Wednesday, February 9, 2022

Danish Shipping Giant Looks to Snap Up Yet Another Specialist Logistics Outfit

Maersk Looks to America for Latest Deal
Shipping News Feature

DENMARK – US – It seems AP Moller – Maersk is still adding pieces to its logistics jigsaw puzzle with the announcement it is to acquire Glen Mills, Philadelphia headquartered Pilot Freight Services, specialist in large and bulky items.

Pilot’s range extends in this category in North America for both B2C and B2B distribution models and Maersk says the intended purchase will expand its integrated logistics offering deeper into the supply chain of its customers. It will complement the earlier acquisitions already made to provide integrated logistics solutions in North America, especially with Performance Team (PT) (B2B warehousing and distribution) and Visible SCM (e-commerce warehousing and parcel distribution).

Pilot will be adding specific new services within the fast growing big and bulky e-commerce segment, thus increasing cross-selling opportunities. It is intended to also create significant cost synergies by leveraging capabilities across the different parts of service solutions. Vincent Clerc, CEO of Ocean & Logistics, AP Moller – Maersk observed:

“In Maersk we continue our path to develop truly integrated logistics offerings for our customers, offering them better visibility, more control and resilience in their supply chains. Adding the capabilities of Pilot is especially important because it will allow us to create more exciting solutions for our customers and support them through the acceleration of the migration towards e-commerce. Furthermore, it will open significant cost synergy opportunities by leveraging the capabilities we have already developed in the network.”

Pilot operates a North American facilities-based transportation network of 87 stations and hubs through which freight is transported and distributed to end customers. The company uses mainly 3rd party providers of trucking and has access to controlled capacity which it says facilitates a high quality first, middle and last mile service offering. The scope encompasses full truckload (FTL) and less-than-truckload (LTL) for both B2C and B2B distribution including heavy and bulky shipments plus white glove service and a focus on expedited and time definite services.

The combined Pilot and Maersk US operation will offer customers approximately 150 facilities, including distribution centres, hubs and stations. This landside logistics network depth combined with Maersk’s international presence will create new, end-to-end supply chain performance capabilities. Pilot’s acquisition of American Linehaul Corporation in July 2021 was instrumental in creating this market expertise in middle mile, LTL expedited capabilities. Pilot Freight Services CEO, Zach Pollock, commented:

“We are looking forward to joining Maersk. This is the ideal outcome for our customers, company and employees who will be able to tap into the ambitious transformation of simplifying and integrating global supply chains which will enable us to perform on a larger stage.”

In part the pandemic has pushed Maersk toward this type of deal. Covid-19 has vastly accelerated growth of the e-commerce sector and numerous B2C vertical segments such as retail, home furnishings and consumer electronics as well as B2B segments such as aerospace, automotive and healthcare have been swept along. Maersk sees this trend continuing and therefore the need to build all encapsulating supply chain networks has become paramount for those traditionally associated with just one or two transport sectors. Narin Phol, Regional Managing Director at Maersk North America elaborated, saying:

“By investing in first mile, middle mile and last middle and integrating them we meet a clear customer demand. This acquisition will add even more expertise and supply chain capacity to customers facing capacity constraints and multiple handoffs with providers in the B2C and B2B space. After completion of this transaction, we will be able to help them install stronger, more integrated supply chains with better visibility and better outcomes for consumers. We look forward to welcoming the Pilot team aboard the AP Moller - Maersk family.”

The proposed purchase will, as ever, be subject to official scrutiny and approval, expected by Q2 2022, and the sale by ATL Partners, a sector-focused Private Equity firm in New York and British Columbia Investment Management Corporation (BCI) sees a transaction price of $1.68 billion equivalent to an enterprise value of $1.8 billion post IFRS-16 lease liabilities, reflecting a pre-synergy EV/EBITDA multiple of 13.8x based on an estimated post IFRS-16 EBITDA of approximately $130 million for full-year 2021.