M&A radar: All of a sudden, a deal spike – Japan leads
Run baby run
Cold chain logistics is shaping up to be a major battleground for carriers hoping to capture market share by vertically integrating supply chain services.
According to Derek Singline, Maersk Line’s head of key client sales Asia Pacific, cold chain is a key part of Maersk’s goal to become the “global integrator of container logistics”.
In September, the carrier announced a significant company reorganisation, with the supply chain services provided by logistics arm Damco coming under Maersk’s direct control from 1 January.
“Damco has particular capabilities that we want to leverage with the shipping line business,” Mr Singline explained at the Asia Logistics & Maritime Conference in Hong Kong yesterday.
“Cold supply chain will come in from Damco to the Maersk Line banner, and we’ll be able to offer that as an end-to-end solution for our customers.”
He said reefer customers trusted Maersk to provide port-to-port services, but were now looking to the carrier to provide extended supply chain visibility.
“Some customers are saying to us, ‘we want to trust you further beyond the port’, and see what can be developed together in terms of solving problems around visibility, control and traceability,” he said.
Maersk Line carries around a million 40ft reefers a year, a 20% market share that generates a huge amount of data, which is now being used to develop cold chain partnerships with customers.
“Feasibility studies are under way on several activities around the world; these might be brand new facilities, infrastructure, or joint-venture opportunities,” Mr Singline explained.
There are a number of other carriers attempting a similar model of logistics integration and acquisitions, he acknowledged, adding that it would be “interesting to see who will develop this and be successful”.
It is not only shipping lines looking at new cold chain logistics opportunities. In North America, rail operator Canadian National (CN) is under way with its own vertical integration, acquiring Winnipeg-based haulier TransX Group.
“I’ve heard many people talk about the vertical integration that’s going on,” said Keith Reardon, CN’s senior vice-president of consumer product supply chain growth.
He said the acquisition gave CN a third option for reefer shipments, allowing it to move cargo by truck in addition to 40ft and 53ft boxes carried on the operator’s railroads, and connect Canada’s east and west coasts, as well as to the US Gulf.
Canadian protein giant and CN customer Olymel exports some 12,000 reefers every year to 65 countries. One of the biggest markets for the shipper, around 2,400 containers, is chilled pork destined for Japan.
The pork is produced at slaughterhouses outside Quebec and trucked to Montreal for the 4,900km rail journey across Canada to the port of Vancouver, ready for the ocean voyage across the Pacific. Altogether, this 20-day transit allows for a 35-day shelf-life in Japan.
“A missed sailing can add seven days transit,” explained Mr Reardon. “So now, if needed, we can truck the whole way, because with TransX we’ll have a fleet of trailers and trucks over and above our rail business. To have this third option will ensure we have the best cold supply chain for our customers.”