TransForce says deal opens door to Mexico

TransForce’s US$558-million acquisition of U.S. company Con-Way Truckload will make it easier for Canadian firms looking to ship goods to Mexico, CEO Alain Bedard says.

TransForce’s Transport America subsidiary did at least US$30 million of annual business shipping goods between the U.S. and Mexico, but almost nothing between Canada and Mexico.

The Con-Way deal will see the company’s U.S.-Mexico business grow to about US$200 million and give TransForce a network of more than 50 local partners across the U.S. southern border.

“I think we’re going to be the carrier with size and connection,” Bedard said in an interview Friday. “When you do 50,000 loads a year in and out of Mexico, you are somebody.”

Con-Way currently doesn’t serve Canada but its addition to TransForce will provide Canadian customers with access to employees who speak English and Spanish and are experienced in transborder shipping.

Bedard sees the partnership being advantageous to manufacturers in Ontario and Quebec and sectors like the automotive industry, which have operations in Canada and Mexico.

He anticipates cross-border trade with Mexico will continue to grow even if Republican nominee Donald Trump, who has vowed to build a wall and rip up NAFTA, wins the presidential election.

U.S. goods and services trade with Mexico was an estimated US$583.6 billion last year, while Canada did $37.8 billion of two-way trade with its thirdlargest trading partner, according to government statistics.

Several large Canadian companies, including Bombardier (TSX:BBD.B) and its offshoot, recreational vehicle maker BRP Inc. (TSX:DOO), have developed sizable operations in Mexico.

“The Mexicans are building products that are good at a better price than we can do in Canada or in the U.S. so trade is trade,” Bedard said when asked if a Trump election Nov. 8 would be a risk for the acquisition.

In addition to the Mexican connection, the purchase of Con-Way helps TransForce increase its U.S. revenues and gain critical mass for its American truckload business, he said.

The acquired business is expected to generate about US$530 million in annual revenue and boost TransForce’s U.S. truckload revenue to about US$850 million.

Overall, the United States will account for half of TransForce’s total revenues of around $4 billion.