Dive Brief:
- DB Schenker, the third largest global logistics provider, is looking to expand into the U.S. market, the Wall Street Journal reported Wednesday. An acquisition plan will be decided within the year.
- Logistics companies have been on a buying binge of late, gobbling up smaller competitors in order to access new markets. Case in point: in 2016, FedEx bought the European TNT Express for $4.9 billion, while DSV/AS bought U.S.-headquartered UTi Worldwide for $1.4 billion.
- Sales could slow in the wake of rising stock prices however, making acquisitions more expensive. Hope for improved freight rates is also affecting asset valuation.
Dive Insight:
DB Schenker recently announced a minority investment stake in uShip, an online freight marketplace. When a successful logistics company with the size and scope of DB Schenker harnesses the insight and market of a start-up, the potential result is a blend of historical reputation and 21st century tech achievement. Customers gain the security of an established provider with the fresh perspective of a start-up, thereby improving and expanding services.
Digitizing offers the added bonus of incorporating an already digitized business into their own, growing from the inside instead of hiring from the outside. Because of the success of startup logistics providers, more established companies are wise to take on the agility and simplicity of their methods, utilizing them as a resource to not only open doors in foreign markets but also provide newer, smarter options for today's shippers.
That said, with global markets preparing for an upswing, the smart companies will need to act quickly. Success breeds success, but also brings with it higher acquisition prices, a worthwhile risk, but a risk nonetheless.
