Buying a LTL (less-than-truckload) carrier in Canada

A buyer comparing LTL carriers is looking at a network as well as a fleet: terminals in the right places, trailers that fill on the lanes that matter, and partner carriers that handle the lanes the buyer does not. The questions below are for someone evaluating a carrier before an offer: what to look for, what to ask the seller directly, and what you must qualify for personally before you can run it.

What to look for in an LTL network

Start with the terminals: where consolidation happens, and whether you could inherit the tenure, owned or leased. Then check the lanes: whether freight density on the core lanes comes from steady shipper relationships or one-off volume, and whether the carrier can serve those lanes without leaning on partners for everything. Finally look at the technology shippers touch, such as rating and tracking, and ask whether shippers have integrated with it.

What to ask the seller directly

Ask directly about claims and damage and what they cost. Ask how much of the earnings depend on a few interline relationships, which lanes are subsidised by others, how long dock and cross-dock staff have stayed, and whether the linehaul tractors and the city pickup-and-delivery trucks are both nearing replacement, since that would mean two capital bills arriving together.

What you must hold yourself

The buyer, or the buyer’s operating company, needs the registrations to run the carrier. Under s.7(1) of the federal Motor Vehicle Transport Act, subject to the regulations, no person or body may operate an extra-provincial motor carrier undertaking except under a safety fitness certificate issued by a provincial authority or an analogous document prescribed by the regulations. Under s.8(2) of the same Act, a safety fitness certificate issued by a provincial authority under s.8(1) is valid throughout Canada. Transport Canada explains that provinces and territories regulate extra-provincial carriers on the federal government’s behalf. Ontario’s CVOR guidance says that if you operate a commercial vehicle in Ontario, you must have a valid CVOR certificate, and other provinces run their own systems; Alberta, for example, issues its own safety fitness certificates. Confirm with each province’s authority what applies to your structure.

Reading the safety record

Ontario states that an unsatisfactory safety rating causes operating privileges to be suspended or cancelled throughout Canada, and that ratings are public. Whatever the rating is today, look at what is behind it. Ontario also says a carrier may request a voluntary facility audit to improve its safety rating, so ask the seller whether any facility audit has been done and what it found. Our guide to the carrier safety rating explains the term, and our LTL carrier due diligence guide covers the records to request.

• Which terminals are owned, which are leased, and what the landlord must agree to on a change of owner
• Which lanes carry the earnings, and which partner carriers handle freight at each end
• What the claims and damage record looks like, and how the carrier handles disputes with shippers
• Whether both the linehaul and city fleets are due for replacement in the same window
• Which registrations your own company must hold in each province where the carrier operates

Who else might be bidding

If you are another carrier, note that the Competition Bureau says the Commissioner of Competition may review any merger or acquisition regardless of size, and that some transactions must be notified before closing. The Bureau adds that mergers not subject to mandatory pre-merger notification may also raise competition concerns and may be investigated, and that it may challenge a merger that was neither notified nor the subject of an Advance Ruling Certificate request for up to three years after closing. Ask your lawyer whether that affects your timing.

Test how it fits what you run

If you already operate a carrier, ask how this network complements yours: whether the terminals fill gaps or duplicate your own, whether the lanes overlap, and whether the two sets of systems and dock practices can be combined without disrupting service. If you are a first-time operator, ask instead who will run the terminals and the dock day to day. Be honest about which of those two buyers you are before you set a price.

Test the lanes yourself

Do not rely only on the seller’s lane summary. Ask for revenue and volume by lane, then talk to shippers where the seller agrees, and check how often freight is passed to a partner carrier rather than carried on the carrier’s own network. Ask whether a lane that looks profitable depends on one shipper or one partner. Ask your accountant to build the numbers from the underlying records rather than from the summary.

Plan the first months

Write down, before closing, who will run each terminal on the first day, how dock staff will be told, which shippers and partners you will call first and how the seller will help. A transition plan belongs in the purchase decision.