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M&A activity looks set to remain strong in logistics sector: report

MERGER and acquisition (M&A) activity in the third quarter is being driven significantly by logistics firms, looking to fill a specific "need or gap, gain scale, or expand margins," said financial advisors PwC in its Intersections report.

In its latest logistics and transportation analysis, Air Cargo News quoted PwC as saying that as more companies make the decision to outsource logistics services and turn to third-party suppliers, "efficiencies in scale and geographic reach will become critical drivers of inorganic growth."

A number of logistics companies with significant airfreight volumes have been active in the M&A market this year, including Geodis, DSV, Gefco and XPO.

PwC said: "Despite a decline in deal volume in 3Q15 compared to the previous quarter, average deal value has continued to increase in each of the last four quarters.

"As a result, both total deal value and average deal value for the year-to-date are up over 40 per cent and 50 per cent, respectively, compared to the prior period."

Trucking continued to be an active deal-making segment, as smaller "mom and pop" operators decide to sell their business, instead of investing in fleets and attempting to find increasingly scarce driver talent.

The $3 billion acquisition of Conway Trucking by XPO Logistics "could trigger further deal activity at the larger end of the sector as competition for trucking capacity intensifies."

In its outlook, PwC said: "Historically, the fourth quarter has been a popular time for M&A activity as strategic investors prepare for the next year's operations, and the environment will likely see increased activity.