Date: Friday, February 18, 2022
Source: The Wall Street Journal
Danish container-ship company A.P. Moller-Maersk A/S is planning more acquisitions in the U.S. as it chases a greater share of domestic logistics spending.
Narin Phol, Maersk’s managing director for North America, said shippers spend eight to nine times more on domestic logistics such as trucking, warehousing and delivery than on international ocean freight, the company’s core business. “Now we want to get access to and bring the two flows together,” Mr. Phol said.
Flush with cash from record profits, Maersk is expanding its reach across domestic supply chains in a global competition with other ocean carriers including French container shipping line CMA CGM SA to reach more of the business-to-consumer market.
“There is a bit of a foot race going on to build end-to-end networks,” said Chris Wofford, the managing partner at West Palm Beach, Fla.-based Wofford Advisors, strategic advisers in global supply chains. “They had floating hotels for freight, and now, as they extend from the ports they are creating a stickier and more value-added array of services.”
In recent years, Maersk has acquired logistics and supply chain companies in Europe and in Asia, but its strategy is most advanced in the United States.
Just last week, the shipping giant announced its $1.68 billion acquisition of Glen Mills, Pa.-based Pilot Freight Services LLC, which will give Maersk a foothold in the business of delivering and installing bulky items, such as washers and dryers, in people’s homes.
Maersk officials say the acquisition complements its purchase last year of e-commerce fulfillment firm Visible Supply Chain Management LLC, which specializes in smaller packages, and the 2020 acquisition of El Segundo, Calif.-based Performance Team LLC, a warehousing and distribution specialist.
The purchases have expanded Maersk’s warehousing and distribution network in the U.S. from about 20 facilities at the start of 2020 to more than 150 at the completion of the Pilot acquisition, expected by the middle of this year. Maersk officials say they plan to buy or build at least another 12 warehouses in the U.S. this year.
By controlling every link in the supply chain, from when an item leaves a factory in Asia through to home delivery, Maersk will be able to offer faster, more reliable services to shippers, Mr. Phol said. The Pilot acquisition rounds out Maersk’s factory-to-consumer capabilities, and future acquisitions in the U.S. will “drive further scale and strengthen our product offering to customers,” he said.
Last year, Maersk recorded underlying earnings before interest, taxes, depreciation and amortization of $24 billion. The company projects another $24 billion in profits this year, with free-cash flow of more than $15 billion.