History, however, offers a cautionary tale. , Diversified Healthcare: Q4 Earnings Snapshot, UPDATE 1-US pick to head World Bank, ex-Mastercard CEO Banga, starts 'charm offensive', UPDATE 1-Cardinal Health, McKesson prevail in Georgia families' opioid trial, Asian Stocks Face Pressure as Yields Move Higher: Markets Wrap, UPDATE 1-US Supreme Court doubt over student debt relief looms over Biden agenda. Any impact of the LaserShip-OnTrac combination on UPS and FedEx is a story that has years to play out. In a deal that banking sources said was consummated about two weeks ago, regional parcel delivery carrier LaserShip, which is owned by PE firm American Securities LLC, acquired fellow regional carrier OnTrac for what is believed to be $1.3 billion, a significant sum for a regional parcel company. (FS) Private equity firms American Securities and Greenbriar-backed LaserShip, an e-commerce last-mile delivery services provider, agreed to merge with OnTrac Logistics, a logistics services provider, in a $1.3bn deal. . LaserShip/OnTrac names new CEO Mike Duffy is currently a board member for the regional parcel carrier and CEO of FleetPride, a truck and trailer parts distributor. The combined company will be a leading national network and solution for e-commerce retailers and other shipping customers. There is no explicit protective language limiting such releases.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe ratings could be upgraded if LaserShip demonstrates improving and sustainable operating leverage as delivery volumes increase, such that EBITDA margins are maintained in at least the mid-teens range and debt/EBITDA decreases toward 5x. googletag.pubads().collapseEmptyDivs(); At less than $1 billion in revenue, LaserShip is significantly smaller than national deliverers UPS and FedEx, but maintains a strong regional network focused on densely populated areas in the eastern US.LaserShip has exhibited substantial growth in its e-commerce delivery business, especially during 2020 and continuing into 2021 as the company shifted focus to the e-commerce space from its traditional B2B business, with significant new customer wins and very substantial throughput with delivery volumes more than doubling. }); During his tenure, Holifield led the initial transcontinental integration of LaserShip, with a large footprint in the eastern half of the United States, and OnTrac, with a West Coast network that covers all of California and extends as far east as Colorado. Regional parcel delivery carrier LaserShip/OnTrac said late Tuesday that it has named Mike Duffy the company's new CEO, effective immediately. LaserShip has announced intentions to buy OnTrac Logistics, which predominantly services the western half of the U.S., for roughly $1.3 billion. Leading omnichannel retailers and direct-to-consumer e-commerce brands have already signed up to secure volume ahead of our launch. Will Manuel, an American Securities managing director who is also LaserShip's chairman, has high aspirations for the entity in a delivery world turned upside down by the COVID-19 pandemic. MOODYS PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODYS ANALYTICS, INC. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. The market share changes have been skewed by the growth in e-commerce fulfillment, which tilted delivery volumes to the more competitive business-to-consumer (B2C) segment, and the emergence of Amazon.com Inc. (NASDAQ: AMZN) as a delivery player. LaserShip, Inc., the largest regional e-commerce parcel carrier in the U.S. and leader in last-mile delivery operating primarily in the eastern United States, and OnTrac Logistics, Inc., a leading e-commerce parcel logistics company operating primarily in the western United States, announced today that they have entered into a definitive agreement to merge. E-commerce and B2C fulfillment is what Jindel called 31 flavors, meaning there are many ways to skin the cat. FedEx, which held a 9.8% share in 2000, controlled 20.4% of the market by 2020, according to the firms numbers. Find company research, competitor information, contact details & financial data for UBS SECURITIES PTE. The combined company plans an expansion into the Texas market in the very near future and to eventually add Chicago to its network. However, the ace in the hole for the big boys is their customers fears of losing volume discounts should they shift even some of their business. Logistics The term loan is not expected to have any financial maintenance covenants.In terms of corporate governance, Moody's expects LaserShip's financial policy to be relatively aggressive given its new private equity ownership. Duffy joined LaserShip/OnTracs board last May. Less clear is whether the wrenching changes made regional carriers and especially the promise of a national network more enticing. My guess is if LaserShip becomes a national, the other regionals will continue to thrive in the short term, but might be less viable long term as it puts