ELD supplier Trimble acquires Kuebix, sees big integration ahead

Trimble, a major supplier of electronic logging devices (ELDs), has acquired the privately held transportation management system (TMS) provider Kuebix. 

Network integration appears to be the key factor driving the acquisition. In the press release announcing the acquisition, Trimble said the deal “will enable Trimble to bring together its network of private fleet and commercial carrier customers, which collectively represent more than 1.3 million commercial trucks in North America, with Kuebix’s extensive community of more than 21,000 shipping companies, creating a powerful new platform for planning, execution and freight demand-capacity matching.”

One analyst contacted by FreightWaves gave a thumbs-up to the move. “I think it’s very positive,” Rob Wertheimer, a partner at Melius Research, said of the acquisition, adding that with its deep penetration into the ELD market, Trimble “actually sees a lot of where freight starts and finishes.”

But it hasn’t been able to fully exploit that, Wertheimer said. 

“What they haven’t had is the ability to stick together shippers and carriers in a way that can make the whole industry more efficient,” he said. “So it’s a step toward making a fragmented industry that has not been digital enough more efficient.”

Trimble agreed as much in its press release. “Today, shippers, carriers and intermediaries operate with fragmented TMS software,” the statement said. “The Kuebix acquisition will allow Trimble to break down technology barriers, enable actionable visibility and improve collaboration by delivering a single logistics platform for all participants in the supply chain.”

Dan Clark, Kuebix’s founder and CEO, said something similar in the statement. “A single-platform TMS across all transportation modes will make it easier for shippers and carriers to plan their strategy, design an optimized transportation network, improve execution and more accurately manage settlements,” Clark said. 

In an interview with FreightWaves, Trimble Senior Vice President James Langley said the acquisition of Kuebix “certainly leapfrogs us ahead” in the race to build even more integrated systems that bring together carriers, shippers and other intermediate parties in the supply chain. The challenge now will be to “start helping customers using whatever technologies they are using today to connect to the platform.”

Kuebix has been focused primarily on shippers. The cloud-based infrastructure that Kuebix bought, company founder and CEO Clark said in the interview, is built to allow expansion that brings carriers and intermediaries into the platform. “Imagine a world where you’re a shipper and you’re online and you can access visibility to an asset in real time,” he said. “I know exactly where it is, I know its availability. I know where it is going and where it needs to be. That creates efficiency for shippers, but the efficiency gains for the carrier are phenomenal.”

Langley said he can imagine a deal of this magnitude could set off other consolidation. There are “dozens of startups” trying to take advantage of the data streams coming off of ELDs, he said. “By coming together, it will accelerate the decision-making process.” 

Mergers and acquisitions have been an important part of Trimble’s strategy, according to CFRA research analyst David Holt. And new CEO Robert Painter said in the company’s third-quarter earnings call that Trimble “will responsibly use our balance sheet to pursue compelling acquisitions.” Trimble had $184.6 million in cash on its balance sheet at the end of the third quarter. 

Holt wrote earlier this week that of an 18% jump in revenue in 2018, six percentage points could be attributed to acquisitions. And in the Trimble transportation sector, Holt saw a slowdown as inevitable. “We expect a pause in spending for the transportation segment as electronic logging devices enter the final stages of mandates,” he said in the report. 

The price of the Kuebix acquisition was not disclosed. As of midday Thursday, the day the deal was announced, Trimble had not filed an 8-K report with the Securities & Exchange Commission on the acquisition, suggesting its size might be not be considered “material” under SEC guidelines. Kuebix is based in Massachusetts; Trimble is in California. 

The acquisition also marks the first purchase by new CEO Painter, who had been CFO since February 2016. He became CEO on Saturday.

Wertheimer said construction, which is a key business for Trimble, is the most wasteful industry in America, citing McKinsey findings. But transportation is second. “It’s come a long way, but it has not come to a good place compared to the rest of the economic sectors,” he said. The integration envisioned in the Kuebix acquisition by Trimble “is a major step toward it.”