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Forward Air keeps share of $250 million account after customer notice
A memorandum of understanding extends the current contract for at least two years, while the unretained portion is expected to transition starting in December.
Forward Air said it has reached a non-binding arrangement with one of its largest customers that provided notice in May it might pull all business. The deal would allow Forward to keep half of the customer’s $250 million account, with potential retention of up to 75%.
The company added that a memorandum of understanding keeps the current contract in place for at least the next two years. Forward expects the service transition for the portion it will not retain to occur in December and continue through next year.
Forward noted the customer had been seeking to diversify its vendor list, and it said the potential departure was not tied to the “exceptional service” it provides. Still, Forward’s stock dropped more than 40% after the notice, after the customer was described as responsible for 10% of annual revenue.
Forward also said the potential loss of business derailed its plan to sell the company, prompting a shift to asset sales instead. The company is now looking to sell its intermodal unit and two smaller legacy Omni businesses, which generated a combined $394 million in revenue last year, and plans to use proceeds to delever its balance sheet.