Transportation & Logistics: March 2022 Market Update

GENERAL TRENDS

Logistics Industry Outlook and Observations

• Growth in the global logistics market was strong in 2021 as it reached a value of $9,525.1 billion and is projected to further grow at a CAGR of 5.7% between 2022 and 2027 to reach a value of approx. $13,326.3 billion by 2027, according to Research and Markets.

• Many of the challenges that have been caused or exacerbated by COVID-19 are expected to persist in the short-term

  • Labor shortages, supply chain disruptions, and tightening cargo capacities are all factors that continue to exert pressure on logistics providers

  • Rising inflation and evolving consumer demands are also increasing supply chain burdens across all industries

  • For the first time in decades, consumers are spending more on goods instead of services with a heavy reliance on imported products

• Despite these challenges, new opportunities for technology-driven growth have emerged as the pandemic transitions to an endemic stage

  • Ever-increasing fuel costs and advancements in development are driving significant interest towards electric vehicles in all transportation related industries, as companies and consumers alike look towards more sustainable solutions

  • Autonomous vehicles are also poised to transform road and rail freight transport, with companies like DHL, UPS, and others investing heavily in research

  • With the proliferation of digitalization and cloud-based computing augmented by AI and data analytics, new software solutions present opportunities for logistics providers to increase reliability, reduce costs, and improve overall efficiency

• Overall, transport rates and expenses are expected to steadily escalate in response to global logistics cost pressures and high product demand, but freight carriers are well positioned to capitalize on this perfect storm by expanding capabilities and adding tech-integrations to transport infrastructure

Industry Insight: Shifting Workforce Dynamics

The foundations of work are evolving, as COVID-19 initiated a revolution towards remote work, balanced lifestyles, and workforce prioritization. With labor shortages impacting suppliers, carriers, and receivers across the logistics landscape, leaders in the industry are being challenged to incentivize and retain talent.

• The logistics industry is experiencing an unprecedented labor shortage due to a number of factors, such as an aging workforce leading to high retirement numbers, overwhelming gender imbalance, lifestyle challenges, and barriers to entry such as low truck driver training school output and stringent hiring standards

• The American Trucking Association estimates that the industry will have to recruit 1 million new truck drivers over the next decade to replace drivers and hire additional ones to sustain current growth trajectories

• While job openings are plentiful, the workforce needed to fill them has contracted despite wage increases, suggesting that employees are placing greater value on relational elements such as having positive and inclusive workplace environments and incentives beyond pay

The labor mismatch in supply chains is a complex issue that is unlikely to be remedied quickly, but companies that implement meaningful changes and address fundamental shifts in the labor supply can reduce attrition and retain quality workers.

M&A ACTIVITY

Logistics Deal Activity Heating Up

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DEAL SPOTLIGHT

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SELECTED 555 TRANSPORTATION TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Healthy Living: February 2022 Market Update

GENERAL TRENDS

Nutrition & Wellness Overview

• The global dietary supplements market is estimated to grow at a CAGR of 6.7% from 2022-2027, with growth driven by a fundamental shift among consumers towards preventive healthcare

• Recent growth in the sector continues to be driven directly by the COVID-19 pandemic, with sales in vitamins and nutritional supplements surging by an unprecedented 21% last year

  • Although this tremendous growth is unlikely to be sustained at its current breakneck pace, the overarching trends in consumer health developed amidst the pandemic are expected to persist

  • Before COVID-19, over 75% of American consumers were already using some type of vitamin, mineral, or nutritional supplement

  • The pandemic not only strengthened existing consumers’ commitment to the product segment and increased their intake, but also drove new, health-conscious consumers to enter the market

• The nutritional supplement market landscape has shifted dramatically to meet ever evolving needs, as consumers have increasingly adopted a tech-enabled, holistic approach to health and wellness

  • E-commerce continues to be the fastest-growing channel in the industry as “brick-and-mortar growth in 2019 was 2.8% while e-commerce grew at nearly 10 times that rate” according to Nutrition Business Journal

  • The market is also putting intensified pressure on manufacturers to increase transparency, with high ingredient quality and ethical, sustainable sourcing entering the forefront of consumer awareness

  • Natural, organic, and functional supplements were once hindered by cost barriers, but are now among the top attributes that consumers are willing to pay a premium for

• The shift towards holistic wellness has given way to a number of new, more niche product categories beyond established categories such as multivitamins

  • While gummy supplements have quickly been cemented as a mainstream delivery form, the category continues to expand to serve new needs such as sleep quality, stress management, CBD and immune system support

  • Consumers are increasingly looking to dietary supplements as an intersection between health and beauty, with demand for collagen and fish oil continuing to grow

  • Genetic data-driven, personalized nutrition solutions designed for an individual’s specific health requirements have also garnered strong interest with a number of startups emerging this category

Preventive Health: Healthcare + Consumer

COVID-19 appears to be in its final stage as a pandemic and may be entering an endemic stage. Many of the fundamental shifts among businesses, consumers and healthcare providers may be permanent fixtures. Preventive health has emerged as a key driver of growth in the wellness industry, blurring the distinction between consumer goods, professional healthcare and technology.

• Owed to growing awareness of general health and nutrition practices, rising median incomes in developed nations, and increased focus towards holistic wellness, preventive healthcare looks to address risk factors for disease before they affect the individual

• Pandemic-related factors such as tremendous pressure on healthcare systems and a need for health and immunity solutions have increasingly driven consumers to seek remedies via consumer goods channels, such as over the counter supplements

• Preventive health has also infiltrated the technology sector as the pandemic accelerated digital transformations across the board, driving growth for tech-integrated fitness and wellness solutions such as Tonal, Peloton, Mirror and Oura

Overall, the pandemic has transformed the consumer health landscape, with a new focus on holistic wellness and balanced lifestyles augmented by readily available, tech-enabled solutions.

M&A ACTIVITY

North American Healthy Living
Deal Activity at Record Levels

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DEAL SPOTLIGHT

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555 HEALTHY LIVING TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions and mandates, customized solutions