Fall Trends for Private Equity Firms

As we turn the corner to October, there’s a chill in the air and the days are getting shorter. But it’s a great season to be a private equity (PE) investor, as opportunities for value creation are heating up. As we look back at September’s market and economic data, now is the time for PE firms to focus on logistics and indirect procurement optimization as a proven way to generate shareholder value. 

Redwood has helped some of the world’s leading PE firms optimize logistics performance across their portfolio companies. We’ve also helped hundreds of retailers, manufacturers and distributors drive significant cost and service improvements. So, we know how to recognize, capture, and execute on opportunities for value creation across the supply chain.  

Top Five Opportunities for Value Creation  

Based on our experience — and our ongoing efforts to monitor conditions in the US freight and logistics market — here are five key trends PE firms should be watching in October: 

In the devastating wake of Hurricane Helene, which left millions of Americans in need of basic supplies, the US logistics industry immediately faced a three-day International Longshoremen’s Association (ILA) strike, which shut down 13 major East Coast container ports. These two events highlight the critical importance of disruption management and contingency planning. Companies that were able to work around the ILA strike, or those who could get essential products into the Southeast US, have a distinct advantage over less prepared businesses. PE firms should make sure their portfolio companies are equipped with advanced technology — including control towers that sense disruptions in advance, as well as optimization engines that ingest data and guide a strategic response. While these kinds of sweeping events are typically unpredictable, having contingency plans in place tends to separate the leaders from the rest. PE firms should make sure their companies emerge as leaders when it comes to future logistics planning.    

While the US freight market has had excess capacity for months, that situation could be coming to an end. Carriers have been steadily leaving the US market for some time, based on slow conditions and low spot rates. Now truckload and less-than-truckload demand may surge, based on the major disruptions just discussed, as well as the upcoming holiday season. PE firms will want to ensure their portfolio companies are actively monitoring demand and capacity conditions —acting now to secure freight capacity for the busy holiday shipping season. Again, companies equipped with advanced technology — such as a transportation management system (TMS), a digital procurement platform, and managed transportation options — will be prepared to win during the holidays.   

When PE firms think of value generation, parcel shipping optimization may not be top-of-mind. But, especially during the holiday peak season, portfolio companies could be shipping thousands of packages every day to homes, offices, retail stores, third-party drop points, lockers and micro-fulfilment centers. Imagine the enormous financial rewards of automating the internal packaging and shipping process, as well as negotiating better rates with UPS, FedEx and other carriers. By taking a close look at their customers’ parcel shipping activities, Redwood drives a rapid average cost savings of 12% — and that’s just the low-hanging fruit. Redwood can drive even greater value over time. Redwood delivers the expertise shippers need, including carrier negotiation, rate analysis and proven cost-saving strategies like zone-skipping. Trust us, all those little packages add up to big costs — and big savings opportunities. 

More companies are exploring near-shoring their production in Mexico, or exporting products to Mexican markets, and with good reason. US-Mexico trade totaled $415.4 billion from January through June 2024 — the highest total ever recorded for this six-month timeframe. PE firms should make sure their companies are capitalizing on this growth. While many businesses are reluctant to take on the complexities of cross-border logistics, a Modern 4PL like Redwood can make international expansion both easy and cost-effective. For our cross-border customers, Redwood assumes responsibility for all documentation, customs clearance, and legal and regulatory compliance. We can help portfolio companies realize new value via international freight brokerage, managed transportation, warehousing and distribution, advanced technology solutions and physical assets.  

Just about every logistics team has been overwhelmed for the past few years — first with the urgent pressures of the global pandemic, then with the rapid growth of omni-channel commerce. And let’s not forget the increasing frequency of supply chain disruptions, from extreme weather events to labor shortages, geopolitical conflicts and port closures. To master these challenges, while enabling a focus on the core business, many companies are exploring a managed services model. By trusting a 4PL like Redwood to manage transportation, warehousing, procurement, cross-border logistics and other resource- and capital-intensive activities, shippers can simplify their operations. Outsourcing ensures that leading-edge expertise, modern fleets and facilities, advanced technology solutions and best practices are being applied to tough logistics challenges — without adding internal staff or making big capital investments. Redwood has made the investments and built the expertise, so you don’t have to. 

The Value Is Out There. It’s Time to Capture It. 

As private equity firms look to close out Q4 and start a new year, they face both challenges and opportunities in generating value. Backed by two decades of experience, hundreds of satisfied customers and private equity expertise, Redwood can help. Logistics optimization has already saved our customers millions of dollars. Will your portfolio companies be next? Reach out to Redwood today before another month passes by.