The acquisition of Panalpina by DSV will produce the world’s third largest forwarder by revenue, and create a rival for market leaders Kuehne + Nagel and DHL Global Forwarding & Freight, according to a new Transport Intelligence (Ti) report.
The reasons for the merger are fundamentally not complicated. Panalpina’s profits, if anything, have fallen since 2014, while in contrast DSV’s have more than doubled, said Ti in its “Global Freight Forwarding 2019” report.
DSV has grown through a combination of acquisition and organic growth. It has been highly successful at integrating its often large acquisitions rapidly. Therefore, it was logical that DSV continue this approach, while Panalpina was the right size and offered reasonably complementary operations in terms of geographical and vertical sector positioning.
The new analysis further reveals that the top 20 forwarders globally account for 57.5% of the market.
“Forwarding is an easy market to enter, but consolidation amongst the world’s largest players, dedicated vertical sector offerings and investments in IT systems have all helped the largest players build significant scale and market share,” noted the report.
When DSV Panalpina comes to the market as a combined entity in late 2019, the top 5 players will account for more than 27% of the global marketplace.
“As the first half of 2019 draws to a close, the forwarding sector remains the focus of rumours about further acquisition activity by the larger forwarding companies,” said Nick Bailey, head of research at Ti, a leading source of market research and intelligence for the global supply chain and logistics industry.
“The rationale is generally economies of scale or the need for greater exposure to global markets, either geographic or vertical. Another rationale, less loudly articulated, is a fear of being left behind. With the new DSV Panalpina set to be a credible contender to both Kuehne + Nagel and DHL Global Forwarding, Freight in almost all markets, other large forwarders will be feeling pressure to keep up,” he added.
Swiss logistics service provider Panalpina announced on April 1 this year that it had been acquired by Danish counterpart DSV for CHF4.6 billion in a share exchange deal that would create a European powerhouse in logistics and freight forwarding.
Photo courtesy of Panalpina