downward pressure on pricing.. There are deep pockets behind the tie-up in the form of private equity firm American Securities LLC. This was a Private Equity round raised on May 1, 2021. Our new facilities in the fast-growing urban megaregion of Austin, Dallas-Fort Worth, Houston, and San MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. Since 1994, we've built a strong track record of value creation for our investors and with our management team partners. Fast-growing parcel carrier LaserShip Inc. agreed to buy Western U.S. rival OnTrac Logistics Inc. in an approximately $1.3 billion deal . LaserShip is a non-asset-based parcel delivery company that leverages a flexible network of sort centers and delivery hubs to provide "distribution center to doorstep" delivery to e-commerce customers. I was amazed how easy it was after I tried itGOOD LUCK.. LaserShip is funded by American Securities. Nicole Chen. UPS and FedEx fail to understand that the guy in Manhattan has different expectations of when a package arrives than the guy in Pittsburgh or Boulder. LaserShip is the leader in e-commerce last-mile delivery for retailers and shippers that desire reduced transit times and increased flexibility within their supply chain. googletag.enableServices(); There has been industry talk for several years about regional carriers joining forces to stitch together a national network and seriously challenge UPS and FedEx. 703-761-9030 In addition, Will has previously served on numerous corporate boards throughout his career. OnTrac is a SmartWay Transport Partner, a USPS Workshare Partner, and integrates with over thirty different multi-carrier software providers. 1.9 Days. All Rights Reserved. Liked by Will Manuel. Josh Dinneen, Chief Commercial Officer at LaserShip and OnTrac, told LM that this transcontinental service is a huge win for retailers, as it empowers them to reach consumers in the countrys most populated areas with faster, reliable, cost-effective home delivery. This allowed the carriers to deliver more packages within specific time windows, and at attractive rates and fewer delivery surcharges. LaserShip and OnTrac are expanding to Texas! Still, cost-conscious e-commerce shippers love doing business with the regionals because they generally receive more favorable pricing, Picard said. window.googletag = window.googletag || {cmd: []}; We do our best to solve any issues and answer your questions in the shortest possible time frames but some delays are possible. Moodys SF Japan K.K. window.googletag = window.googletag || {cmd: []}; He is currently Chairman of the Board of FleetPride, LaserShip / OnTrac, and MW Industries, and a Director of Trace3. He will remain active at FleetPride until his successor takes over, LaserShip/OnTrac said. Satish Jindel, president of Shipmatrix, said the LaserShip/OnTrac deal proved there is money to be made in B2C delivery, running counter to the duopolys growing focus on shifting the mix toward more profitable B2B shipments. We look forward to continuing to innovate for our retail partners in the future.. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. October 13, 2021. googletag.pubads().collapseEmptyDivs(); LaserShip is the leader in last-mile delivery for retailers and shippers that desire reduced transit times, lower costs, reliable on-time performance, and increased flexibility within their supply chain. Holifield formally assumed the role on Nov. 8, 2021. googletag.pubads().enableSingleRequest(); "I . With OnTrac, we will use our combined best practices and scale to support customer growth and provide excellent opportunities for our associates., As our customers grow, so do their shipping needs, said Robert E. Humphrey, Jr., Chairman and CEO of OnTrac. All Rights Reserved. It is unclear what Holifields next move will be. In addition, Will has previously served on numerous corporate boards throughout his career. Our new service enables our combined company to provide delivery solutions on a national scale. Technology, Media & Telecom. window.googletag = window.googletag || {cmd: []}; Find company research, competitor information, contact details & financial data for Grand Fortune Securities Co.,Ltd of Taipei City. Both LaserShip and OnTrac have exhibited substantial growth in their ecommerce delivery businesses in 2020 and 2021 with significant new customer wins and substantial increases in delivery volumes, Moodys said. We enjoy our work and the relationships that come from it. A same-day delivery done by FedEx could cost Amazon $50, according to Kevin Porter, who has worked for LaserShip, FedEx, and UPS as a courier. If [LaserShip/OnTrac] doubled in volume capacity which they cant for a very long time theyre still insignificant compared to the behemoths, said Rob Martinez, Shipwares founder and co-CEO. googletag.pubads().enableSingleRequest(); }); Duffys background at FleetPride and elsewhere extraordinarily prepares him to succeed in his new role, Martinez said. LaserShip has raised 1 round. The OnTrac network provides companies an affordable way to speed up ground delivery so they can lower their shipping costs and delight their customers with world-class service. This merger of two strong companies is a testament to the extraordinary efforts of our team members to build a leading parcel carrier and logistics business, said Mike Roth, Board member and interim CEO of LaserShip. