FEATURE BY KPMG

I.7 Market Overview: Global M&A

environment in Transport & Logistics
I. 7. 1 At a glance

A thriving global transaction market

Concluding from the analysis of 6,000 transactions over more than three years, the Trans-
port & Logistics industry continues to be an attractive transaction market. With Ocean
Freight and Truck Transport having completed their most recent consolidation rounds and
in the light of geopolitical tensions, the market seems to cool down in these segments, but
is still fueled by the emergence of new technologies.

Europe claims highest number of transactions

Across geographies, APAC countries appear to inspire most investor confidence and feature
the highest share of strategic investors. However, transaction volume and occurrence seem
to be negatively affected by international tensions, as North America maintains a steadier
transaction behavior overall, focusing on domestic modalities, while APAC and Europe
experience a drop in timely correlation with trade conflicts. However, Europe remains num-
ber one in terms of total number of deals over the analyzed period, with most transactions
being conducted in the Truck Transport segment, as the most disrupted and heterogenous
modality.
I. 7. 2 Global Perspectives
Average total deal volume remains steady as number of deals drop
Over the analyzed period, the global logistics industry recorded an average transaction
volume of USD 35 bn per quarter across all industries, amounting to a total of USD
497.44 bn. The global transaction peak was reached in 2017, with 504 transactions in Q1.
Recently, we observed a global drop in the number of transactions, while total deal volume
per quarter remained within the average of previous years. Respectively, we saw a global rise
in average deal volume by the start of 2019, which is significantly influenced by recent deals
in the Rail Transport segment in the Americas.

Global transaction volume dominated by Ocean Freight

Globally, the top three industry segments in terms
of overall deal volume between Q1 2016 and Q2 Others Figure 1:
Ocean-Freight
2019 were Ocean Freight, Freight Forwarding and 13.3% global Deal Values
Rail Transport (Figure 1). The APAC region exhib- Air-Freight 25.9% & Industries
5.6%
ited the largest overall deal-volume across the top 5 497.44
Truck-
industry segments, whereas a decline in transactions Transport 13.9%
Bn USD
(Q1 2016 –
Q2 2019)
in the Rail Transport segment could be observed
after 2016. 23.9%
17.5%
Freight
I. 7. 3 The European Transport Rail-Transport Forwarding

Powerhouse
Europe is leading in number of transactions
Concerning the global distribution of total deal volume, Europe comes second after APAC.
However, 37.0% of the total number of global transactions were conducted in Europe
across all industry-segments, putting Europe on the pole position in terms of total number
of transactions. On average 159 transactions per quarter were closed in Europe (Figure 2).
In total, 2,227 European transactions comprised an average deal volume of USD 9 bn
per quarter up until Q2 2019. Based on the number of transactions conducted, Europe

THE TOP 100 OF LOGISTICS | 17

PART I

is followed by APAC, where 2,141 transactions were closed between 2016 and 2019 Q2
amounting on average to 153 per quarter. Respectively, 35.7% of the total number of
transactions happened in APAC, while 24.5% of total transactions were conducted in the
Americas and 2.8% in the Middle East & Africa.

Private equity investors are more prominent in Europe

Taking a look at the investor types, Europe features the highest share of private equity
investors in the global comparison, which could be linked to the mostly liberal market and
local business structures. However, these investor types also come with a comparably lower
average deal volume compared to APAC. Yet, this average deal value is widely spread among
the most diverse distribution of industry segments and deals across the globe.

Most European transactions happen in the UK

The leading countries in terms of both number and volume of transactions are Germany,
the United Kingdom, France, Switzerland and the Netherlands (Figure 3). Most European
transactions are based in the UK, covering in total ~ 400 deals of which ~ 44% are allocated
to Truck Transport, ~ 16% in Freight Forwarding and ~ 14% in Air Freight.

Figure 2 & 3: 198 20 Switzerland

200 188 18 20 12 Deals
177 171 Netherlands
170

Transaction volume in USD bn

European Deal 169
162 160
149 155
Number of transactions

29 Deals
Ø159 148 United
Values & Country 150 132
142 15
0,6 USD bn
Kingdom
84 Deals
Breakdown 11
10 101
100 8 9 9 9 10 4,8 USD bn
Avg. Deal # 6,6 USD bn

