Should warehouse operators buy their own trucking company?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

There is no one correct answer for this that would apply to all warehouse owners.  Much depends upon the individual warehouse owner’s characteristics.  A company that has a lot of money would be more likely to do well buying a trucking company, for example.  So would one that at least has some experience working in the transport industry.  By contrast, a warehouse firm that has no expertise in transport and has little cash flow would not be as likely to succeed if it bought a trucking company.

In general, this sort of purchase makes sense.  Many companies have done well by participating in what are called “vertical mergers” or “vertical integration.”  This occurs when a company buys another company with which it has a buyer-seller relationship.  Such a relationship exists between a warehouse owner and a trucking company.  This means that the merger could be beneficial.  The warehouse owner would no longer need to go looking for a trucking firm to deliver to its warehouses or to take goods from them.  If the warehouse firm does not have any of the disadvantages mentioned above, a vertical merger with a trucking firm would be a good idea.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Approved by eNotes Editorial