Trimble Acquires Transporeon as Part of Its Ambition to Bring Logistics Connectivity to the North American Market

Technology solutions giant Trimble announced last week that it will acquire German transportation management platform Transporeon. Trimble is a California-based, publicly listed company that acts as a supply chain technology provider for trucking companies, freight brokerages, and Third-Party Logistics (3PLs) providers. Its transportation division provides services include enterprise, mobility, last-mile, mapping, and enterprise solutions. The all-cash deal unveiled on Monday last week is valued at US$1.98 billion and is expected to close in 1H 2023. Transporeon uses a cloud-based Transportation Management System (TMS) to connect carriers, logistics service providers, and shippers for enhanced connected visibility. Rob Painter, Trimble’s president and Chief Executive Officer (CEO), said digital software solutions are in high demand in the commercial transportation market and the acquisition of Transporeon represented a great opportunity.

Despite the hefty acquisition fee, Transporeon’s value proposition and its standing as one of the key visibility and operational management solutions providers in Europe’s supply chain present some unprecedented benefits:

• Scaled Cloud-Based Transportation Management Platform: Transporeon's platform and network enables 145,000 carriers and logistics service providers and 1,400 shippers and load recipients to manage approximately €48 billion of freight spending and more than 25 million transports each year. Network participation has grown continuously over 15 years and the platform integrates with more than 3,000 global Enterprise Resource Planning (ERP), Warehouse Management System (WMS), and TMS solutions.
• Addition to Trimble’s Total Addressable Market (TAM): Transporeon is a scaled, high-growth software platform expected to generate approximately €190 million in revenue in 2023 on a full-year basis, representing approximately 25% growth Year-over-Year (YoY). The addition of Transporeon expands Trimble's TAM by approximately US$5 billion, with its strong footprint in the European market.
• Lucrative to Trimble Shareholders: Greater than 90% of Transporeon’s revenue is through subscriptions or recurring transactional revenue, which has led to the business consistently achieving favorable net retention with very low churn.
• Experienced Management Team: Transporeon's management team consists of leaders in software, transportation, supply chain and logistics, and network management with years of experience operating as the leading TMS provider.

Although Transporeon’s platform works globally, its current business is predominantly in Europe. Transporeon’s CEO has acknowledged that North American supply chains are highly fragmented, unlike Europe’s. Earlier, Transporeon lacked a large carrier network supporting it in such a highly siloed market. Thus, joining Trimble presents a competitive advantage for Transporeon when approaching prospective customers in this highly competitive market.

For Trimble, Transporeon’s capabilities as a TMS provider allow it to venture into untouched markets globally without the need to establish TMS functionalities from the ground up. Expansion into new markets with a TMS product is a strategy Trimble has been talking about for years and has made unsuccessful attempts before. It acquired TMS provider TMW Systems for US$335 million back in 2012 in order to move into the international TMS market. However, this strategy proved to be unsuccessful as Trimble didn’t understand the subtleties of how different transportation and logistics markets worked. Accommodating multiple languages undoubtedly is a major determinant when venturing into new digital solutions markets, a factor at which Transporeon has already excelled. But it is imperative for Trimble and Transporeon to acknowledge the nuances of different supply chains and transportation networks, including North America, and plan accordingly when they look to break into untouched markets.