Maersk announces acquisition of omnichannel fulfilment company LF Logistics

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Maersk has announced the acquisition of Hong Kong-based omnichannel fulfilment company LF Logistics. The Danish shipping company did not disclose the value of the deal in its press release, though multiple reports estimate the acquisition to cost in the region of $3 billion.

Maersk announces acquisition of omnichannel fulfilment company LF Logistics
Photo: Photo: Filip Maljković from Pancevo, Serbia, CC BY-SA 2.0, via Wikimedia Commons

Maersk says the deal represents a “significant step” with regards to providing its customers with global logistics and integrated end-to-end services and solutions. Moreover, the company says the acquisition will give it the means to provide clients with a more holistic service across their logistics.

Commenting on the announcement, Ditlev Blicher, Maersk’s Regional Managing Director for Asia Pacific, said the acquisition will help the shipping giant “close the loop”:

“Maersk’s origin consolidation, purchase order management and ocean services have long been highly acknowledged. The addition of LF Logistics’ excellent destination omnichannel fulfilment capabilities will help to close the loop, enabling fully integrated supply chains for our customers. There will be one homogeneous fulfilment mechanism across all geographies, with less contact points, more visibility, and more data, truly supporting our customers grow their business.”

LF Logistics currently has a workforce of 10,000 as well as an extensive warehousing network covering the Asia-Pacific markets. In addition, the company sports an operational and technology platform that Maersk believes has “a proven capability to scale across multiple locations”. Maersk also recognises LF Logistics’ system as “one of the best-in-class” thanks to its single, standardised ecosystem. According to the shipping company, implementing LF Logistics’ system alongside its own shall ease data transfers between Maersk and its customers. Moreover, Maersk claims the standardised deployment methodology and technology will also allow the company to implement a new warehouse in only three months. This will aid Maersk’s aim to expand to more than 800 warehouses by 2026.

Joseph Phi, CEO of Li & Fung and CEO of LF Logistics, said the deal will “deliver a compelling value proposition”:

“We recognize that for LF Logistics to be a global leader in the industry, achieving scale is of paramount importance. Maersk provides the ideal fit. Together we will deliver a compelling value proposition that will allow our people to attain their full potential and our customers to achieve sustainable growth.”

Maersk also argues that the deal will allow customers to build end-to-end visibility “with ease, seamlessly connecting supply with demand down to SKU level.” The company argues this will allow its clients to react quicker in the event of disruptions, as well as making it easier to prioritise urgent cargo first.

The transaction is expected to close in 2022, subject to regulatory approvals. As explained in the press release, until this point, LF Logistics and Maersk will remain two separate, independent companies running their businesses in the ordinary course.

Reacting to the news, renowned shipping expert Lars Jensen said that 2022 would see a wave of major acquisitions in the logistics sector:

“The question is not whether we will see more major acquisitions across the global logistics market in 2022 – the question is rather how many we will see as the major carriers, the major logistics companies as well as an assortment of “other” companies such as ports and terminal operators are likely to maintain a very high activity level in this respect.”

Writing on LinkedIn, Jensen added:

“In terms of logistics, 2022 should not mainly be seen as a volatile transition year back towards normality. It should be seen as a foundational year where the major players position themselves for the battle of the global logistics market – a battle which will continue throughout this decade.”

Photo: Filip Maljković from Pancevo, Serbia, CC BY-SA 2.0, via Wikimedia Commons

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