Transport, logistics deal activity dips in Q1

M&A activity in the transportation and logistics sector fell sharply compared with the fourth quarter of 2013, PwC found.

The first quarter of 2014 started off on a ‘soft note’ with regard to global merger and acquisition (M&A) activity in the transportation and logistics sector, with deal volume down 50.6 percent compared with the fourth quarter of 2013, the US division of auditing firm PwC reported in its most recent quarterly analysis.

Thirty-seven transportation and logistics transactions worth $50 million or more totaled $16.1 billion in the first quarter, down from 75 transactions worth $27.2 billion in last year’s fourth quarter, PwC reported.

However, on a year-on-year basis, volume and value remained flat with 41 deals accounting for $16.2 billion in the first quarter of 2013.

“Following brisk M&A activity in the fourth quarter, deal volume pulled back in the first quarter of 2014, returning to the subdued levels we have witnessed over the past two years,” PwC’s US transportation and logistics leader Jonathan Kletzel said.

Deal volume was primarily driven by shipping, trucking and logistics industries with local market deals reaching a new high and accounting for 78 percent of activity, a growing trend since 2008, according to PwC.

Once again Asia and Oceania was the most active region in the first quarter, while the US and the Eurozone remained below pre-financial crisis levels.

“While confidence among management teams is improving as the global economy recovers, acquirers have remained cautious and continue to pursue small local deals,” Kletzel said, noting that buyers are focusing on consolidating existing markets, strengthening core services, and emphasising cost synergies.

In terms of mega deals – worth $1 billion or more – activity remained flat with four mega deals being realised in the first quarter compared with six and four in the fourth and first quarters of 2013, respectively.

Two of the four mega deals occurred in Brazil, while the other two happened in China and the UK.

PwC expects emerging markets to continue contributing “meaningfully” to total M&A volume and also predicts that interest in deals involving specialty third-party logistics (3PL) providers – companies that deliver complex, expertise-based services in a wide range of areas including fulfillment, transportation and configuration – will continue into 2014 by both strategic and financial buyers.