Vox Pop: Is the industry ripe for increased consolidation?

CMA CGM Group's move to buy nearly 100% of the capital of automotive specialist Gefco and integrate it into its subsidiary, Ceva Logistics, is the latest in a flurry of recent industry takeover activity.

MT asks a range of of the sector's leading players whether we can expect more of the same in the months ahead.

Bob Terris, chairman, Meachers

Almost every day I receive information on companies for sale. So many people are looking to get out, either because they have no succession or they can see the future level of investment that will be required to meet the environment standards.

There will be further consolidation and the days of small independent operators are numbered. Many of the larger operators depend on smaller operators for subcontracting and if this disappears they will need to operate more vehicles themselves which will add costs. This will result in higher distribution costs overall which will be inflationary.

Add to this the loss of short-term hire from the hire companies which will reduce flexibility and this is not a good long-term scenario.

Not a very optimistic view,  but I believe it is realistic.

Matthew Deer, MD, Swain Group

The industry appears ripe for further consolidation. However, many companies still have too much debt from the pandemic. We see independent and family companies wanting to release the property when preparing the business for sale. This is years of hard work for many companies and is seen as part of a retirement income stream.

As we start to see rising interest rates, leasing costs and increased costs of vehicles and trailers, compounded further by the cost-of-living impact on operating costs, I think you’ll see another round of consolidation in the next six months.

Caroline Green, chief executive, Pallet-Track

This may not be a surprise. Without knowing the circumstances of the latest acquisitions [see MT 11/4/22, page 1], they could be potentially weaker firms, operating off the back of hideous fuel prices and wage inflation who may need bailing out.

Kevin Buchanan, chief executive, Pall-Ex

We are living in very ‘special times’. I think the last two years have tested many companies and if you had half a mind to retire and get out anyway, then recent events will have certainly focused the mind.

We have also seen some companies like us do well in the last two years and see the current situation as an opportunity to ‘prey on’ weaker or less progressive businesses and pick up a deal.

The likes of EV Cargo who have plenty of cash will be trying to react to gaps in the market and weaknesses in their own strategy. I spoke with Stephen Dunn, the MD at North West Logistics, and they have identified [in Proserve] a company which was stronger in warehousing than them but weaker on transport, so the two companies complemented each other.

One thing is for sure, more consolidation is inevitable as change always creates both risk and opportunity.

Clive Brooks, MD, ABE Ledbury

Acquisitions, of course, are nothing new and the potential benefits for the purchasers are clear (although they are not always achieved).

There’s a certain inevitability to it as families seek to find an exit, in the absence of suitable or willing succession from within.

Is there less determination, now, to keep these companies within the family, over the generations, with all the challenges that are faced? High investment, high compliance, low margin...