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Shaking the 2017 Logistics M&A Tree

It’s always fun to chat with Eric Johnson of American Shipper about any topic whether it’s college football, politics or logistics. So, this week, we decided to invite all of our Twitter friends to chat about logistics mergers & acquisitions.

2017 seemed like a fairly quiet year for m&a activities. In my opinion, there were a number of niche acquisitions particularly in cold chain such as Panalpina’s acquisition of Interfresh Airfreight Handling and Kuehne + Nagel’s acquisitions of niche forwarders, CFI, Commodity Forwarders Inc. and Trillvane Ltd. Eric questioned if some of the lack of big deals stemmed from the top 25 or 50 companies trying to figure out what the market will look like and what they needed to look like within that market. Kind of like a year of taking stock of the market. A good point and in keeping with some recent earnings calls. XPO Logistics, for example, noted they were not in any particular hurry to make an acquisition but was monitoring the market on an ongoing basis.

Speaking of XPO Logistics, Eric and I both agreed that since they have most product areas covered that perhaps they could potentially expand further into the European market or the Asia-Pacific region. Perhaps even make a tech acquisition.

Next up for discussion was an Air Cargo World Magazine article that suggested four particular forwarders in danger of being acquired (Damco, Hellmann, CEVA and Panalpina). Rumors have swirled around each of these forwarders for a while now so who knows what will happen with each one.

The question then popped up concerning who would want to buy a forwarder? Eric cautioned, “As to who would want to buy a forwarder, I think the demise of the forwarder has been greatly exaggerated. At least in the short term. No one’s been better at adapting and living on razor-thin margins over decades than forwarders”. However, he then said, I would say that no one would want to buy a legacy forwarder with declining customer relationships, ancient tech and a bad rep (unless it was a fire sale price), but most forwarders have lots going for them”.

Of course, our conversation would not be complete without mentioning Amazon. Will they end up buying their air partners? Having watched the company for almost twenty years, it seems to me their pattern is to learn through partnership and then build it themselves. It would be an expensive project but that hasn’t stopped them before and recently a similar e-commerce player, JD.com announced they were studying the idea of investing in their own air fleet. Stay tuned I guess….

Finally, what kinds of acquisitions are we likely to see in 2018? Both Eric and I agree that last mile delivery will be an interest as well as technology. In particular, Eric noted that machine learning or deep learning capability would be very interesting to established 3PLs, especially if they compare between developing that capability in-house or buying a promising small company. In addition, another point we both agree on is the fact that there are too many logistics tech startups and would be of particular interest to LSPs.

There’s a lot of ‘what ifs’ and ‘what abouts’ in the logistics market. I personally expect a pick-up in the number of logistics m&a deals in 2018 and I totally agree with Eric that we’ll see a particular interest in technology and the logistics startups as targets. 2017 can probably be described as a time in which logistics providers were ‘shaking the tree’ to study the market and to get a feel for what’s out there and what is needed for growth.

A big thanks to Eric for taking time out of his busy schedule to chat. If you would like to check out the chat on Twitter, visit #merge17. While you’re on Twitter, be sure to check out what Eric is tweeting at @AmShipEric and what I’m tweeting about at @cmroberson06. Also be sure to check out a listing of m&a and joint ventures on our website.

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