The shipping giant announced the largest acquisition since its establishment!
On May 8, CMA CGM Group announced that it has confirmed the acquisition of Bolloré Logistics, the transportation and logistics business of Bolloré Group. CMA CGM stated that the acquisition will accelerate the group’s development towards logistics diversification, and for the CMA CGM Group, it will represent a step forward in the development of comprehensive solutions that support customers’ supply chains by handling end-to-end transportation and logistics important step. This transaction will be the largest acquisition of the CMA CGM Group since its establishment in 1978, and it is also an important strategic milestone in the group’s logistics development.
Although CMA CGM did not disclose the transaction price, the enterprise value of the acquisition is US$5.5 billion. The final completion of the transaction is still subject to the relevant review and regulatory approval process. If the acquisition is completed, it will significantly strengthen CMA CGM’s logistics business and rank among the top five in the global logistics industry. For CMA CGM, the acquisition will help the company accelerate its development toward logistics diversification. CMA CGM said that after the joint operation of its logistics business and Bolloré Logistics, the total revenue is expected to reach $24 billion(based on relevant data in 2022), further strengthening the ocean and air freight business of CMA CGM Logistics. It is estimated that the annual sea cargo transportation volume will exceed 2 million TEUs, and the air cargo transportation volume will exceed 800,000 tons.
It will squeeze the living space of freight forwarders
According to Peter Sand, principal analyst at Xeneta, big carriers like CMA CGM and Maersk are continuing to move into the traditional turf of freight forwarders. Big shipping companies have amassed huge profits over the past two years, allowing carriers to vertically integrate into areas they usually avoid. The price of the service offered by the carrier may be more competitive as it is optimizing a larger network. If CMA CGM completes the acquisition of Bolloré Logistics, the operating space of freight forwarders will be tighter and the competition will be more intense.
In addition, some shipping lines are refusing to sign long-term contracts with freight forwarders, leaving them no choice but to book on the spot market, Sand said. This effectively disrupts the traditional business model of freight forwarders, except for the biggest players, he added. Bolloré Africa Logistics was sold to CMA CGM rival MSC in December for 5.7 billion euros, in what one banking analyst called a huge mistake for the French shipping liner. Nonetheless, he said Bolloré Logistics would be a good fit for the Ceva and CMA CGM liner business. While Bolloré Logistics would strengthen CMA CGM’s market position in France, it could raise some antitrust concerns, the analyst added. At present, CMA CGM has carried out business in more than 160 countries and regions around the world, with 155,000 employees. After the acquisition is completed, CMA CGM will add more than 14,000 new employees in 63 countries and regions.
CMA CGM Global Logistics continues to acquire
At the end of April, CMA CGM bid to acquire the Lebanese Postal Service, another diversification move after CMA CGM entered the air cargo business and acquired several logistics companies in recent years. In addition to postal services, CMA CGM has other logistics businesses in Lebanon. Last year, CMA CGM was awarded the contract to manage a container terminal hub at the port of Beirut, and it has also operated Lebanon’s second-largest container hub in Tripoli since 2021. Mainly through acquisitions and partnerships, CMA CGM is pursuing a rapid and diversified development strategy aimed at providing end-to-end logistics solutions, including e-commerce, last-mile delivery, freight forwarding, and air cargo.
In addition, earlier this year, CMA CGM and La Poste Group announced the establishment of an extensive commercial and operational partnership between GeoPost, a French Post subsidiary, and CEVA Logistics, to provide a wider range of parcel and logistics services and strengthen its presence in the European and American markets competitiveness. Recently, Air France-KLM and CMA CGM formally established a long-term strategic air cargo joint venture. The company’s aim is to shape the future of air cargo with a focus on sustainability, smart digitalization, and integrated technologies.
