Freight forwarding companies are facing increasing competition from the companies they rely on to transport freight. Shipping lines have redefined their business models to become end-to-end logistics suppliers, handling all aspects of the value chain.Flush with cash after their most profitable period in history, shipping lines are on the acquisition trail.Covid-19 disruptions gave them the opportunity to raise freight rates by around 20 times per container compared to pre-pandemic charges, but their own costs remained much the same. CMA CGM agreementOne of the latest developments is an announcement by French line CMA CGM that it has entered into a preliminary agreement to acquire a 51% stake from the HOPPS Group in the French Colis Privé Group. Founded in 2012, Colis Privé is described as a leading last-mile logistics player in France, specialising in home deliveries.Colis Privé has also established a presence in Belgium, Luxembourg and Morocco, and has announced the upcoming launch of its activities in the Netherlands. Rodolphe Saadé, chairman and CEO of the CMA CGM Group, commented: “The acquisition of a majority stake in Colis Privé is an important step in the development strategy of our logistics activities. “This operation will enable us to offer end-to-end logistics solutions to our e-commerce customers for whom the last mile is a critical stage. By leveraging the global presence of our subsidiary CEVA Logistics, our ambition is to develop Colis Privé internationally, starting with Europe where the company is already established.”His statement echoes that of Maersk chief executive officer Søren Skou, who described the December 2021 announcement of the $3.6-billion acquisition of LF Logistics as “an important and truly strategic milestone on our journey to become the global integrator of container logistics, a global logistics company that provides digitally enabled end-to-end logistics solutions based on control of critical assets”. According to Maersk, the acquisition will add 223 warehouses to the existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5 million square metres.In August 2021 Maersk announced it was acquiring Salt Lake City-based Visible Supply Chain Management LLC, which operates nine fulfilment centres across the US, and Netherlands-based B2C Europe, in separate deals with a combined enterprise value of $924 million.MSC and Evergreen have been focusing on optimising their f leets.Hapag-Lloyd investing in terminalsHapag-Lloyd has used its windfall to purchase shares in port terminals. According to Mike Walwyn, operational director at Nexlog, the increasing competition faced from shipping lines is a concerning phenomenon which will have a significant impact on the forwarding industry in the future.“I think the jury is still out on whether these lines are able to service customers to the same extent as traditional forwarders. Experience and expertise continue to play an integral role in clearing and forwarding,” he said. “The question is, can the lines offer the same level of service? They might be able to do it for the big traders, but can they do it for the thousands of small shippers all requiring the same level of ser vice?”He said while carriers in the past had had some run-ins with competition authorities in various places, based on their leverage of their dominant positions in industry, the purchasing of forwarding companies was at present not raising eyebrows with these authorities.“There is some stance being taken on this in the United States and this might spill over to other regions,” he said.Agents facing obsolescence?Clearing and forwarding players are under real threat of becoming obsolete, says another forwarder, unless they are able to differentiate themselves from the lines. “The lines possess a large asset base which they are now leveraging by offering a seamless experience, which is also hugely supported by highly competitive rates. Another concern that forwarders will face is that they will be competing with the very same entities that provide and own capacity on the ships. So, the true winners will be the ones that are able to differentiate themselves from up-and-coming competitors by being f lexible and nimble whilst providing a strong network of partners within the value chain,” he said. “Historically, large logistics players were able to attain favourable lower rates by guaranteeing large volumes upfront, whilst the smaller companies were subjected to paying higher freight rates based on smaller volumes. With the shipping lines now also competing for market share in the clearing and forwarding space, the large forwarders are now somewhat being prejudiced and the market is now wide open, which leaves more opportunities for smaller players.”Increasing competition faced from shipping lines is a concerning phenomenon which will have a significant impact on the forwarding industry in the future.– Mike Walwyn“More and more shipping lines are entering the freight forwarding space.
