There’s been a lot of attention in the news these days about how large logistics services providers are buying up similarly large to midsized counterparts to add to their portfolios.
Since the start of the year, the announcements have come fast and furious. Here’s some of the most notable acquisition plays so far: XPO Logistics buys Norbert Dentressangle; Echo Global Logistics acquires Command Transport; Kintetsu Express takes over APL Logistics; Japan Post adds Toll Holdings; Forward Air absorbs Towne Air Freight; Greenbrier Equity takes a controlling stake in SEKO Logistics; and Geodis snaps up OHL.
Let’s not forget the activities of the two large U.S. express carriers. Late last year, FedEx announced its acquisition of third party logistics services firm GENCO, and most recently proposed to buy express competitor TNT in Europe. UPS in August acquired Chicago-based freight brokerage Coyote Logistics for $1.8 billion.
These larger entities, for sure, will offer shippers great economies of scale for standard logistics services and greater global coverage. But it’s not uncommon for these companies—many beholden to shareholders and public financial scrutiny—to begin worrying more about the numbers than hand-holding their customers. In fact, initial emails and telephone calls to most of these giants seeking assistance may receive less than personal attention at the onset, which doesn’t help to calm a supply chain manager who is already stressed out over a problem shipment.
Unlike so many other industries that have wiped out small businesses, such as the corner groceries and hardware stores, the logistics industry worldwide continues to facilitate and sustain large numbers of small entities. In the United States alone, the Federal Maritime Commission processes numerous ocean transportation intermediary license applications each month—these include many small startups seeking to get their piece of the estimated $720 billion global freight transportation industry.
What these small firms bring to the table is that entrepreneurial spirit, working hard to ensure each shipment from a shipper is handled with utmost care, realizing that failure to do so could easily spell lost future business and possibly their demise.
American Shipper information technology editor, Eric Johnson, in this issue (pages 27-28) looks at what it takes to operate a small customs broker and freight forwarder these days through the eyes of the now 100-year-old, Baltimore-based Shapiro. Despite its size, it still manages pieces of freight logistics for some Fortune 500 companies with the skill and service delivery of a multinational 3PL.
With the continued rush of merger and acquisition activity among the large 3PLs, it doesn’t hurt for any shipper—large or small—to consider adding some of these smaller firms to its overall logistics services network. When push comes to shove in the world of global shipping, that small operator may become your best friend.
This editorial was published in the September 2015 issue of American Shipper.
