Maersk Makes B2C Logistics Acquisitions, Reporting Record Earnings
Shipping giant A.P. Moller – Maersk announced two acquisitions to expand the company’s operations in the business-to-consumer business as part of its continuing strategy to expand the logistics side of its business offering customers a comprehensive supply chain strategy. News of the acquisitions comes as Maersk also reported a record-breaking financial performance in the second quarter of 2021, marking the twelfth quarter of successive year-on-year earnings progress.
The growth of the B2C side of its logistic business was launched with the completion earlier this week of the acquisition of a U.S.-based company, Visible Supply Chain Management (Visible SCM), which is focused on B2C parcel delivery and B2C fulfillment services in the U.S. and an agreement to acquire a Dutch company, B2C Europe Holding, a business-to-consumer logistics company focused on B2C parcel delivery services in Europe. The total enterprise value for the two transactions was placed at $924 million for the two companies that Maersk said are well-established and recognized players in the E-commerce logistics industry.
Within E-commerce Logistics, Maersk said its strategy is to build an asset-light, global business focused on the core capabilities of B2C fulfillment and B2C delivery based on a strong and flexible E-commerce technology backbone. The plan is to build these capabilities in Europe, North America, and Asia, which represent the world’s three largest E-commerce regions.
“Maersk has set out to build strong E-commerce logistics capabilities that will extend and reinforce our existing supply chain offering and create growth opportunities. Today, customers rely on the integrated logistics approach and services,” says Maersk Ocean & Logistics CEO Vincent Clerc. “The acquisitions will provide Maersk with a strong growth platform in the rapidly evolving field of E-commerce, where our investments in digitalization and integration will create significant synergies and make a big difference for customers’ ability to sell across multiple channels effectively. Furthermore, they will allow us to have a more comprehensive offering towards small- and medium-sized customers.”
Fast-changing consumer buying patterns and digital platforms are accelerating online consumption, redefining business models across the globe. Maersk notes that many of its customers are seeing strong E-commerce sales growth and it believes they are looking for support for their business-to-consumer supply chain growth. The two acquisitions are designed to address this customer trend and strengthen Maersk’s E-commerce logistics products suite in line with its strategic business transformation.
Visible SCM, headquartered in Salt Lake City, Utah, enables E-commerce businesses to ship and deliver so they can compete with the biggest brand names. Visible SCM operates nine fulfillment centers in the US, handling 200,000 orders a day and enables 200 million parcels a year through its proprietary technology solutions. B2C Europe’s core offering is in parcel delivery services for both retailers and brands as well as for logistics operators, with a focus on cross-border deliveries. It operates a multi-carrier platform with a significant reach and volumes into all European countries through an extensive carrier network.
Logistics and services is a fast-growing portion of Maersk’s business growing 38 percent revenue growth to $2.2 billion in the second quarter and its earnings before taxes more than tripled to $153 million, but it remains a small part of the business compared to the ocean shipping operations. Volumes in ocean rose 15 percent in the second quarter while average freight rates rote 59 percent resulting in more than $11 billion in revenues and $3.6 billion in earnings before taxes during the second quarter.
“The strong results benefited both from the exceptional circumstances in Ocean, where congestions and bottlenecks continued to drive up rates, and from solid progress in executing on our strategic transformation where we kept a firm focus on our customers need for integrated solutions across their supply chains,” said Søren Skou of CEO A.P. Moller - Maersk. “Our exceptional earnings and high cash flow enable us to further accelerate our transformation... To that effect, we announced today the acquisitions of Visible SCM and B2C Europe, which complements our existing supply chain offering and addresses our customers' need for E-commerce logistics.”
In the second quarter of 2021, A.P. Moller - Maersk reported revenue grew 58 percent to $14.2 billion, while EBIT increased almost five times to $4.1 billion. The company also reiterated its recent increase in guidance having added $5 billion to its profit forecast for 2021.