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. LaserShip and OnTrac will begin to link their networks in 2022 to ensure seamless service for customers during the 2021 peak holiday season. The OnTrac network provides companies an affordable way to speed up ground delivery so they can lower their shipping costs and delight their customers with world-class service. @LaserShipAssist. It continues to be such an . 10-35%. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moodys Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading Investor Relations Corporate Governance Director and Shareholder Affiliation Policy.Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODYS affiliate, Moodys Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moodys Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). Having real competition nationally can potentially reign the runaway price increases weve seen over the past couple of years, he said. They also value the regionals as safety valves should FedEx and UPS continue to impose volume limitations, she said. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Following their late 2021 announcement, in which Vienna, Va.-based LaserShip, the largest regional e-commerce parcel carrier and last-mile delivery services provider, and Chandler, Ariz.-based regional shipping services provider OnTrac, announced they had entered into a definitive agreement to merge, with LaserShip acquiring OnTrac for $1.3 billion, the companies last week stated they are taking a major next step in the process. Following their late 2021 announcement, in which Vienna, Va.-based LaserShip, the largest regional e-commerce parcel carrier and last-mile delivery services provider, and Chandler, Ariz.-based regional shipping services provider OnTrac, announced they had entered into a definitive agreement to merge, with LaserShip acquiring OnTrac for $1.3 billion, the companies last week stated they are . gptAdSlots.push(gptSlot); Specifically, Skiver added expansion into new markets like Dallas and Chicago could lead to profitable growth for LaserShip. All Rights Reserved. About one-third said they used regionals because of their service, and they received no cost benefits over what they paid UPS and FedEx. LaserShip is a portfolio company of American Securities and Greenbriar, and both will provide additional equity financing and continued strategic support for the combined company. }); Depending on how the holiday season pans out, FedEx Corp. and UPS Inc. will get close to $200 billion in combined annual revenue by the time they finish their reporting years: UPS on Dec. 31 and FedExs the following May 31. MOODYS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. Tuesdays announcement also caught employees off-guard. Maintaining positive free cash flow generation with free cash flow-to-debt in the high single-digits range could also result in an upgrade.The ratings could be downgraded if LaserShip loses a major customer or there is rapid turnover of the customer base, especially among the newer customers, inability to increase contribution margin per package at higher volumes, increased competition that strains revenue per package, or higher delivery costs. About 26% said they increased their use of regional carriers in 2018, though nearly half said they would engage more frequently during 2019. He is currently Chairman of the Board of FleetPride, LaserShip / OnTrac, and MW Industries, and a Director of Trace3. (2 minutes) Last-mile delivery specialist LaserShip Inc. on Friday said it named Mark Holifield chief executive, poaching the veteran supply . Vienna, Virginia-based LaserShips mid-October $1.3 billion purchase of Chandler, Arizona-based OnTrac will forge the first nationwide provider built from regional networks. Will received a BA in Government from Connecticut College. Will Manuel joined American Securities in 2016. If your package is marked delivered but you cannot locate it, please submit an inquiry after tracking by choosing " Tracking shows delivered; no package ". Recent increases in volumes have improved operating leverage, but sustainability of network efficiencies at high volume and higher earnings margin have yet to be demonstrated.LaserShip's business model utilizes independent contractors for deliveries that provides a cost advantage to offer lower rates to customers for smaller, low-priced packages compared to traditional large network competitors. May 1, 2021 OPINIONS OR COMMENTARY PUBLISHED BY moodys ANALYTICS, INC 31 flavors, meaning there many. 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