Consultant Insight: Uber Freight and Maersk lead the way in end-to-end logistics acquisitions

For more than a year, shippers have struggled with capacity constraints, higher rates, and delays in receiving freight from suppliers and manufacturers to address consumer demand that shows no hint of slowing down. Now, logistics and transportation providers are betting that their shipper customers will look to reduce their reliance on multiple supply chain partners and are investing in building end-to-end logistics and transportation services for them. [caption id="attachment_68221" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] In less than a month, we’ve seen two acquisitions from two different types of providers aiming to offer end-to-end solutions: one from technology provider Uber Freight, the other from ocean freight carrier Maersk. Uber Freight In July, digital freight broker Uber Freight acquired non-asset-based 3PL Transplace for $2.25 billion. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most,” said Lior Ron, head of Uber Freight, in a statement. “We believe there’s a large opportunity to be the preferred end-to-end logistics partner for shippers,” Ron said during Uber’s second-quarter earnings call. Citing a survey, he added, “80% of shipper decision-makers manage both full truckloads as well as last-mile shipping, and almost 60% of survey customers have last-mile needs.” Combined, Uber Freight and Transplace will bring intermodal, cross-border Canada-Mexico trucking, parcel management and customs brokerage services that rival industry leaders such as C.H. Robinson and XPO Logistics. However, a weak spot remains around international transportation, which a future acquisition of a freight forwarder could address. Maersk International transportation provider Maersk announced its acquisition of U.S.-based e-commerce fulfillment and parcel management provider Visible Supply Chain Management (SCM), as well as the pending acquisition of European parcel management provider B2C E-commerce. “We’re building this company that is a global integrated container business, a company very similar to UPS and FedEx,” Maersk CEO Soren Skou told investors in 2018. “I hope they will be considered peers of ours when we are done with this journey in three to five years.” Since 2018, Maersk has added several companies to accomplish its end-to-end logistics goals. In the U.S., it acquired warehouse and distribution provider Performance Team in 2020 and customs broker Vandergrift in 2019. In Europe, Maersk acquired customs services provider KGH in 2020. Maersk’s venture-capital arm, Maersk Growth, invested in U.S.-based digital freight broker Loadsmart in 2019 to support building a new drayage solution that accelerates the transit of goods through the largest ports in America. “The free-flow model moves the industry from container-specific to container-agnostic,” said Ricardo Salgado, CEO and co-founder of Loadsmart. “It means that truck drivers will be given the best container available when they arrive at the port, having pre-agreed with a specific mileage band trip. As a result, we project that truck drivers will be able to reduce their time to get in and out of the port by at least 25%. At the same time, we estimate that port operators will be able to reduce container shuffles by at least 50%, which is a huge efficiency gain.” End-to-end aspirations Both Uber Freight and Maersk have work to do before they can accomplish their lofty end-to-end strategies. As noted earlier, Uber Freight will need to develop international transportation capabilities by perhaps including a freight forwarder to its list of acquisition targets. Meanwhile, Maersk will need to build out its inland network. For example, while it utilizes Loadsmart for U.S. trucking capacity, the company could benefit from acquiring an asset-based provider to cover its complete trucking and intermodal needs in the U.S. Its latest acquisition, Visible SCM, is a good start toward managing parcels. As items are fulfilled, the company injects parcels into the U.S. Postal Service’s network for last-mile deliveries. If Visible SCM can’t integrate other last-mile providers into its technology during peak periods, Maersk will need to consider adding a parcel TMS or 3PL that has its own parcel capabilities to cover capacity requirements across the U.S. Maersk’s end-to-end strategy seems to be paying off. Revenues for logistics increased by 38% in the second quarter, almost all due to organic growth. Whether this is due to the current environment or it’s a sign that shippers are indeed looking to partner with a single provider for their entire supply chain needs remains to be seen. Other logistics and transportation providers may join Uber Freight and Maersk in providing end-to-end solutions which, in turn, could set off a surge in mergers and acquisitions activity that seems to have been brewing for a while within the supply chain market.

Consultant Insight: Uber Freight and Maersk lead the way in end-to-end logistics acquisitions

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