Merger and acquisition (M&A) activity in the transportation and logistics industry increased in the third quarter of 2014 over the same period last year, driven by smaller deals in the trucking, logistics, shipping and passenger air modes, according to Intersections,  a quarterly analysis of global deal activity in the transportation and logistics industry by PwC US. In the third quarter of 2014, there were 48 transportation and logistics transactions (worth $50 million or more) with a total value of $13.6 billion, compared to 44 deals totaling $12.1 billion in the same period in 2013. Deal value and volume decreased on a sequential basis compared to 52 transactions worth $20.6 billion in the second quarter of 2014, largely as a result of several mega deals (transactions valued at $1 billion or more).  The sector saw a lull in infrastructure deals in the third quarter of 2014, which accounted for the majority of mega deals in 2013. However, PwC expects to see the return of larger infrastructure assets to the market, which could result in higher deal values in the coming quarters. The lack of mega deal activity, combined with the interest in trucking M&A, which tends to carry lower valuations, contributed to a lower average deal value ($283 million) in the third quarter of 2014. “While deal values remain low, the volume of M&A activity in the third quarter was up compared to the first half of 2014 as we saw more consolidation in some of the highly fragmented modes in the sector,” said Jonathan Kletzel, U.S. transportation and logistics leader for PwC. “The sector has seen ongoing focus on smaller announcements, but with continued interest among governments in exploring privatizations, the return of infrastructure deals and higher deal values is likely to occur in the coming quarters.” Trucking and logistics deals continued to increase, with the two modes combined representing more than 40 percent of M&A activity in the third quarter. In particular, the North American trucking M&A market is robust with companies looking to improve geographic reach, expand truckload businesses, enhance logistics offerings and add new capacity as freight demand improves. Shipping and passenger air also contributed to the increase in deal volume in the third quarter, representing 23 and 21 percent of activity, respectively. In shipping, while there has been a shift in focus to alliances, the market could see additional shipping transactions moving forward, for example, in China where the government has recently loosened rules on foreign investment and ownership restrictions in certain areas. On a regional basis, Asia and Oceania acquirers accounted for more than 41 percent of deal volume in the third quarter, followed by North America with 33 percent, and the UK and Eurozone with 18 percent.  Local market deals continue to represent the majority of activity with 31 transactions or nearly 65 percent of activity. The sector saw a healthy level of financial investment with financial investors accounting for 40 percent of all deals worth $50 million or more during the third quarter of 2014. According to PwC, with the return of infrastructure assets to the market in the coming quarters, it’s likely that the sector will see new interest from private equity players. “While overall deal valuations remain high, the substantial cash levels of strategic investors should be enough to finance new M&A.  Accordingly, we are optimistic about the health of the transportation and logistics deal market as we enter the final quarter of 2014,” concluded Kletzel. PwC’s transportation and logistics M&A analysis is a quarterly report of announced global transactions with value greater than $50 million analyzed by PwC using transaction data from Thomson Reuters.