The past 12 months have seen some of the highest levels of merger and acquisition activity (M&A) within the 3PL industry in at least the last 15 years. As of early November, Armstrong & Associates (A&A) tracked 11 mergers worth more than $100 million this year – the highest total since the consulting firm began keeping track in 1999. Here are some highlights that will change the face of the 3PL industry in 2016:
One of the most aggressive deal-makers of the last 18 months, with possibly the widest impact on the industry, was XPO, which has been involved in a flurry of 3PL acquisitions since 2014. The most prominent of these include premium contract logistics firm New Breed Logistics (US$615 million) in September 2014; last-mile delivery firm UX Specialized Logistics ($59 million) in February 2015; the French 3PL Norbert Dentressangle ($3.6 billion) in June; and U.S.-based trucking company Con-way in October ($3 billion). As a result of this activity, the combined 2014 revenues of XPO and these four new purchases total $8 billion, placing it at No. 7 on A&A’s annual list of top global 3PL firms, just ahead of DSV Group.
Speaking of DSV, the Danish transport and logistics firm announced in October the pending acquisition of U.S.-based UTi Worldwide for about $1.35 billion. The deal, expected to become final in 2016, will likely affect DSV’s Air & Sea Division most dramatically, as UTi’s business will give DSV a large foothold in the North American forwarding market. Meanwhile, DSV’s profits for logistics and trucking operations should be enough to help bring the cash-hemorrhaging UTi business back into the black.
In November, GEODIS, the French supply chain company, received regulatory approval to complete its acquisition of OHL (Ozburn-Hessey Logistics), a 3PL based in the United States, with annual revenue in excess of $1.3 billion. Combined, the new company will generate an estimated $8.7 billion annually, operating more than 400 logistics warehouses worldwide. GEODIS’ core business lines include supply chain optimization, forwarding, contract logistics, distribution and truck transport.