Private Equity Firms Should Be Aware of These November Trends

November has been a busy month, with a U.S. presidential election, a Wall Street surge, the Federal Reserve dropping interest rates and continued tensions in the Middle East. These trends will surely impact the U.S. logistics market, both for the remainder of 2024 and over the long term.

To maximize the returns on their investments, it’s incumbent on the world’s private equity (PE) firms to monitor these trends and understand the implications for their portfolio companies’ logistics teams. After all, logistics represents one of the largest single cost centers for any business. Logistics is also critical to delivering on customer promises, creating competitive differentiation and driving repeat business. 

Because Redwood works closely with many private equity firms to optimize logistics performance and generate value, we like to monitor news and trends from a private equity perspective. With that in mind, here are the top four trends PE firms should be monitoring as we inch closer to 2025.  

Four November Developments to Monitor 

Private equity firms will want to make sure their portfolio companies — and their logistics teams, in particular — are aware of these trends from the month of November.  

From carriers and logistics analysts to retailers and consumer markets experts, just about everyone was predicting a big holiday season — with high retail sales and high freight transportation demand. As we wrap up November, however, the signals are decidedly mixed. The load-to-truck ratio has increased 18% month-over-month, and freight rates are up, with growth in the upper single digits. Industry experts are saying the increased momentum leading into the peak season may signal the end of the freight recession. And the consumer price index is up 3.3% year-over-year, which generally means demand is growing. But retail giant Target recently stated that it might have over-estimated holiday-season demand. Target shares dropped 22% following the news. Meanwhile Walmart’s sales are booming and its shares are up. (Remember we told you signals are mixed?) the difference seems to be Target’s focus on discretionary items, while Walmart is emphasizing low prices and value. Across manufacturers and retailers, will the next month bring continued growth in revenues and transactions, with associated growth in freight movements? The answer depends on what you’re making, what you’re selling, and what your value proposition is. Private equity firms will do well over the next month to make sure their portfolio companies are delivering the right value proposition, as well as ensure logistics teams are optimizing operations in every way possible to maximize profitability and customer service in the hyper-competitive holiday landscape.   

U.S. President-Elect Donald Trump has announced plans to aggressively tax all imports coming into the U.S.. Tariffs will be increased by 10-20% on all goods, with Chinese imports targeted for a 60-100% tariff increase. Already the global logistics industry is seeing impacts. Some companies are speeding up their inbound product shipments in advance of Inauguration Day. Others are shifting production from China to Vietnam, Mexico and other countries. PE firms who own portfolio companies doing business internationally need to stay on top of tariff developments — and ensure that logistics teams are making short-term and long-term decisions that are strategically sound. PE firms should also make sure their owned companies are equipped with expertise in customs clearance, cross-border transportation and warehousing, global distribution and logistics, and other core international business competencies. The rushed decisions that occur between now and January 20 may not provide the best foundation for continued global success. If portfolio companies lack the internal expertise to analyze tariffs and act strategically, they can partner with an experienced 4PL to ensure they’re making the right moves. 

We’ve all enjoyed months of declining fuel prices. But escalating tensions in the Middle East may threaten not only fuel affordability but also supply reliability. Scarcity and potential new tariffs pledged by President-Elect Trump could send fuel prices much higher as we move into 2025, making highway transportation more expensive and eroding profit margins. It’s hard to say where fuel prices will end up. But smart logistics teams have digital solutions to help optimize modes and routes, as well as freight brokerage partners who can help find the lowest rates. They also leverage managed transportation, which allows them to focus on their core business and stop worrying about fuel prices. As we noted in an earlier Redwood blog, carriers are exiting the market in record numbers. Climbing fuel prices and a lack of carrier capacity represent a potential profit-margin disaster for portfolio companies — and their PE owners — who aren’t monitoring these trends closely as we turn the page on 2024.  

Both UPS and FedEx recently announced their general rate increases for 2025. In Redwood’s analysis, the new carrier rates will increase shippers’ 2025 parcel spend by 6-11% if they do nothing to accommodate these changes. So, what can portfolio companies, and PE firms, do? They can increase the diversity of their shipping modes, shake up their carrier mix, optimize loads and routes, skip zones with a surcharge, and leverage hardline negotiations. The only mistake? Doing nothing and letting higher rates decimate your margins. 

Count on Redwood for Market Insights and Value Generation 

There’s no doubt that transporting and storing products profitably is especially challenging right now, due to these factors and more. But no one knows how to navigate the complex world of logistics better than Redwood. Backed by two decades of hands-on experience, and hundreds of customer success stories, Redwood can offer proven solutions and best practices that cut costs, improve service and generate shareholder value. PE firms shouldn’t expect to become experts in logistics optimization, they should leave the driving to Redwood. 

Count on us for market insights that show you the opportunities, as well as execution services and digital solutions that help you capture them. Reach out to Redwood and start generating increased value via logistics optimization today.