In the rapidly growing e-commerce market, consumers are demanding faster shipping times, but are not willing to pay higher costs. This is putting logistics companies in a challenging position to keep their customers happy. Providers, including XPO Logistics Inc. (NYSE: XPO), are spending more on technology so they can keep up with the competitive logistics sector, and are looking for acquisitions to help.

When C.H. Robinson Worldwide Inc. (Nasdaq: CHRW) agreed to buy for $365 million in 2014, CEO John Wiehoff acknowledged that e-commerce was going to play a big role in the future of logistics. is an Internet-based freight brokerage company that allows customers to compare rates, book shipments and make payments online. The company works with major carriers such as FedEx Corp. (NYSE: FDX) and Roadrunner Transportation Systems Inc. (NYSE: RRTS).

XPO’s chief strategy officer, Scott Malat, says XPO spends about $400 million a year on technology to make sure that the 12 million deliveries that XPO makes annually succeed and its customers are satisfied. The so-called last-mile is “getting a huge push from e-commerce,” says Malat. Last mile refers to the last leg of the delivery process where the product reaches its final destination. To help expand its last-mile services, in 2015, Greenwich, Connecticut-based XPO said it will buy UX Specialized Logistics for $59 million. UX focuses on same day delivery services from e-commerce and major retailers. Even though acquisitions have been expanding XPO’s services, Malat cautions the company is going to step back from making deals for now. “Acquisitions are not a priority right now, but we’re never going to shut the door on deals,” he says.

XPO and C.H. Robinson are not the only companies that have been looking for technology-related targets. In 2015, UPS (NYSE: UPS) completed its $1.8 billion purchase of Coyote Logistics from Warburg Pincus LLC. Coyote is a non-asset based logistics provider with a software program that allows employees to handle and monitor shipping transactions. Malat predicts that there are still several deals to be processed in logistics. “There is a combination of a fragmented industry and companies outsourcing their third-party logistics (3PL) functions,” he says. “The M&A market is going to continue for a long time.”

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