PwC’s Chapman on logistic M&A
As PricewaterhouseCoopers (PwC) analyzes transportation and logistics industry mergers and acquisitions, here’s what Darach Chapman, PwC’s US Transportation & Logistics Deals principal, says in an AJOT interview.
AJOT: What impact are mergers and acquisitions in the transportation industry having on US trade and transportation?
Chapman: M&A tends to strengthen competitors. It helps them to improve pricing and lets them offer their customer more services, routes, etc. Trucking, shipping and logistics are most active globally.
AJOT: What impact are M&As having on the logistics, transportation industry and the freight forwarding industry?
Chapman: While we see some consolidation in the freight forwarding industry, this segment tends to involve smaller deals and, therefore, deals have less impact on the industry. Deals are typically made to increase efficiencies and scope for the acquirer.
AJOT: In what parts of the world is most M&A activity occurring and why?
Chapman: Asia and Oceania continue to drive M&A in the sector, particularly China. The China activity appears to be driven by consolidation to drive greater efficiencies and gain geographic reach.
AJOT: Are investors in China or the Middle East playing a big role in acquiring logistics operators/transportation facilities? Who has the cash doing the buying, and is this of any concern to US shippers or shippers elsewhere in the world?
Chapman: As mentioned, much of the M&A to these regions is driven by local market deals, as domestic companies compete to capture a larger share of the consumer led demand for logistics within these countries. Given the size of these markets, the domestic winners in this consolidation process will undoubtedly also represent credible competition in the global marketplace.
AJOT: Do M&As generally impact the cost of shipping/transporting cargo?
Chapman: M&A typically increases scale and scope and therefore generates efficiencies, which often result in lower cost and lower prices.
AJOT: Is the trend actually moving away from M&A activity?
Chapman: M&A activity is stagnant given moderate growth in GDP in most countries. We expect it to pick up once GDP growth accelerates.