Transport and Logistics Clearview

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Truck highway 1

Drivers of continued consolidation

The transport and logistics (T&L) market has historically been a relatively fragmented market with many local players and low entry barriers.

Continued consolidation and growth of customers is however putting pressure on the service and price offered by transport and logistics providers, thereby challenging the players in the market to grow rapidly through acquisitions or by joining forces with larger players in the market.

Consolidation is being driven by a need to offer one-stop-shop services to customers either by offering international reach and coverage, specialised services and/or expanding service offerings with distribution, storage, pick/pack and traceability.

Another driver for consolidation is the need to bring down costs through increased capacity utilisation in part load business and/or higher utilisation of return trips, as well as economies of scale on IT including automated fleet planning, traceability and invoicing.

Strategic acquirers are increasingly looking for strong niche market positions within the transport of time-urgent goods, temperature-regulated goods or goods that require customised solutions where margins are typically stronger compared to the competitive and standardised road transport.

Private equity interest

Strong possibilities for value creation naturally evokes the attention of PE, and the highly fragmented market within freight forwarding, transport and logistics is increasingly attracting PE investments. Financial investors can add acquisition know-how and capabilities, which combined with a strong management team provides a solid platform for future growth.

Clearwater expects a continued high appetite for consolidation in the T&L market driven by economies of scale, technology and strengthening of the customer value proposition

M&A activity and outlook

With its high exposure to international trade, the T&L sector in Northern Europe has continued to see a large number of M&A transactions. While the overall deal activity has been heavily impacted in 2020 due to COVID-19, the T&L sector in Northern Europe has seen 15-20 deals completed compared to the historical level of 20-30. COVID-19 has caused a ‘bottleneck’ and 16 transactions has already been completed in Q3 in 2020.

The high level of M&A activity is expected to continue in the future, driven by strong underlying market drivers such as increased international trade on both consumer and B2B levels. Clearwater expects a continued high appetite for consolidation in the T&L market driven by economies of scale, technology and strengthening of the customer value proposition. Further, cross-border transactions are expected to continue to grow as geographical reach and internationalisation will be a key agenda in the sector.

T&L M&A activity in Northern Europe

TL MA activity in N Europe graph 2

Selected North European M&A activity in the transport and logistics sector

N European MA activity table 3

Recent Clearwater International transaction

DTK Blue Equity tombstone
"Through Blue Equity, DTK has found a competent business partner, which shares our values and provides us with a strong foundation for continued profitable expansion. Clearwater International advised us through the process and with their informal and competent approach, they made a complicated and intensive process, transparent and instructive. The team has strong experience with sales processes, foresees and evades potential pitfalls and enabled us to present DTK in the best possible way by highlighting synergies and opportunities for the potential investors." -Steen Sørensen, Owner & CEO, DTK Group

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