DSV Panalpina will target road transport for next M&A

Dive Brief:

DSV Panalpina’s next acquisition targets will likely be large companies in the road transportation industry, a press release from the freight forwarder stated.
Thomas Plenborg, chairman of DSV Panalpina, said the freight forwarding industry is "still very fragmented and there’s lots of scope for further consolidation."
The company said M&A activity will be on hold for the next 12 to 18 months while it completes the integration of Panalpina, the acquisition of which was announced in April. "Now is not the time for a lot of new initiatives," Plenborg said.

Dive Insight:

DSV’s purchase of Panalpina for $4.6 billion formed the fourth largest freight forwarder in the world. In a year or two, the forwarder could become even larger with a more expansive network by way of acquisition. The company touts growth as one of its four strategic focus areas and notes part of its pursuit of growth comes through "an active acquisition approach."

Overall M&A in the logistics industry, however, has been relatively cool in the last two years. This is in part due to significant consolidation in ocean and air transport in 2017 and 2018. Now the top 10 ocean carriers control 83% of total market share. Further consolidation would be difficult to get past anti-trust regulators.

The mergers and acquisitions that have occurred recently have targeted specific geographies or specialized skill sets. Growing capabilities in specialized business areas or locations through organic means "is just too slow," Mike Nayden, logistics and distribution leader at Deloitte, previously told Supply Chain Dive. FedEx said in August it would acquire freight forwarder Cargex, expanding its reach into the Latin American market. Panalpina and Kuehne + Nagel have sought to aquire forwarders or logistics companies with cold chain specialization.

DSV Panalpina’s plan for acquisitions follows a similar roadmap, with a focus on road transport. The forwarder holds significant air and ocean freight volumes already. The acquisition of Panalpina further strengthened these business areas, adding 3 million TEUs and 1.5 million tons of air freight to DSV's network. "Additions within [road transport] will be attractive for us. It’s all about increasing our network," Plenborg said.