7 Ø9 & Volume
6 6 in USD bn
2016-2019
50 4 5 66 Deals per country

2 2
1,5 USD bn

Germany
0 0
2016 Q1

2016 Q2

2016 Q3

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

3,4 USD bn

© 2019 KPMG AG Wirtschaftsprüfungsgesellschaft, ein Mitglied des KPMG -

67 Deals
France

Most transactions within Europe are related to the Truck Transport industry segment,
amounting to 41.4% of all transactions with a total deal volume of USD 7.57 bn, making
it the fifth largest industry segment in terms of total deal volume in Europe.
I. 7. 4 Truck Transport as an example of consolidation
Most Global and European deals take place in the Truck segment
Furthermore, most global transactions were also related to Truck Transport. Whilst only
making fourth place in terms of total global deal volume within the observed period (13.9 %;
Figure 1), Truck Transport makes up for 35.9% of all global transactions by 2,156 deals,
compared to Ocean Freight contributing 25.9% of total global deal volume with 20.9%
of all transactions. This widely reflects the particularities of different industry segments
within the global Transport & Logistics market. The Ocean Freight segment underwent
a consolidation wave during the last decade, both in terms of acquisitions and alliances,
which in turn lead to a decline in the number of deals over time. While Ocean Freight is
an asset heavy segment with larger average transaction volumes (hence its comparably large
contribution to global deal volume), similar effects can be observed in the Truck Transport
segment. While the Truck Transport industry contributes the largest number of transac-
tions both globally and within Europe, the timeline shows a decreasing trend in the number
of transactions for Truck Transport from 170 transactions in 2016 Q1 to 84 transactions in
2019 Q2 globally and from 65 to 22 transactions in Europe respectively (- 66%, Figure 4).

18 | THE TOP 100 OF LOGISTICS 2019 / 2020

 FEATURE BY KPMG

From 2016 Q1 to 2017 Q1 the number of transactions in Truck Transport in Europe

increased by 21.5% with a decrease following the years after (CAGR of - 66.2% over the

Rail Transport
-83%
117 Deals
Figure 4 & 5:
79
-66% Freight
Forwarding
Global Truck
80 2.5
2.05 71 70 72 296 Deals 7,6 USD bn
Transport
66 68 67
70 65 65 Truck
Development &

Transaction volume in USD bn

2.0 9,2 USD bn Transport
Ø60 60 57
Number of transactions

49 836 Deals
European Industry
50 46 Avg. Deal # 41,1 USD bn

39
1.5 11,9 USD bn & Volume in Breakdown
40 1.12 USD bn
2016-2019
30 1.0 per segment
0.75 352 Deals
0.70 22
0.62
20 0.55
0.42 0.5 Ø1
0.36 0.33 Freight
10 34,1 USD bn
0.18 0.17 0.18
0.08 0.07
0 0.0
2016 Q1

2016 Q2

2016 Q3

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2
© 2019 KPMG AG Wirtschaftsprüfungsgesellschaft, ein Mitglied des KPMG-

416 Deals

observed period, Figure 4). The increasing number of transactions until 2017 is a symptom
of the mega trend that was previously exhibited by the Ocean Freight segment: consolida-
tion of the market to bigger fleets as well as more efficient networks through optimized
routes, less idle capacity and pooled transport volumes to increase total capacity.

The consolidation wave is coming to an end

In addition, the deal value decreased from USD 0.42 bn in 2016 Q1 to USD 0.07 bn
in 2019 Q2 reflecting less optimistic growth expectations in the Truck Transport seg-
ment (CAGR - 83.3%, Figure 4). The decrease of both transaction volume and average
deal amount are a sign of this consolidation wave coming to its end in 2019 following its
peak in 2017. Consequently, this industry trend illustrates an increasing saturation of the
market in the light of consolidation and partially adverse market forces, such as geopolitical
tensions, and increasingly volatile volumes for both ocean and overland freight.

Lessons learnt for all segments

Despite these recent developments, the Truck Transport segment remains among the most
influential in the industry and in Europe, contributing as much as double the number of
transactions as for Ocean Freight in the peak year 2017 and still providing the highest
number of transactions in 2019 (Figure 5). The overall strong transaction performance
of the segment can also be attributed to the emergence and evolution of technologies like
autonomous driving, alternative fuels and increasing intelligent infrastructure. In unison
with the recent consolidation wave, these drivers expedited growth within the segment
across Europe where many transactions were also driven by the need to acquire or integrate
technology for continued growth. Specifically in Europe, with its highly complex overland
transport network, these challenges and opportunities, partially introduced by new tech-
nologies and disruptive new players, will continue to challenge all industry segments.

About this study:

KPMG conducted a study covering a dataset of 6,000 transactions across the global Trans-
port and Logistics industry. Including transactions between Q1 2016 and Q2 2019, the
study focused on deal volume, investor types and geography, as well as industry and product
types. Covering all modalities and business models within the industry whilst correlating
geographical investment behavior and industry focus, the study reveals quantitative insights
about current industry trends. Article by Michael Pritzer & Steffen Wagner

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