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            july 21, 2018

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New York investment bank sees mergers ahead in forwarding


Increasing differences in the performance of forwarders will likely result more mergers and acquisitions, according to a report by equity analysts at Jefferies International, a New York investment bank, reported London's Air Cargo News.
Due to differences in customers and product mix and the effectiveness of IT systems, there has been growing performance divide in the forwarding sector, said co-authors David Kerstens and Hamish Dalgarno.
With both DSV and XPO Logistics recently expressing an interest in buying competitors, which would further consolidate the fragmented forwarding sector, other companies could find themselves takeover targets, said the analysts, reported London's Air Cargo News.
"Panalpina has become an increasingly likely takeover target in our view," pointing out that it had suffered the most from higher freight rates while "a restructuring-driven earnings recovery has so far failed to materialise, with the operating performance further deteriorating after the strategy update by the new chief executive in September 2016."
They noted that DSV remains the best-in-class freight forwarder, with the strongest growth track record and the highest and least volatile profit margins. Underlying earnings growth of 54 per cent in the first half of 2017 was largely driven by the successful integration of the UTi acquisition.
The analysts added that Kuehne + Nagel has met its five per cent earnings target since 2015, despite still relatively low profitability in overland and contract logistics.

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