LSPs increasing M&A activity to provide specialist e-retailing services


The global transportation and logistics industry continues to be shaped by mergers and acquisition activity as companies seek to adapt to rapidly changing market conditions.

Whilst already growing at a rapid pace, the e-retailing logistics sector received a very strong boost in 2020 from the COVID crisis, as people increasingly undertook their shopping from home. This placed enormous pressure on many logistics and transportation providers, not only from the increased amounts of volumes but also from the changing characteristics of the business:

  • Logistics operations need to deal with smaller, but more frequent deliveries
  • Increased levels of automation are required in warehouses
  • Increased visibility of shipments are required to provide end-recipients with details of delivery times
  • There are increased levels of returns
  • Cross border e-commerce volumes are growing
  • Driver and truck assets need to be better utilised
  • Better supply chain orchestration is required.

One of the results has been the increasing acquisition of companies which have been able to provide logistics companies with these specialist services.

In December 2020, FedEx agreed to acquire Chicago-based ShopRunner, an e-commerce platform that connects brands and merchants with online shoppers. ShopRunner’s consumer experiences and omnichannel enablement capabilities are anticipated to help unlock potential for FedEx as it continues to use data and technology to improve end-to-end commerce experience.

In October 2020, DSV Panalpina acquired Prime Cargo, an international forwarding company with a high degree of specialization in e-commerce and fashion retail. “Prime Cargo… fits perfectly into the strategic portfolio of our Danish DSV divisions. In e-commerce we will offer state-of-the-art competitive automated warehousing services with ambitious growth opportunities,” said Marcel Blomjous, Managing Director, DSV Solutions, Denmark.

Larger deals have been made in China by the giant e-retailing companies there in order to build delivery infrastructure. In 2020, the exceptional market growth led Alibaba to strengthen its operations by increasing its control over national parcels delivery company, YTO Express. The transaction was valued at 6.6bn yuan ($966m), suggesting the worth of YTO Express as being in the region of $9.6bn and increasing Alibaba’s holding to around 30%.

Alibaba operations are heavily dependent on both national and regional providers such as YTO Express which are co-ordinated by Alibaba’s own logistics purchasing and planning organisation, Cainiao. The move is also being seen as a response to the expansion of rival internet retailer which had earlier in 2020 invested $432m in another express company, Kuayue-Express Group.

Outside of China, other developing countries have seen very strong growth in the e-retailing sector. This has proved attractive to large European, Asian or North American logistics providers looking to extend their reach into markets with high potential. DPD’s acquisition of Jadlog, one of Brazil’s main logistics operators in e-commerce, is an example of this. Over the previous 4 years and with GeoPost/DPDgroup as a majority shareholder, Jadlog has increased the volume of its deliveries by six times. In the e-commerce segment, Jadlog is committed to increasingly offer facilities to retailers and delivery options to end consumers. The Jadlog network is also connected to the international network of DPD giving Brazilian customers access to the global market. 

Source: Transport Intelligence, January 28, 2021

Author: Transport Intelligence

This brief has been taken from a larger paper, ‘M&A Activity in the Global Logistics Industry – Part 1’ written by Ti’s CEO, Professor John Manners-Bell. The paper is available exclusively to GSCi subscribers. Each week, Ti’s team of senior analysts and industry experts deliver analysis covering the latest logistics and supply chain trends exclusively to users of GSCi.