February 21, 2025

TransForce International's CEO announced yesterday on an earnings call that it was going to ask shareholders permission to move its legal headquarters from Quebec to the USA.

Summary of impact

There is no indication that this will affect employment in Canada in the short-term. However, the move indicates the direction of long-term investment focus for the company is in other jurisdictions.

TransForce International (TFI) is less of a trucking company and more of a holding and acquisitions company in logistics. It buys firms and applies the cost cutting and profit maximizing strategy that it perfected in the late 1990s. That money is passed to shareholders.

Since it is a company that grows only through acquisitions, it means expanding in the USA. The USA simply has a larger market and more turnover of companies (especially over the previous 5 years).

TFI is now the fourth largest for-hire carrier in North America and the fifth largest less-than-truckload carrier.

Transforce is a publicly traded company and it’s stock collapsed yesterday during the earnings call that, for a second year in a row, significantly under performed market/investor and the company’s stated expectations on earnings.

It’s current 1 Year Return on its stock is -28.97%.

It stock has risen 225% over five years through this acquisitions strategy, but this has now hit a bit of a reality wall in that trucking is not a growing sector.

There has been a broad contraction in volume of truck shipping across the USA.

We are all talking about tariffs and so everything like this looks to people like it is about tariffs. However, the announcement yesterday to move to the USA is about stock value, not about earnings from operations.

This is more to do with:

• the economic situation in North America not being so great
• TFL's last two major acquisitions in the USA have been a huge drag on profits, including UPS Freight (now part of TForce).
• intermodal transport doing so well on setting a competitive price.
• NYSE (and other exchanges) listing requirements for companies with significant ownership stakes in the USA having to be “domiciled” in the USA.
• supposed tax benefits of a company that operates in the USA being “domiciled” in the USA.

While number 4 above might be related to tariffs and Trump's attack on taxes, the impact on earnings is not really a sure thing. The promise of lower realized taxes has always been the case for large companies operating in both Canada and the USA and affects locations of address for tax filings. In a situation where share value has tanked like it has, companies will do anything that even looks like it will prop-up earnings potential, especially moving to lower tax environments.

And, not all investors are convinced by this announcement:

“We do not believe any tax savings brought about by the US redomiciliation announcement will be enough to please investors,”

• Desjardins Securities analyst Benoit Poirier wrote in a note to clients.

• The Quebec pension fund (CDPQ) which owns 4% of TFI is opposed to any move to the USA if it affects jobs in Quebec.

There is general agreement that there is a recession in trucking that has continued since the pandemic. It is taking out companies across the USA with the most recent collapse being Jack Cooper.

Even as trucking is finding it hard to compete, contract rates in the USA (and likely Canada) are expected to go up in 2025. This is because of the nature of who is unable to compete and therefore the loss of capacity in the sector.

TFI moving its headquarters’ address to the USA is more of an indication of where it is going as an investment firm. It is the same as any fully financialized company that is operating in both Canada and the USA, we are second in priority on all things.