(MT Newswires) -- Private equity deal activity slumped in the transportation and logistics sector overall during the second quarter of this year amid uncertainty over the impact of changes in tariffs and trade on global supply chains, a report published by PitchBook has indicated.
The value of private equity deals in the sector was worth $3.53 billion in the second quarter, down 34% from the corresponding quarter of the prior year and down 69% on a sequential basis, according to the report, which was published in August. The financial data provider said that the level registered was the lowest seen since Q1 of 2024
Deal volume fell by 24.5% year-on-year to 40 in the second quarter and was 9% lower on a sequential basis.
"The Q2 2025 pullback was likely a function of owners pausing on bringing assets to market during both a shipping rate downcycle and period of high consumer uncertainty brought on by the Trump Administration's tariffs," Brad Kuntz, senior managing director at Stax Consulting, told MT Newswires in an email.
The Great Retreat from Traditional Carriers
"Private equity's retreat from traditional carriers in Q2 2025 is largely about risk and flexibility," Charles Brennan, senior analyst at Nucleus Research, told MT Newswires in emailed comments.
"Asset-heavy operators are struggling with higher fuel and labor costs, while tariffs, sanctions and environmental rules add further uncertainty. In this environment, carriers look less adaptable, and investors are shifting toward platforms and forwarding networks that can scale without the same capital burden."
The numbers make the downturn clear. Traditional transport sectors were hit especially hard in the second quarter; the air transport deal value plunged from $2.6 billion in the first quarter to $442 million in the second quarter, according to PitchBook. Meanwhile, trucking segment deals "softened modestly" in the second quarter to $446 million, according to PitchBook's report, which did not provide in its report a comparable value for trucking in the prior year period or the first quarter.
The report stated that the post-pandemic freight recession in US trucking persisted through the spring, with carrier and capacity oversupply not expected to return to equilibrium until early 2026. Marine freight rates, meanwhile, were described as remaining "soft" against a backdrop of continuing global capacity expansion and declines in US container volume amid increased tariffs.
Warehousing took off during the pandemic but vacancy rates rose above 7% in the second quarter, among the highest in decades. PitchBook said that the warehousing industry is continuing to absorb the post-COVID-19 build-out.
"The pullback indicates declining spot container rates, compression of margins and high prices of fuel, labor as well as insurance," Nick Heimlich, attorney and owner of Nick Heimlich Law, told MT Newswires in an email. "Traditional carriers are capital-intensive and hence they are not appealing in a high-interest-rate environment. I do not see this discriminating position ending in 2026 unless prices steady or financing rates reduce."
The Tech Transformation
While traditional carriers struggled, tech-focused transport companies saw a big jump in investor money. Transportation software deals climbed to $468 million across seven deals in Q2, up from $159 million across five deals in Q1. Freight forwarding segment deals did even better, pulling in $1 billion in new funding compared with just $288 million in the previous quarter.
The appeal is clear to industry observers. "Private equity firms are moving toward tech-based platforms and freight forwarders because they are generating higher profit margins and require less capital," Paul DeMott, chief technology officer at Helium SEO, told MT Newswires in written comments. "Asset-light companies can scale without purchasing expensive trucks, warehouses or distribution centers, which allows them to achieve 15%-20% EBITDA margins vs 6%-8% on traditional trucking companies."
The scalability advantages are particularly compelling. "Digital freight platforms can fulfill 300% more shipments without increasing cost proportionately," noted DeMott, who helps logistics companies expand their presence online using data-driven marketing strategies. "Traditional carriers create a linear scaling constraint based on the growth of their physical assets."
Lee Klaskow, a senior freight and logistics analyst at Bloomberg Intelligence, pointed to the bigger market forces driving these trends. "Non-asset businesses with higher return on invested capital are more attractive. It's really where the growth is, because there's an AI revolution going on," he told MT Newswires. "There are opportunities in transportation to make it more efficient and productive through technology."
Strategic Advantages of Tech Platforms
Industry experts point to several key advantages that technology platforms offer over traditional carriers. "Technology-driven segments offer what carriers cannot: visibility, compliance and resilience," Brennan explained. "Freight tech and forwarding platforms help companies diversify suppliers, buffer inventory and navigate shifting trade rules in real time."
The operational improvements could lead to better outcomes for customers. "Technology implementation along with great customer service is [determining] and will continue to determine winners and losers in the sector," Gordon Mackay, managing director at Capstone Partners, said. "Tech-enabled platforms provide more efficient back-end operations, the potential to streamline and bring together disparate systems and data and can provide a better customer experience."
What really matters to investors isn't just efficiency but the strength of the business model. "Technology-enabled firms are faster to scale, require less capital and their revenue streams are recurring (data, visibility and compliance tools)," Heimlich noted. "The digital forwarders equipped with custom house and brokerage services have become especially handy in the uncertainty of global supply chains and the complexity of tariffs."
Looking Ahead: Opportunities and Risks
Even with the problems traditional carriers face, experts still see promising areas for investment. "PE has and will continue to be interested in differentiated platforms that are not overly exposed to the broader freight cycle," Mackay explained. "Time-critical logistics, high-value/specialized cargo services and contracted warehousing are areas more appealing to PE investors."
Mike Ross, PwC US consumer markets deals leader, sees particular promise in specialized segments. "Investors in this sector continue to focus on specialty logistics verticals with structural tailwinds, including healthcare logistics, cold-chain infrastructure and reverse logistics, where demand growth remains resilient," he told MT Newswires in an email.
Bringing technology together with traditional logistics is creating some of the most exciting opportunities. "The marriage of AI-enabled tech platforms with legacy service providers in spaces such as freight brokerage, freight forwarding and freight audit have substantial promise, and is still in early innings," Mackay noted.
Still, asset-heavy operations continue to face higher risks. "The risks involve asset-intensive carriers which are vulnerable to trade volatility, labor shocks and regulatory changes," Heimlich warned.
The Road Forward
Deal value in transportation and logistics is projected to reach $14.9 billion for all of 2025, down from $22.3 billion in 2024, according to the PitchBook report.
"Investment strategies have now centered on diversified supply chains, regional alliances as well as contract formation," Heimlich said. "Companies are more well-equipped to invest [in] technology to provide real-time tracking or mobile warehousing than permanent fixed infrastructure."
The current changes appear to go beyond a typical cycle, signaling a broader shift in how private equity approaches transportation. Traditional carriers face high costs and regulatory uncertainty, while technology platforms provide scalability and stronger margins that are drawing investor interest.
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