought. The situation is testing investors’ patience and exposing the risks of acquisitions, which have fuelled TFI’s growth over nearly two decades. Despite a strong performance in certain segments of its operations, TFI reported third-quarter earnings that fell short of analyst estimates Friday and introduced a financial forecast for the fourth quarter that was softer than expected. Its shares tumbled 17 per cent to close at $130.05 on the Toronto Stock Exchange. The big culprit? The company’s U.S. less-than-truckload business, largely made up of the assets it bought from UPS in 2021, now known as TForce Freight. The unit’s operating income dropped by 43 per cent during the quarter, made worse by high fuel costs. Less-than-truckload transport, or LTL, means shipments that are too big for standard parcel services but don’t require a full flatbed trailer. They’re typically carried on pallets. One truck can carry several pallets from different customers, whether it be an auto supplier sending parts to an assembly plant or a distributor sending dry food to a local grocer. When TFI bought UPS Freight, ch.