Warren Buffett has struck a deal to acquire truck stop operator Pilot Flying J, despite expectations of an autonomous trucking industry.
Buffett’s Berkshire Hathaway conglomerate will become a majority owner in Pilot Flying J, which has over 750 locations in the US and Canada. Starting with an initial 38%, the firm plans to increase its stake to 80% in 2023. Owned by the Haslam family, Pilot Flying J is the 15th-largest private company in the US, generating more than $20 billion in annual revenue. CEO Jimmy Haslam will continue to run it. “He truly wants us to run the company, wants us to maintain the culture,” Haslam said of Buffett. “It’s just a marriage that we thought made a lot of sense.”
“Jimmy Haslam and his team have created an industry leader and a key enabler of the nation’s economy,” Buffett said in a statement. “The company has a smart growth strategy in place and we look forward to a partnership that supports the trucking industry for years to come.” Among the more than 90 businesses in Berkshire Hathaway’s holdings are several other industrial sector companies, such as Marmon Holdings, IMC International Metalworking and Precision Castparts, according to Reuters.
Berkshire Hathaway’s interest in Pilot Flying J has some scratching their heads, since a chain of truck stops would seem ill-suited to the future many imagine, in which autonomous vehicles handle the bulk of road freight. Buffett, the “Oracle of Omaha,” has addressed the issue, telling Bloomberg News that he is not concerned. “Trucks are going to be around for a very long time,” he said. “Who knows when driverless trucks are going to come along and what level of penetration they have.”
Automotive journalist David Kiley posits that Buffett sees the chain not only as a stable near-term revenue stream serving gasoline and diesel-powered trucks, but also as a potential network of charging and natural gas stations. The US recharging network is far from ready for mass-market EVs, but demand is bubbling just below the surface. “As more cars and trucks that run on electric power and natural gas hit the road, networks that can refuel with multiple fuel sticks will become even more valuable, not less as autonomous vehicles gain momentum,” Kiley writes.
Further, Buffett is a known proponent of electric car technology. He predicted rightly that a large automotive market would develop in China and other parts of Asia, and that developing markets, unencumbered by legacy investments, would invest more in electric vehicles. This year, EV sales are forecasted to grow 30% in China alone. UBS predicts that global EV sales will reach over 14 million by 2025. A growing portion of the oil and gas industry agrees that energy diversification is not going away. Branching out into cleaner energy sources, aside from any environmental considerations, will simply be good business practice, on the road and elsewhere.
