Business Match Europe

M&A in Logistics – Continuing to Shape the Market

Key Drivers

As in other industries, logistics M&A takes many forms, and the exact nature and structure of deals are derived from many different circumstances, ambitions, objectives and strategies of buyers and sellers alike. Sometimes the transactions are a long time in the making, sometimes they are quicker and more borne of necessity – perhaps in times of financial distress for a would-be seller – or unexpected opportunity.

Globally, private equity takeovers in the logistics sector have been increasing in number from a previous high point in 2018, often involving publicly listed companies as the acquisition target. The $ 1.3 Billion purchase of Chicago-based Echo Global Logistics by The Jordan Company, completed in November, is a case in point. In January, Ridgemont Equity Partners acquired a majority stake in privately-owned global forwarder SEKO Logistics for an undisclosed sum.

On the other hand, many transactions are driven by the strategic expansion and market-share growth ambitions of some big logistics players themselves, with their larger competitors firmly in their sites. DSV’s August acquisition of Agility’s Global Integrated Logistics division, for a $ 4.8 billion non-cash consideration in the form of 8% of DSV’s worldwide shares, is the stand-out example from 2021. An immediate gain in market share in key geographic areas for DSV and a new strategic partnership with Agility’s logistics infrastructure business to support further expansion of DSV’s global logistics network were two important strategic outcomes.

In February, SF Holding, parent company of Shenzhen-based SF Express, a leading domestic and international express delivery company with its own fleet of some 50 aircraft, acquired Kerry Logistics in a $ 2.3 Billion which was alleged at the time to have ‘created the biggest logistics group in Asia’. This followed SF Holding’s 2019 acquisition of DHL’s supply chain operations in China, Hong Kong, and Macau.

DHL’s take-over of the ocean freight and drinks logistics specialist Hillebrand Group was a strategic move in support of DHL’s on-going expansion of its global ocean freight business sector.

European Activity Abounds

And there are plenty of smaller, regional acquisitions which don’t necessarily attract the same headlines. Europe is a particularly busy area in this respect. In the UK, Wincanton increased its eCommerce capacities with the purchase of Cygnia Logistics in September, and in the same month, J&J Denholm concluded negotiations to acquire John Good Logistics. US-headquartered 4PL CH Robinson expanded its road transport presence with the acquisition of Combinex in May, and Geodis’ acquisition of the Pekaes Group in Poland was followed by its purchase of French part-load operator Transports Perrier in December.

The Danish 3PL Scan Global Logistics A/S made several acquisitions in Europe and globally in 2021 – whilst individually, these deals are relatively small, together they comprise and reflect a clear determination for network and market share growth by this ambitious organisation. Examples include Grupo Contenosa (Spain, annual sales turnover around € 65M), Orbis Global Logistics (New Zealand, annual sales turnover around $ 20M) and the UK’s Horizon Global Logistics (annual sales turnover £ 48 M / € 57 M).

In Germany, Rhenus’ acquisition of German freight forwarder BLG added 6 more depots in key locations, and in Benelux the € 100 M turnover GVT Transport & Logistic have been bought in November by the French global logistics organisation ID Logistics.

Vertical Acquisitions: Shipping Lines & 3PLs

Now we are on the cusp of some major ‘vertical’ acquisitions with two of the world’s largest shipping lines looking to gain a stronger foothold in the 3PL sector. Maersk expects to soon conclude its now-agreed takeover of LF Logistics, having already taken over Visible Supply Chain Management of Salt Lake City and B2C Europe in the Netherlands in line with the company’s strategy to further expand and integrate its eCommerce and fulfilment services within its overall portfolio.

MSC has lodged a $ 5.7 Billion bid to acquire Bollore Logistics Africa having also reached agreement to take over Brazil’s Log-In Logistica Intermodal. The trend for such vertical acquisitions is not brand new: CMA CGM’s 2019 acquisition of CEVA Logistics is one of the most significant prior examples. It’s likely that more such deals will follow.

Power from the People

The phrase ‘logistics is a people business’ is a common refrain, and in my opinion it’s a very important one. All logistics companies, from the global network operators to general, regional, and niche freight forwarders, are delivering a B2B service. Instilling trust and securing loyalty successfully in that service from customers is essential, and it’s the attitude, accessibility, responsiveness, and commitment of staff which is so often at the heart of a customer’s perception of their logistics service provider’s performance. IT systems and functionality, rates & tariffs, quality, strength of network – all these factors, and more, are fundamentally important too of course, to varying degrees depending on the client’s requirements and expectations. But in my experience, customer satisfaction and retention depend primarily on the customer feeling valued and looked after, which in the end comes from the people dealing with the business whether at management level or within operations and service.

As such, company culture is often a significant influence in attempts to place a value on a logistics business in an M&A context. Even if the nature, objectives, and sheer scale of a deal mean that some level of post-acquisition rationalisation is a ‘given’, it shouldn’t be forgotten that lost staff can easily mean lost customers in many instances – a balanced, sensitive and holistic approach should be taken. A successful cultural integration between buyer and seller is always desirable for underpinning the future success of the newly combined business.

Growth and Evolution of the 3PL Sector

The size of the global 3PL industry is nowadays over $ 1 Trillion and is predicted by some commentators to be heading towards $ 1.6 Trillion by 2027. This trend is partly driven by the ever-evolving need for domestic, regional and international and supply chains to become increasingly lean, flexible, and adaptable in light of the on-going worldwide supply challenges which have been witnessed over the past few years.

Innovative technologies in areas such as e-Fulfilment, load planning & optimisation and real-time track & trace, to name but three, are continually developing. Established and new-entrant tech companies could increasingly become interesting acquisition targets for some 3PLs as they look to secure competitive advantage through greater adoption of, value-adding, integrated, systems and applications to the benefit of themselves and their customers alike.

Overall, whichever way the wind blows, it seems that there are interesting and dynamic times ahead in the world of global 3PL M&A.