Given the scale of Con-way, a company which is expected to record revenues of around $5.7bn for 2015, it is unsurprising that XPO’s acquisition of the company (a transaction valued at $3.0bn) will dramatically alter its position in a number of transport and logistics markets.
Most obviously, as stated in a company press release, “XPO will become the second largest provider of less-than-truckload (LTL) services in North America.” Con-way’s Freight (LTL) division had revenues of $3,632m in 2014, placing it behind FedEx’s market leading LTL division (FedEx Freight), which had revenues of $6,191m for its latest fiscal year which ended May 31, 2015. Rivals such as YRC (revenue over $3bn), in addition to Old Dominion and UPS (both over $2bn) are Con-way’s nearest LTL competitors ranked behind it.
It is worth noting that XPO will also acquire a significant full-truckload (FTL) business in North America. Con-way’s Truckload division had revenues of $632m in 2014, placing it definitively outside the top 10 players by revenue, but firmly in the top 25.
The final piece of the jigsaw is Con-way’s Logistics division. Better known as the brand Menlo, it offers contract logistics services which generated revenues of $1,639m in 2014. Although the division’s primary market is the US, it also operates facilities in Europe (the UK, Ireland, Netherlands, Belgium, Germany, Czech Republic, Hungary and Finland), Latin America (Mexico, Peru and Chile) and Asia (China and India most significantly, but also Hong Kong, Taiwan, Thailand, Malaysia, Singapore and Australia). Putting this in perspective, Menlo’s contract logistics revenues in the US and Canada (almost all US) amount to approximately 80% of the division’s revenues, with the rest of the world accounting for about 20%.
Menlo’s presence in Asia, although relatively small, will now permit XPO to call itself a truly global contract logistics provider. Prior to this acquisition, XPO only offered contract logistics in Europe (through its purchase of Norbert Dentressangle, first announced in April 2015) and North America (through its purchase firstly of New Breed Logistics in July 2014, and later its acquisition of Norbert Dentressangle, which itself acquired Jacobson in July 2014). It will be interesting to see if XPO makes further acquisitions in future to ‘firm up’ its contract logistics presence in Asia, resembling its strong positions elsewhere.
So overall, where does the acquisition leave XPO in the global contract logistics market? Still far behind the market leader, DHL Supply Chain, which reported revenues of €13,230m in 2014. However by the end of 2015, barring any major acquisitions by its rivals, XPO will sit firmly in second place. It will be some distance ahead of the likes of other global players such as Kuehne + Nagel and CEVA (contract logistics revenues of over €3bn), as well as UPS and DB Schenker Logistics (contract logistics revenues of over €2bn).
Find out more about the global contract logistics market in Ti’s Global Contract Logistics 2015 report. This includes detailed profiles of the largest contract logistics providers in the industry and rankings of the top 10 players globally and regionally (Europe, North America, Asia Pacific). It also sizes the contract logistics markets of the world, 10 regions and 84 countries.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)