Most commuters may look at this region's gridlocked beltways and cities as a nightmare. But Europe's largest private operator of buses and commuter trains sees only lucrative opportunities.
That is why Connex is acquiring privately held Yellow Transportation Inc. of Baltimore, the chief executive of the French company said yesterday in his first interview since the deal was confirmed last week.
"The Washington-Baltimore metropolitan area is one of the fastest-growing and most congested areas in the U.S.," said Antoine Frerot. "We hope to make [Yellow] the regional flagship of transportation."
Aside from Maryland, Connex sees opportunities in Washington and Virginia, particularly that state's fast-growing Loudoun County and the Dulles airport corridor, Frerot said.
Yellow not only operates more than half of Baltimore's taxicabs, it also provides transit services for universities and hospitals, plus luxury sedan and limousine service for corporate clients in Maryland, Virginia, Washington and Connecticut. Its taxicab business accounts for just 15 percent of revenues, said Mark L. Joseph, 45, Yellow's president and chief executive.
Local clients include the Johns Hopkins University, several Maryland counties, the Baltimore Ravens and the Maryland Mass Transit Administration.
Connex is a $3 billion-a-year company that operates in 19 countries and has experience running taxi, bus, trolley, and commuter and regional rail networks. Connex is a unit of Vivendi Environnement SA, a French waste management, energy, water and transportation company.
Acquiring the 92-year-old Baltimore company fits with Connex's strategy because of Yellow's experience in the public transportation sector and its established reputation in the region, Frerot said. The deal marks Connex's first entrance into the North American market.
At a news conference in Paris, Frerot said Connex is aiming for $500 million in U.S. transport sales within four years. Yellow expects to have $42 million in sales this year, company officials said.
No other acquisitions are planned, but Connex is bidding on a contract for a commuter rail line in California's Silicon Valley, he said.
The company plans to form a wholly owned subsidiary, Connex North America, which will control the company's expansion on this continent.
"We will bid and propose some initiatives through Yellow, but we could also act directly through Connex North America in other markets, such as the commuter rail markets, outside Yellow's region," Frerot said.
Nationally, the number of public transportation riders, excluding Amtrak passengers, has been rising 4 percent per year for the past five years, said Amy Coggin, a spokeswoman for the American Public Transportation Association in Washington.
The APTA, a trade association of U.S. and Canadian transit companies, reported that 9.4 billion rides were taken on the nation's trains and buses last year, the highest number of trips in more than 40 years.
"Certainly in the Washington metro area, anybody who lives here can tell you that ridership has been increasing," Coggin said.
Connex also saw Yellow as a good fit for its transit services for disabled passengers. Yellow currently provides the service under a contract with the Maryland Mass Transit Administration.
"Yellow has very good expertise ... [in the field that] could bring to us very good opportunities outside of the United States," Frerot said. Transportation for the disabled is more developed in the United States, and Yellow's expertise "could be exported to other parts of the world," he said.
Joseph, who will continue as chief executive, said he made the decision to sell to Connex because he believed the company could bring more resources to the U.S. market and pursue larger contracts.
"We expect a number of major contracts in the next few years" to arise in traffic-congested Northern Virginia, he said. Selling to Connex "gives us an opportunity to pursue them."