Brazilian cargo company Modern Logistics expects to enter the U.S. and Mexican markets in the next few months as it puts in place an expansion strategy that will include looking at merger and acquisition opportunities in the short to mid-term

Why It’s Important

Modern is a big player in the fast-growing cargo market in Latin America’s largest economy, which has been boosted in recent years by e-commerce and infrastructure investments.

Restructuring

Established in the 2010s by former Azul (AZUL.N) executives, Modern underwent a restructuring last year that saw former FedEx (FDX.N) executive Cristiano Koga appointed as CEO.

The firm is backed by asset manager DXA and private-equity firm H.I.G. Capital. It has invested some 300 million reais ($53.58 million) over the past year to get new aircraft and enhance distribution centers, Koga told Reuters.

Expansion

Modern, whose main hub is the Viracopos airport near Sao Paulo, started flying to Chile, Ecuador, Colombia, Argentina and Uruguay in August and aims to enter Mexico and the U.S. in 2025.

The ongoing expansion, whose first phase was organic, includes possible mergers or acquisitions both in Brazil and abroad in the next 18 to 24 months, Koga said.

An initial public offering (IPO) or strategic merger could be ultimate goals but would depend on market conditions.

Additional Context

The size of Brazil’s freight and logistics market is estimated at $105.5 billion and expected to reach $140.7 billion by 2030, according to research firm Mordor Intelligence.

Other major logistic operators there include the cargo divisions of traditional airlines Azul, LATAM (LTM.SN) and Gol (GOLL4.SA), as well as Total, Jadlog and Braspress.

Modern currently operates four Boeing (BA.N) 737 aircraft, including two next-generation 737-800 added over the past year, and has options to add more, Koga said.

Reporting by Gabriel Araujo via Reuters