M&A Activity Increases, Trade and Supply Chain Instability Rises

Logistics technology market merger and acquisition (M&A) and equity capital raising activity have seen an uptick in recent years, despite challenges such as economic uncertainty and delays in expected Federal Reserve easing. According to data from Capstone Partners, M&A volume rose by 14.8% year-over-year in 2025. However, this increase can be attributed to distressed sales of early-stage companies that have faced difficulties in securing additional growth capital.

Industry experts believe that the logistics technology sector is overdue for a sustained increase in transaction activity, as factors like trade policy complexities, e-commerce growth, advancements in artificial intelligence (AI), and the increasing importance of logistics services in enhancing end-customer experiences continue to drive the need for investment in logistics technology. Gordon Mackay, managing director at Capstone Partners, notes that while promising startups pursuing Seed or A rounds have been successful, businesses that raised capital in 2020-2021 are facing challenges in securing follow-up rounds, leading to an increase in M&A activity among financially strained companies.

By the end of 2024, industry participants had hoped that an improvement in logistics and freight industry conditions would lead to accelerated adoption of logistics technology. However, a delayed freight recovery has hindered sector profitability and slowed down the adoption of essential technologies. A 2025 survey by PwC revealed that 91% of logistics managers anticipate an increase in supplier and material costs and are preparing to make significant adjustments to their supply chain strategies to manage these rising costs. Additionally, 85% of logistics managers have either increased or plan to increase their technology budgets to cope with these challenges. As freight recession headwinds ease and revenue pressures diminish, it is expected that logistics technology adoption will rise.

The slow digital penetration in the sector has acted as a long-term driver of growth and M&A activity, with investors and buyers targeting profitable and scalable companies that address critical supply chain pain points and help mitigate increasing complexities. Both sponsor-backed and new platform deal volumes have kept pace with the previous year, while strategic M&A activity has been on the rise, with deal volumes increasing by 66.7% and 25% year-over-year for public and private buyers, respectively. Strategic buyers have been particularly active in pursuing inorganic growth initiatives after focusing on internal cost control efforts in the preceding year.

Financially distressed companies seeking new ownership have contributed to the increase in sector M&A activity, as securing additional rounds of growth capital has become more challenging. The industry continues to face challenges from macroeconomic volatility, geopolitical uncertainty, and the freight recession, leading to a decline in equity financing interest. This environment has favored strategic buyers looking to enhance their technology capabilities and product offerings through cost-effective acquisitions, with strategic deal volumes rising significantly.

In conclusion, while the logistics technology sector has faced obstacles such as economic uncertainty and delays in Federal Reserve easing, the recent increase in M&A activity indicates a positive outlook for the industry. As logistics managers brace for rising costs and adjust their supply chain strategies, increased investment in technology is expected to drive growth and innovation in the sector.