Berkshire Hathaway has recently taken steps to acquire almost 40% of the operator of Pilot and Flying J travel centers. Pilot Flying J has 750 locations in the U.S where truckers are able to refuel, eat, and shop; the company has more than $20 billion in annual revenue. After 2023, Berkshire Hathaway hopes to buy an additional 40% stake leaving the Original owners with 20%.
The investment is Berkshire’s latest bet on traditional forms of transportation and U.S. economic growth. Mr. Buffett already owns BNSF Railway, auto-dealership group Berkshire Hathaway Automotive, car insurer Geico and private-jet company NetJets.“There will be more goods moving to more people as the years go by in the United States—that I would bet a lot of money on,” Mr. Buffett, Berkshire’s chairman and chief executive, said in an interview.
The deal runs counter to the massive projected growth in electric vehicles and self-driving cars and trucks expected by some analysts. Belief in those businesses has helped Elon Musk’s Tesla Inc., for example, post a more than 60% stock-price jump in the past year.
This purchase seems interesting as the current trends seem to indicate that self-driving trucks and transportation will be the norm in the future. However,
Jimmy Haslam, Pilot’s chief executive, said in an interview that both trends still have a long way to go before becoming mainstream and disrupting the truck business.”We personally believe—and we spend a lot of time talking to both truck and car manufacturers—that it will be a long time before there’s not a person in the truck,” Mr. Haslam said. “I think diesel fuel will power trucks for a long time to come, and there will be a person in that truck for a long time to come.”
Personally, I don't see a long-term upside for truck stops. I believe that self-driving trucks will become the industry standard in the next 15-25 years. What I can see for Flying J in the future, is if the company adapts and becomes a service stop for self-driving trucks.
What do you guys think of this? Will self-driving trucks come sooner or later than we expect them to? How will Flying J adapt? Did Warren Buffet make a smart move with this purchase?
Trucks currently get about 8 mpg. I would be willing to bet that even a 50% improvement in fuel efficiency is billions of dollars cheaper than the total cost of energy to produce and operate electric trucks. Truckers will still need a place to refuel and chill out while on the road.
Spend some time out on the road and you will see how many trucks there are. Additionally, truckers are limited in their daily hours they can drive, so they need somewhere to stay/park if on long trips to rest and be social with other truckers. This is a good bet - truckers are people too.
You're missing the forest through the trees. He's betting on online sales and delivery to continue to increase and trucking goods across country as consumers step less into traditional retail stores.
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