Dachser seeking takeover targets in the US to reinforce its forwarding network

German road transport giant Dachser is looking for acquisition targets in the US to strengthen its global freight forwarding network.

At the Transport Logistic event in Munich yesterday, chief executive Bernhard Simon told The Loadstar: “In the forwarding market there might be some minor acquisitions needed to complete our network – this is the case in the US, where we are not yet at the size we want to be. It will be something that fits with what we already have there.”

Dachser is engaged in what Mr Simon described as an “interlocking” project, which is bringing together the road transport division and the air and sea freight forwarding division, and “a lot of our growth after this will be through efficiency gains”.

The company’s current approach is for each country manager to target local exports, he said. “We are encouraging each of our country managers to think “exports, exports, exports”. Europe is made up of export markets and if you capture this cargo you have a Dachser subsidiary at the other hand receiving the freight.”

Last week at the Multimodal show in Birmingham, Dachser UK managing director Nick Lowe told The Loadstar that in 2014 the volume of exports from the UK to continental Europe that the company handled was up 15%, above the market growth, and described it as “our core focus”.

Mr Simon said this approach meant there was relatively little need for it to make further European purchases: “Within Europe we are convinced that we are running the densest road transport network there is, and we do not need to make acquisitions – although if the right opportunity came along, at the right price, we would of course consider it, but it is not something we are actively seeking.

Dachser chief executive Bernhard Simon

“We have become the market leader in road transport in Tunisia and Morocco, but we don’t have plans to create the sort network we have in Europe in other continents. We use a lot of road transport outside Europe to support our supply chain management activities, but much of that is subcontracted.

“To set up a network like that is something you can’t just do overnight. It takes years, decades even. And once you are in a mature market it is not feasible for others to come in because the barriers to entry are so high – the investment required is huge, the margins are low and there are big fixed costs,” he said.

Dachser is currently running around 8,000 trucks per night in Europe.

“No one asks whether they are full or not, but we have to run that number to maintain the frequency of services a 24-hour Europe-wide network demands – and that 8,000 doesn’t include peaks,” said Mr Simon.

Much of the interlocking project is a response to the combined challenges of the sclerotic behaviour of the global economy following the financial crisis and the opening up of European markets which – notwithstanding its current slackness – has led to a huge increase of interest in outsourcing logistics and supply chain management activities.

Dachser runs 8,000 trucks per night across Europe

He said: “Since 2009 globalisation isn’t taking place at the same pace as before – where logistics companies saw growth of 10% or more.

“In the medium term, we see growth of 5-9%, which is challenging when you are running a large company. Globalisation will continue and it is demanding the development of different systems that require a lot of complexity.

“Our future is in targeting exports throughout Europe and linking our transport provision to them through all these electronic data processing services,” he said.

Mr Simon described the impeding acquisition of Norbert Dentressangle by XPO Logistics as “a big surprise”, adding that it demonstrated an “interesting appetite for risk”, and predicted that the future landscape of the global logistics industry would likely be dominated by a “handful” of global operators.

However, he also predicted a healthy future for smaller players.

“There will always be a need for local solutions and we will still see regional markets where you have local heroes specialising in particular geographies or verticals.

“I see a very positive future for companies with revenues of €200-400m that have these sorts of specialities. However, they will then find it very difficult to grow beyond that size because the barriers to switch from regional to global operator are huge.”