Accenture Freight Consulting Insights: Why M&A Is the Right Option to Capitalize on Growth Opportunities

Accenture’s freight consulting experience shows that mergers and acquisitions (M&A) can help freight and logistics companies address growth challenges.

After years of focus on cost reduction and performance improvement, freight and logistics companies are again actively pursuing their growth agendas and evaluating inorganic growth options to achieve their financial targets. For an increasing number of companies, M&A are a critical part of the solution.

This paper explores the various M&A trends in detail and recommends steps companies can take to position themselves to capitalize on inorganic growth opportunities in the coming years.

Freight and logistics companies as a group have set aggressive financial goals for top-line growth, with many of the key industry players having communicated double-digit growth targets to the capital markets.

But the economic climate remains challenging and the environment for organic growth is competitive. Companies need to develop a compelling and credible value-creation agenda that will convince investor communities that they have the right vision and plan for growth.

M&A will be a relevant and increasingly attractive option for freight and logistics companies to pursue inorganic growth.

Based on our freight consulting experience, we have identified four key M&A trends that will impact the freight and logistics industry in the next several years:

• Consolidation is likely to continue because the freight and logistics market remains highly fragmented.

• The aspiration to attain a strong position near rapidly growing markets is likely to fuel M&A activity in emerging markets.

• China’s quest to become an influential freight and logistics player quickly is expected to increase competition for potential Chinese targets, especially for those with favourable inland accessibility.

• Specialist providers will become increasingly attractive targets for freight forwarders and contract logistic companies pursuing growth in verticals or complementary growth in value-added services.

Without the right M&A strategy and robust capabilities, a freight and logistics company is at the risk of not fully capitalizing on the growth opportunities presented by M&A and being left behind as more able competitors make their moves.

As M&A becomes an increasingly important component of freight and logistics companies’ growth agenda, Accenture recommends that companies:

• Develop the right M&A strategy—Companies should have a robust M&A strategy that articulates how and why they will approach M&A. Such a strategy will help companies target M&A deals that strongly contribute to their near- and long-term pursuit of overall corporate objectives and fulfill their commitments to investors.

• Build robust M&A capabilities—Once the companies have developed their M&A strategy, they should confirm that they have the right capabilities in place to effectively execute the strategy. Accenture has identified three main drivers of M&A success: value-driven target screening, thorough due diligence and effective merger integration.