Despite the declining freight volumes and high fuel prices of 2008, mergers and acquisitions activity among the truckload sector has remained the same
, according to an annual study released by BMO Capital Markets. The report said M&A activity was relatively healthy within the transportation industry in general.

"Overall, M&A activity for transportation industry service providers remained relatively strong last year with a total of 142 announced transactions, a decrease of only 2 percent from the number of deals recorded in 2007," said Edward McGuire, managing director in the BMO Capital Markets Transportation Group.

While deal flow in other sectors such as railway saw an increase, truckload saw 29 completed deals, which is very similar to previous years, the report said. Of this number, 45 percent of the companies acquired were through private equity and private equity-backed strategies companies.

"Despite market challenges, we are seeing modest deal flow in the transportation sector in the first half of 2009," McGuire said. "Deals getting done, however, are characterized by longer time periods for financing and due diligence."

Meanwhile, the LTL industry completed nine deals, 89 percent through strategic companies. According to the report, this activity has been progressively lower in the last few years as a result of steady consolidation of the industry.

However, decreased freight and rising fuel prices forced many truckload carriers into bankruptcy in 2008. For the first, second and third quarters, bankruptcies increased 143 percent, 118 percent and 50 percent, respectively, year-over-year.

The outlook for next year doesn't fare much better for the transportation industry, however, which will still be reeling from low freight and restrictive capital structures, the report said. The study found a 6.5 percent reduction in the U.S. trucking fleet during the first nine months of 2008, including about 39,000 less trucks in the third quarter alone.