Dive Brief:
- The freight forwarding sector saw a series of acquisitions announced in Europe Wednesday, with Panalpina, UPS, and Groupe Cat making big deals, The Loadstar reported.
- Perishable-forwarder Panalpina acquired Denmark's Carelog and Kenyan forwarder Air Connection, Groupe Cat is negotiating with SCNF Logistics for its transport subsidiary STVA, and UPS purchased Irish delivery firm Nightline Logistics Group.
- The three acquisitions fall in line with the actors' long-term strategy, mainly dealing with securing assets for international expansion.
Dive Insight:
While global mergers and acquisitions endure a slowdown driven by uncertain global politics such as Brexit, potential U.S. regulation and trade changes, and the pending French election, such deals in the freight forwarding sector do not appear to be slowing down.
What makes the logistics industry so different from others? For one, they are situated as intermediaries to two trends that have and continue to transform the world: globalization and e-commerce. The two can be seen as factors expanding both the supply and demand curves.
As supply chains become increasingly global, many companies are looking for a single point of contact for worldwide needs. Still an extremely fragmented market worldwide, the quickest path to secure market share in a new country is through acquisitions. In other words, a more open world has increased the supply of forwarders available for use.
Meanwhile, e-commerce has opened consumer markets globally as well by decreasing the retail and distribution intermediary for small and medium enterprises. Shippers must now be able to meet consumers where they are; it just so happens to be that a greater amount of consumers are shopping from abroad.
As a result of increased production potential through both supply and demand, a logistics company looking to keep up must also increase their potential. Economics dictates this can be done through investment in labor or technology, and acquisitions are often both.
