Forward Air said Tuesday that it will continue working with one of its largest customers, which had provided notice in May that it might pull all of its business. A non-binding arrangement with the customer will allow Forward to keep half, and potentially up to 75%, of the $250 million account. A memorandum of understanding keeps the current contract in place for at least the next two years.
The service transition of the unretained portion of the business is expected to occur in December and throughout next year.
Forward (NASDAQ: FWRD) previously said the customer was seeking to diversify its list of vendors, emphasizing that the customer’s potential departure had nothing to do with the “exceptional service” being provided. However, Forward’s shares plummeted over 40% following the warning that it might lose a customer responsible for 10% of its annual revenue.
It said the potential loss of business also foiled its plan to sell the company. (Forward commenced a strategic review at the beginning of 2025 as pressure from investors mounted following its contested merger with Omni Logistics.)
Instead, Forward is now looking to sell its intermodal unit and two smaller legacy Omni businesses, which generated $394 million in combined revenue last year. Proceeds from the sales will be used to delever the balance sheet. Net debt of $1.65 billion stood at 5.4 times last 12 months’ adjusted EBITDA at the end of the first quarter.
“We are extremely pleased with the productive conversations we have had with one of our largest customers, including the prospect of retaining up to 75% of the Customer’s business with us and meaningfully extending the contract term,” said Shawn Stewart, Forward president and CEO, in a Tuesday news release. “This agreement builds on our 20-year relationship and underscores the impeccable service the Forward Air team continues to provide.”
Shares of FWRD were up 19% in early trading on Tuesday compared to the S&P 500, which was up 0.5%.
Why it matters? This story highlights the potential impact one large customer can have on an entire enterprise. It also looks at several critical dynamics in the logistics industry, particularly around vendor reliability, risk mitigation and service strategy.
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