Red-hot 3PL: AOI Capital acquires RK Logistics

3PL RK Logistics acquired by AOI Capital

With e-commerce booming and warehouse space shrinking, 3PLs have become hot commodities. The latest is RK Logistics Group, which manages about 1 million square feet of warehousing and distribution capacity in the competitive California market.

On Friday, a group of investors led by Miami-based investment firm AOI Capital announced they have acquired RK Logistics Group. Terms were not disclosed.

“RK Logistics Group has a stellar reputation as a high-performance supply chain operator supporting some of the most demanding, complex and mission-driven businesses in Silicon Valley,” said Joe MacLean, chief executive of AOI Capital. “We welcome RK Logistics to our portfolio and we are confident that with RK’s skilled workforce, collaborative employee culture and a proven, agile approach to customer solutions, together we will build on its track record of sustained, profitable growth.”

Founded in 2009, AOI Capital invests in startups and ongoing businesses with a particular focus on e-commerce, pharmaceutical sales and distribution, and third-party logistics services. RK Logistics checks two of those boxes.

“This is the start of an exciting new chapter in our journey,” said Rock Magnan, president of RK Logistics Group. “We look forward to benefiting from the business acumen and financial expertise Joe MacLean and his team bring to the table.”  

MacLean said RK’s current management has been retained and will continue to run the day-to-day operations of the company.

RK Logistics operates in Newark, Fremont and Hayward, California, and employs over 300.

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Following the sale, RK’s founder and chairman, Rod Kalune, is retiring. Kalune founded the company 35 years ago with one warehouse and a few trucks. He has spent 40 years in Northern California trucking and logistics businesses.

Last year was a historic time for industrial real estate. According to a report from logistics real estate firm Commercial Edge, transactions closed in the first 11 months of 2021 totaled $61.6 billion across its markets, setting an all-time high for sales volume. Sales prices averaged $111 per square foot in November, up 27.4% on a year-over-year basis.

There was 293.9 million square feet of industrial capacity delivered nationally by the end of November, with an additional 555.4 million square feet currently under construction, representing 3.4% of total stock nationally, the company said. An additional 520.5 million square feet of space was in the planning stages as of December.

Magnan had previously said that logistics providers were starting to see a shift in the way businesses managed inventory.

“What has for the better part of two decades worked almost flawlessly is now [disrupted],” he told Modern Shipper in December. “You can clear the ports in six weeks miraculously, but that doesn’t fix the problem. The ships are unloaded, but that doesn’t fix the logistics problems. You have containers on the wrong side of the ocean. You have a shortage of truck drivers. You have a lack of warehouse space where it’s needed.”

Watch: Will 3PL M&A continue?

The result, Mangan said, is that businesses were interested in moving away from just-in-time inventory strategies to stocking more items, and that is pressuring 3PLs and warehouse operators, especially as e-commerce shows little sign of slowing.

Real estate services firm JLL (NYSE:JLL) published a survey in August of over 720 logisticians that found 74% predict 5% annual growth or more in warehouse demand over the next three years. About 28% of those said it would be 20% or more, and 71% expect demand from e-commerce to grow significantly through 2024.

Chris Wofford, managing director of Wofford Advisors, said that 3PL mergers and acquisitions are expected to remain hot for the foreseeable future.

“This is one of the hottest markets we’ve seen for selling 3PLs in recent memory,” he told the audience during a fireside chat at FreightWaves’ 3PL Summit in March. “We obviously have some headwinds that we’re experiencing: inflation, what’s happening with Russia and Ukraine, and geopolitics broadly. And those issues absolutely manifest in business models. The certainty of cash flows, the certainty of entrance and exit, the certainty of closing when deals can be subject to CFIUS [U.S. government national security] review and things of that nature. But the real issue that buyers and sellers are struggling with the most is how much of a COVID bump did business models experience, and how much of those supply and demand shifts or changes in behavior are here to stay.”

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Source: freightwaves - Red-hot 3PL: AOI Capital acquires RK Logistics
Editor: Brian Straight