Tech-enabled brokerage platform RXO will buy UPS’ freight brokerage operation for $1.025 billion in cash to enhance its market position, diversify and expand its customer base and broaden its carrier network. 

Upon closing the acquisition of Chicago-based third-party logistics provider Coyote Logistics, expected by the end of the year, RXO says it will be the third-largest provider of brokered transportation in North America. Under the terms of the agreement, RXO will continue to serve UPS’s brokered transportation needs under a contract that runs through January 2030.

Meanwhile, UPS officials said the sale will allow the company to refocus on its core business as a small package provider and logistics partner.

Coyote Logistics generated approximately $3.2 billion in revenue in 2023 with approximately $470 million in gross margin and approximately $86 million of adjusted EBITDA. The company manages about 10,000 loads per day and works wil 100,000 network carriers, UPS officials said in a news release.

“The addition of Coyote’s customer base will diversify RXO’s vertical mix and will increase the number of customers that do more than $1 million in business with us by approximately 80%,” RXO CEO Drew Wilkerson said in a June 23 news release. “This acquisition will provide RXO with both immediate and long-term opportunities for revenue and earnings growth.”

RXO was formed in 2022 out of XPO Logistics, which was launched by Brad Jacobs, who this year announced his entrance into the building products distribution industry with the formation of QXO.