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E-commerce fulfilment takes Maersk further down the supply chain

New acquisitions extend Maersk’s reach in an omni-channel retail world

Maersk’s latest acquisitions add a new feature for Ocean customers. The company believes the move will enable more partnerships with its largest customers

MAERSK’S latest foray into the inland logistics market will likely not be its last, as the container shipping giant seeks to further integrate supply chains for its customers and take a slice of a bigger pie.

The company said it had acquired US-based company Visible Supply Chain Management, and subject to regulatory approval would be acquiring B2C Europe, based in the Netherlands

Both focus on e-commerce fulfilment and add another string to the bow of Maersk’s full-service model that now seeks to provide customers with a full logistics suite, right down to final customer delivery.

“The acquisitions will further enable us to expand the end-to-end service offering to our customers and give more growth,” said chief executive Søren Skou.

Speaking in an analysts’ call following the release of the company’s second-quarter results, Mr Skou said one of the highlights of the quarter had been the number of long-term contract customers that were buying more logistics solutions from Maersk.

“In logistics, the strong strategic progress continued with an organic growth of 36% in the second quarter,” he said. “At the same time profitability continued to improve.”

He added that the synergies between the Ocean and Logistics segments of the business could be seen in the Logistics revenue growth from its top 200 Ocean customers.

This had increased by 66% to $1.8bn in the first six months of the year and accounted for 58% of the organic revenue growth in Logistics in the second quarter.

“This confirms to us that the commercial synergies are very real and we can leverage our strong relationships with our Ocean customers to grow in logistics,” Mr Skou said.

Maersk intimated during its capital markets day presentations in May that acquisitions were on the way, and has allocated $7bn for capital expenditure over 2021-2022, of which it has spent under $800m to date.

While some of that spending will be on new equipment and fleet renewal, but more acquisitions are likely.

“Our framework for M&A remains based on acquisitions that can expand our capabilities, facilitate the type of acquisitions and not around building scale,” said Maersk Ocean and Logistics chief executive Vincent Clerc.

Acquisitions would be made based on a “verified need” in the portfolio that had an opportunity to be integrated into the existing service offering.

“Over time as we expand our capabilities, we can leverage these to progressively increase the scale and create synergies,” Mr Clerc said.

Both Visible Supply Chain Management and B2C Europe fitted within this framework, he added.

The move towards e-commerce delivery was customer-driven, Mr Clerc said.

“We see that customers are moving their supply chains towards an omnichannel model, adding e-commerce to physical stores, which has led to the strong emergence and need for business to consumer supply chain solutions. This has been further accelerated on the back of the pandemic, with growing customer needs within the business to consumer sector.”

Revenues from the two new companies will contribute some $700m with an earnings before interest, tax, depreciation and amortisation of $75m.

“This transition of the traditional supply chain to omnichannel is top of mind for virtually all of our customers,” Mr Clerc said. “Its importance will only increase in the coming years. Being able to play a key role in that transition and integrate the consequence of it across the whole supply chain was always very high on our priority list when considering capabilities to acquire.”

Mr Skou said that there were also synergies to be gained from bringing Ocean customers to the new acquisitions.

“The acquisitions we have done now are all based on taking a portfolio of products that these companies have and then supercharging the growth by selling it to our Ocean clients,” he said. “We have done it with KGH and Performance Team and we are quite convinced we can do it here.”

This in turn would give a greater traction to Ocean customers, he said.

“We are in a situation where our customers are looking for more resilience in their supply chains. Everyone has learned that in the pandemic. We also have plenty of proof points from our customers that integrated solutions and end-to-end products, and having one throat to choke, is a favourable value proposition.”

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