UPS to sell freight-brokerage division at a loss compared to 2015 purchase price.

United Parcel Service (UPS) announced on Sunday that it has agreed to sell its Coyote Logistics division to RXO for just over $1 billion. This amount is less than what UPS paid for the freight-brokerage company in 2015. The decision to sell Coyote Logistics is part of UPS’s strategy to focus more on its core package-delivery business.

The sale of Coyote Logistics is expected to be closed by the end of the year, pending regulatory approval. Once the sale is completed, UPS plans to update its financial outlook. UPS CEO Carol Tome stated that selling Coyote Logistics will allow the company to concentrate even more on its primary business operations.

Freight brokers like Coyote Logistics act as intermediaries between shippers and carriers such as UPS. RXO, a freight broker based in Charlotte, North Carolina, shared that acquiring Coyote will nearly double the company’s annual revenue to $7.1 billion. This move would make RXO the third-largest freight broker in North America. Coyote Logistics currently has 15,000 customers and 2,500 employees.

When UPS acquired Coyote for $1.8 billion from the private-equity firm Warburg Pincus, it aimed to expand in the growing freight-brokerage industry. Initially used by UPS to provide additional truck space during peak holiday seasons, Coyote had a network of over 35,000 trucking companies at the time of acquisition. However, the company now works with 100,000 carriers and manages 10,000 loads per day from its headquarters in Chicago.

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