UPS has entered into a purchase agreement to acquire Coyote Logistics, a non-asset based truckload freight brokerage company for $1.8 billion from the global private equity firm Warburg Pincus.

Coyote arranges freight shipments on available trucking capacity contracted to members of its carrier network of more than 35,000 trucking companies.

"This deal gives UPS a real presence in the U.S. truckload brokerage market — the largest market in transportation," explains Dave Ross with Stifel Transportation & Logistics Research Group in an email to investors. "And, if one is going to enter truck brokerage, there are only a couple companies behind industry-leader C.H. Robinson to consider to become a player. As a fast-growing top-3/4 player in the market, Coyote helps round out the UPS portfolio."

In the past, UPS often used Coyote during peak holiday shipping season to supplement its fleet with contract transportation providers. In the past few years, Coyote’s role in supporting UPS’s peak operations had grown and the company expects to leverage Coyote’s carrier network even further for this purpose in the future.

“Through the Coyote network, UPS will provide our combined customer base with an even more seamless supply chain solutions portfolio from multi-modal freight shipments to small-package delivery,” said Alan Gershenhorn, UPS executive vice president and chief commercial officer. “We will now also have the technology to help our customers improve the utilization of their fleets as part of an extended network of carriers."

Coyote CEO Jeff Silver will continue to head the company, which will operate as a subsidiary of UPS. Coyote generated $2.1 billion in annual revenue last year.