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One of Utah's oldest family-run trucking companies, UW Freight Line Inc., is about to be sold to one of its national competitors.
Old Dominion Freight Line of Thomasville, N.C., said Tuesday it signed a contract to purchase the assets of the 33-year old, Salt Lake City-based "less-than-truckload carrier" that operates by consolidating freight from different customers before putting its trucks and trailers on the road.
It expects to close on the deal by the end of the month. Terms of the sale were not disclosed.
"Smaller carriers are finding it tougher and tougher to survive alone," said J. Wes Frye, Old Dominion's senior vice president of finance. "While for us, this transaction provides a way to expand our service in Utah and several other Western states."
Old Dominion operates a terminal in Salt Lake City, as does UW Freight. But Frye said the company probably will consolidate operations at UW Freight's headquarters and sell its own terminal.
More importantly, though, the acquisition of UW will give Old Dominion seven additional terminals in Utah and provide the company statewide coverage for the first time.
It will gain similar state-wide coverage in Idaho, Nevada and Colorado and initial entry into the Wyoming market, Frye said.
Utah Trucking Association executive director David Creer said there is a wave of consolidations rolling over the trucking industry nationwide.
"Small and midsized carriers are having a lot of trouble dealing with an increasing regulatory burden, higher insurance costs and rising fuel prices," Creer said. "The larger companies are better positioned to take advantage of the economies of scale that can help them keep their costs down."
Creer pointed to United Parcel Services' acquisition last year of North Salt Lake-based Motor Cargo Industries as another Utah example of the trucking industry's consolidation.
UW Freight Line, short for Utah-Wyoming, was founded in 1973 by David R. Free, who was a longtime chairman of the Governor's Motor Carrier Advisory Board. The company generated revenue of approximately $23 million for its fiscal year ended June 30, 2005.
Free, who is said to be in ill health, also is the only Utahn to have served as chairman of the American Trucking Association.
His son, David G. Free, serves as president of UW Freight Line. He could not be reached for comment on the sale, so it is unclear what his role might be under the new ownership.
With its acquisition of UW Freight, Old Dominion will have full operations in 37 states and a smaller presence in nine more. For the first nine months of 2005, the company reported revenue from operations of $776 million, up 29 percent from the comparable period in 2004. Net income for the nine-month period increased 38 percent, to $39 million.
"Right now we're a $1 billion a year company and we have plans to double our size over the next five years," Frye said, noting the company's acquisition of UW Freight will help it achieve that goal.