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Coyote struggles for traction in UPS parent's larger infrastructure

Mar 25, 2017 at 07:03 AM CST

Going on two years since UPS Inc. spent $1.8 billion in cash and debt to buy freight broker Coyote Logistics LLC, things are not going as swimmingly as planned.

Chicago-based Coyote posted fourth-quarter 2016 net revenue—gross revenue minus the cost of purchased transportation, a key metric for companies that don't own assets—of about 10 percent below internal estimates, according to a person familiar with the matter. Coyote's problem, according to the person, is that a large portion of customers' freight that it books with carriers, while benefitting UPS by filling up "empty" miles across its vast U.S. surface network, has not been as profitable as expected for Coyote. UPS bought Coyote in July 2015 in UPS' most expensive acquisition in its history, and the biggest pure brokerage transaction ever.