Is CMA CGM acquisition of Bolloré Logistics a threat to freight forwarders?
Shipping giant CMA CGM has confirmed its plans to acquire transport and logistics operations of Bolloré Logistics. The company said it has granted a put option at the end of a period of exclusive discussions that kicked off in April.
Final completion of the transaction, valued at €5 billion ($5.5 billion), remains subject to the examination by employee representation, and then to customary regulatory approvals. If the acquisition is finalised, it would significantly strengthen the CMA CGM Group’s logistics business and make it a top five player in global logistics.
The deal would be the largest since the CMA CGM Group was founded in 1978 and would represent a major strategic milestone in the Group’s development of its logistics activities, which the Group has been building since 2019, alongside the original CMA CGM shipping business.
What does this mean for freight forwarders?
With the addition of Bolloré Logistics, the CMA CGM Group and its subsidiary, CEVA Logistics, would gain further expertise in high-value sectors, both in sea and air freight management and in contract logistics. Bolloré Logistics is a major name in transport and logistics solutions for the luxury goods, fragrances and cosmetics, healthcare, aerospace and defence sectors.
For the CMA CGM Group, this acquisition would represent a major step forward in its development of a full range of solutions supporting customers’ supply chains through handling end-to-end transport and logistics.
Commenting on the move, Philip Damas, Head of Supply Chain Advisors practice and Managing Director at Drewry Shipping Consultants, through his social media said that it brings CMA CGM closer to small and medium shippers, widens its range of services (such as LCL and warehousing) and represents a major strategic threat to other forwarders.
As an example, CMA CGM would be handling more forwarding volume than the likes of Expeditors, C.H. Robinson and Nippon Express.
Additionally, Damas notes that CMA CGM will control the vessel and airline assets – unlike the forwarders. “It was tough enough when ocean carriers consolidated by acquiring each other; now they are extending their influence vertically by controlling both physical transport and forwarding,” he said.
It remains to be seen what forwarders make of the situation and Damas also questions whether CMA CGM will manage to integrate its ocean carrier arm and its growing forwarding arm.
Several industry experts have told Project Cargo Journal that this is a cycle that has been seen previously, with major names attempting to bring everything under one roof. For large accounts such a move does make sense and could pose a threat for large logistics companies, especially those doing business in the same markets.
However, for smaller accounts where clients need direct line of communication, transparency and quality of service, the acquisition will not have an effect. Project forwarders who often deal with cargo that cannot be containerised and needs special attention may not worry too much.
What does it mean for CMA CGM
Following its acquisition of Ingram Micro Commerce & Lifecycle Services and Colis Privé, then of GEFCO, which boosted CEVA’s capabilities in eCommerce contract logistics and automotive logistics respectively, the acquisition of Bolloré Logistics would further strengthen the sea and air freight activities of the Group’s logistics division. The combined entity would have an annual shipping volume equivalent to more than 2 million TEUs of sea freight and 0.8 million tons of air freight.
The CMA CGM Group already operates in more than 160 countries, with 155,000 employees. This deal would add more than 14,000 new employees operating out of 350 offices in 63 different countries.
The Group’s warehouse space would increase by more than 900,000 square meters at 115 different warehouses, in addition to the 10.3 million square meters already managed by CEVA at its 900 warehouses around the world. The acquisition would also open up access to major logistics hubs, especially in France and Asia.