Earlier this month, a Reuters report indicated that Hedehusene, Denmark-based 3PL company DSV A/S was interested in acquiring the Global Forwarding business of CH Robinson (CHR), a global service provider logistics and freight forwarder based in Minneapolis, Minnesota.
The report says DSV is looking to expand into North America, adding that CHR’s global transit business would provide DSV with what it calls critical access to trans-Pacific trade lanes, with global transit business potentially coming at a price. of $9 billion. Moreover, he added that DSV has long wanted to expand in North America, having previously indicated that it wants to do so through mergers and acquisitions, at a time when the global logistics market is seeing activity. increase in mergers and acquisitions.
CHR and DSV officials did not comment on the Reuters report.
Morgan Stanley transportation analyst Ravi Shanker wrote in a research note that when Cleveland-based Ancora Holdings was announced as a strategic investor in CHR in late February in a cooperation agreement, his firm observed that the Potential breakage of CHR and rotation or sale of the transport unit could help unlock value for the company quickly.
“CHRW [management] has long stated that they believe the NAST [North American Surface Transportation] and transit business go hand in hand, but perhaps the involvement of the strategic investor has resulted in a change in mindset,” Shanker wrote. “Global Forwarding has undoubtedly been one of the biggest ‘winners’ from the pandemic – gross revenue is almost 3x 2019 levels and net revenue is around 2x. It would make sense for CHRW is looking to sell the business at the top, but DSV is a savvy buyer who is also a key player in the business and will know as much.
And he also wrote that mergers and acquisitions were part of DSV’s strategy, which makes the review of CHR’s Global Forwarding unit plausible, adding that DSV believes scale is very important in freight forwarding. , the sector being highly fragmented.
Evan Armstrong, president of Milwaukee-based supply chain consultancy Armstrong & Associates, told LM that DSV’s interest in CH Robinson’s Global Forwarding division makes perfect sense.
“With DSV’s history of successfully acquiring the international transportation management (ITM) space of Agility’s Global Integrated Logistics (GIL) business for $4.2 billion in August 2021 and then Panalpina in 2019 and UTi Worldwide in 2016, DSV became the third largest ocean freight forwarder in the world with 2.9 million TEUs and the third largest air freight forwarder with 1.6 million metric tons,” he said. “Last year, its Americas division grew gross revenue 88.2% to $6 billion and net revenue 48.3% to $1.1 billion, with strong increases in air and ocean volumes and revenues CH Robinson has grown rapidly through organic growth and acquisitions since 2011, when it had net sales of $100 million. acquired significant capabilities and scale through its $807 million acquisition of Phoenix International, from which it added $251 million to Australian supplier APC Logistics in 2016, $124 million to Canada’s ITM Milgram in 2017 and $84 million in Madrid, Spain, Space Cargo in 2019.”
As for CHR, he said CH Robinson’s Global Forwarding division more than doubled in 2021 with gross revenue growth of 117.1% to $6.7 billion, and its net revenue increased by 70. 7% to $1.1 billion.
“CH Robinson is now one of the leading freight forwarders on the trade lane between Asia and the United States and with 1.5 million TEUs of ocean export (20ft container equivalents) handled,” Armstrong said. . “It overtook longtime US-based competitor Expeditors International. By comparing sea and air freight volumes of our top 3 global freight forwarders [Kuehne + Nagel, DHL Global Forwarding, and DSV], DSV is the only freight forwarder of the three that has maintained an upward trajectory in volumes. When you add CH Robinson’s 2021 volumes of 1,500,000 ocean TEUs and 300,000 metric tons of air freight into the mix, you see that it continues to play well for DSV, especially in ocean freight.
About the Author
Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman