As Summer Wraps Up, What Trends Should PE Firms Be Watching?

Did you know Redwood has many customers in the private equity (PE) space? When you think about it, that only makes sense.  

The objective of PE firms is to acquire companies, substantially improve their performance to increase their value, and then sell them to produce investor returns. Across industries, logistics optimization has proven to be one of the fastest and surest ways to generate value. Not only is logistics a huge cost center, but it plays a central role in customer service. So, it’s not surprising that Redwood partners with some of the world’s leading PE firms to deliver logistics improvements across their portfolio companies — for a rapid, substantial return on investment (ROI). 

Being a modern 4PL with broad capabilities and decades of hands-on experience, Redwood knows exactly how to deliver logistics value quickly. Redwood also knows how to create a long-term logistics advantage via network updates and redesigns, new technology solutions, synergistic partnerships and other initiatives. all of these combined make Redwood a powerful partner for the world’s private equity firms. 

Positioning Portfolio Companies for Success: Four Keys  

Part of the value we deliver is monitoring conditions in the US freight logistics arena, and alerting our PE customers of any new trends and developments they should be paying attention to. Redwood’s analysts have just created an in-depth market update for August 2024. Let’s take a few moments to highlight four key takeaways for PE firms.  

We expect to see truckload capacity continue to tighten in the lead-up to Labor Day and beyond. The Midwest, Northeast and Southern California regions are still in the thick of produce season, which means demand is high. Transportation capacity is low, as more and more drivers and carriers exit the market. Spot rates will be climbing, so PE companies should ensure their portfolio companies have carrier contracts and adequate resources in place now. The holiday peak shipping season is also coming up fast. Demand for less-than-truckload (LTL) transportation, which has been flat this year, is expected to rebound in the coming months as well. 

While summer 2024 is winding down for many of us, the 2024 hurricane season lasts until November 30 — and experts warn that it will bring more severe weather than normal. Already we’ve seen the devastation wrought by Hurricane Beryl in Houston and Tropical Storm Debby in the Southeastern US. These storms took lives, wrecked communities, knocked out power and seriously impacted the flow of goods and freight service in an already low-capacity environment.  

Four to seven major hurricanes are predicted in the coming weeks. Wherever their portfolio companies are located, smart PE firms will make sure they have contingency and emergency preparedness plans in place should these weather events materialize. Those plans should include alternate routes, carriers, distribution hubs and other workarounds. 

With gasoline prices down 50 cents a gallon from August 2023, now is the time to get on the highway and take advantage of lower fuel costs. Portfolio companies should have a strategy in place to monitor and respond to developments like this. They should be able to pivot among modes, change distribution patterns and routes, and otherwise operate agilely as conditions in the US freight industry change. 

Today’s logistics challenges are too complex to master via human analysis and manual methods. One of the best ways for PE firms to generate value quickly is through process automation and decision automation. Enabled by artificial intelligence (AI), today’s supply chain software can slash costs by accelerating and optimizing everyday processes, increasing accuracy and driving responsiveness. As conditions change, these AI-enabled software engines can autonomously course-correct to get the supply chain back on track. There are many exciting developments happening in the supply chain software industry, from new Oracle functionality announced at the OTM user conference to Korber’s acquisition of MercuryGate — which will help companies connect multiple functions in real time. As technology improves, PE firms will want their portfolio companies to remain at the forefront, gaining a maximum advantage from the newest innovations. 

Looking to Drive Value? Leave the Driving to Us 

Private equity firms have a lot going on across their business portfolios. Can they really be expected to monitor fuel prices, spot freight rates and extreme weather plans? Optimizing transportation and distribution adds enormous value, but most PE firms lack the time and internal resources to get the job done. 

That’s why so many PE firms leave the value-driving to Redwood. We live and breathe logistics optimization every day — from hands-on, tactical matters like load building to big-picture, strategic efforts like network redesign. We’ve produced millions in savings for customers in just about every industry. Ask us about our proven ability to generate value quickly and confidently.