Still waiting for shake-out to deliver on expectations

So what does the future hold for the global logistics industry?

Most observers agree that there is more consolidation to come, even if some doubt whether the financial results to date provide sufficient justification. Shippers’ supply chain strategies are continuing to drive consolidation in the logistics market, and the current economic climate will hasten this process.

The recent downturn has seen a lull in consolidation activity.

Are companies likely to be more cautious now, given tightening purse-strings, or will plunging valuations send the well-heeled off on spending sprees?

Second wave

Ulber believes that a pick-up in takeovers could start soon. "I would expect it to pick up after the first quarter." He says that the past few months have seen a pause as sellers have held out for pre-recession prices and buyers have waited for valuations to fall further. A second wave of consolidation could start after the first quarter as the weak seek refuge and the strong bargains, he reckons.

He also believes that this time some of these acquisitions may be more opportunistic.

"There will be consolidations that will not be strictly strategic but more opportunistic, because certain companies might run out of steam, " he says. "It’s a question of picking up something that can be acquired for a lower price."

So it seems this forthcoming phase of consolidation is likely to see more speculative activity than before. But what other features can we expect? Ben Hackett, executive consultant to IHS Global Insight, a market research provider, and until recently executive managing director of its International Trade and Transportation Service, believes that struggling shipping lines could become the target of the large integrators or 3PLs. "This may be one of the outcomes of the current crisis, which will make ships cheap to buy, " he says.

However, aside from KlausMichael Kühne’s private investment in Hapgag-Lloyd, there is little evidence to suggest that carrier-neutral and assetlight forwarders would get into the business of owning ships.

KN management has been at pains to distance itself from the personal interests of its boss.

"As a 3PL, we have to be completely neutral, " says Ulber.

"Our business model is definitely not to be a carrier."

However, the reverse strategy seems more possible. Carroll of Dyson anticipates shipping lines moving into the 3PL market via acquisition.

Some of the lines have already done so, in an attempt to thwart forwarders’ penetration of the sea freight market through offering alternative end-to-end solutions.

It is probably too early to judge whether consolidation has delivered on its expectations.

Clearly there is more to come - and probably at an accelerating pace as the credit crunch bites harder. The rewards for acquisitive players that can get it right are too great, as are the risks for those chasing shadows in fear of losing out. The real challenge for the industry is to make these integrations work, so that they realise the expectations of both providers and shippers.

Martin Dixon is an independent consultant to the logistics industry. He was previously head of marketing at DB Schenker. He can be contacted at martin.dixon@linkmanagementgroup.com