Dive Brief:
- Kuehne + Nagel acquired Worldwide Perishable Canada, further expanding the freight forwarder's perishables and cold chain network.
- The two companies' combined volume will account for 17,000 tons of annual perishable air exports from Canada, according to a press release from Kuehne + Nagel. Worldwide Perishable Canada specializes in seafood cargo and is the market leader in tuna exports, the press release said.
- Kuehne + Nagel announced the acquisition the same day as its second quarter earnings call. The value and terms of the acquisition were not disclosed.
Dive Insight:
Although the logistics M&A landscape has slowed over the last few years, big players continue to acquire companies that strategically enhance the business and add specialized services for customers.
Cold chain, particularly perishables, is one such service, and a key growth driver for Kuehne + Nagel, according to executives on the second quarter earnings call. "Approximately one-third of our entire volume is perishable," CEO Detlef Trefzger said, adding that the vertical is "agnostic at the moment to any cycle or consumption-factor pattern," in contrast to markets like automotive and industrial.
Kuehne + Nagel has also made acquisitions in cold chain on the healthcare and pharmaceutical side. Last November, it announced its acquisition of Quick International Courier, which specializes in air freight for pharmaceutical and healthcare logistics. The industries tend to be high margin and sought after by large freight forwarders to add business value.
Quick helped to improve margins for Kuehne + Nagel in the second quarter. Margins overall grew 22% over the previous year, and executives attributed about one third of that to the Quick acquisition. Trefzger described the business offering under Quick as "a very focused solution that is seeing a lot of traction and demand in the market."
Both of these acquisitions add to Kuehne + Nagel's air freight capacity and network. On slides published in conjunction with its Q2 earnings, the freight forwarder said it's number two globally in air freight and has seen success in this industry with pharma, healthcare and perishables. According to Armstrong & Associates, Kuehne + Nagel's air freight volumes total 1.57 million metric tons, behind DHL Supply Chain with 2.25 million.
CFO Markus Blanka-Graff hinted at the possibility of additional acquisitions down the line. "Our [current] net debt position demonstrates ... our willingness to sustain some degree of debt in support of the right kind of acquisition," he said.
