- Sysco is set to acquire fresh produce distributor The Coastal Companies, adding to a growing list of transport and logistics companies making acquisitions.
- Terms of the deal were not disclosed, but The Coastal Companies' annual revenue is about $600 million, and it includes three businesses: Coastal Sunbelt Produce, a foodservice distributor; Lancaster Foods, a retail distributor; and East Coast Fresh, a processor and manufacturer.
- The purchase includes fleet assets, a spokesperson confirmed via email. Once the acquisition is complete, the companies will be folded into FreshPoint, which is Sysco's specialty produce business.
Many shippers have leaned into growing their private fleet operations, largely because of the control it allows over costs and customer service in a volatile environment. Nearly half of shippers with private fleets say customer service is their primary justification for operating an in-house fleet, according to a recent survey by the National Private Truck Council.
Sysco's latest acquisition diversifies its portfolio of businesses as well as its geographic footprint. Its FreshPoint division is concentrated in the southern U.S., with some outposts in the Pacific Northwest and Connecticut. The Coastal Companies' base in Maryland gives Sysco's FreshPoint a greater presence in the Mid-Atlantic, the news release stated.
Coastal Sunbelt operates a 330,000-square-foot facility in Maryland and a 123,000-square-foot one in Virginia, and Lancaster Foods has a 220,000-square-foot cold warehouse, 28 shipping doors and 15 receiving doors in Maryland — all of which will become part of FreshPoint when the acquisition closes.
Acquiring the distributors also gives Sysco additional fleet assets, at a time when ordering new tractors and trailers is a challenge due to supply chain constraints and semiconductor shortages.
Lancaster Foods said on its website it has "an extensive fleet of vans, straight trucks and tractor-trailers," and Coastal Sunbelt's fleet includes more than 225 reefer trucks. Reefer capacity is in high demand, which spot market data reflects. There are about nine loads posted to DAT load boards for every available reefer truck, and rates have surpassed $3 per mile.
Sysco is already the largest foodservice fleet and the second largest private fleet (after PepsiCo) with 8,745 tractors and 10,593 trailers, according to Transport Topics rankings.
Sysco has grown its business via acquisition throughout the year. In May, it announced the purchase of Greco and Sons, an Italian specialty distributor with $800 million in yearly revenue. In October, it acquired Paragon Foods, also a produce distributor that began to be operated as part of FreshPoint.
CEO Kevin Hourican touted Sysco's fill rates as being above the industry average, "although our fill rates still lag our historical standards," he said on the distributor's earnings call in November.
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