What a year 2010 has been! Rates are up, volumes are up, and deal activity is up!

In the last year, we've seen the recession end (according to Bernanke, in June 2009), truckload rates spike (in some lanes as much as 30%), LTL rates bump up 5-10%, volumes inch up (2-4% in aggregate), pop as high as 24% in ports like LA/Long Beach, and M&A markets return. Valuations, while not has high as 2005-2007, seem to be back to the long-term average levels we say throughout the 1990s. Deals like Converge-Arrow and Genco-ATC reflect an increased appetite for growth.

What should we expect to see in 2011?

First, we anticipate a continuing increase in freight rates. Regulatory changes like CSA 2010 will reduce the pool of available drivers, pushing up driver compensation rates. Fuel volatility may also contribute to higher rates. And finally, trucking companies' reluctance to add capacity will also put upward pressure on transportation costs.

Second, we expect to see profits strengthen in the sector. Already, we have seen public firms like UPS and FedEx report positive earnings surprises, in some cases as high as 20%. In the private sector, trucking companies have been among the first to benefit, followed by freight forwarders, port-based logistics providers, and warehousing companies. Typically, truck brokerage firms are the next to benefit in the cycle, and we expect firms like CH Robinson and their private equivalents to follow suit next year.

Third, we see owners of transportation and logistics companies testing the market more aggressively. In 2009, nobody wanted to sell, given depressed profits and reduced valuation multiples. In 2010, plenty of buyers emerged, but the gap between buyer and seller expectations posed an obstacle. In 2011, buyer expectations appear likely to increase, as both sellers' operating performance and the financial markets are supporting healthier prices. At the same time, sellers who want to take advantage of Bush-era tax levels appear likely to win a two-year reprieve. In sum, this will make 2011 a busy year for buyers and sellers.

In sum, 2011 should be an exciting year of opportunity for many firms in our industry!