Global consultancy PwC has released the newest edition of its quarterly analysis of mergers and acquisitions (M&A) in the global transportation and logistics (T&L) sector.
The analysis covers all T&L transactions worth US$50 million or more, across passenger air, passenger ground, shipping, logistics, trucking and rail industries.
Global transportation and logistics M&A activity remained stable in 2016, though Q3 2016 was slightly less active. With over 50 deals, the quarter saw a decline of 11 per cent in deal volume compared to both Q2 2016 and Q3 2015.
Despite a gradual decline in volume, M&A activity remains strong with respect to volume and value. There were five transactions over US$1 billion ($1.4 billion), known as ‘megadeals’ in Q3 2016, with the takeover of the Port of Melbourne (PoM) Corp in Australia the largest at $9.7 billion.
According to the report, five megadeals held around a 54 per cent share of the total disclosed deal value in Q3 2016.
Shipping was stable in deal volume in Q3 2016 but saw a surge in deal value driven by the PoM lease. Rail recorded growth from Q2 2016, although from a low basis, and the logistics sector saw a 20% increase in deal volume compared to Q3 2015. In addition, deal value in the sector grew over the past year by more than three times to US$4.6 billion ($6.6 billion).
PwC suggested that general uncertainties related to the US presidential elections, the long-term impact of Brexit, and China’s economic growth paired with reduced forecasts of international trade activity may have impacted recent M&A activity.
While the report states the Asia & Oceania region continues to lead in M&A activity, South America and Europe (excluding the UK and the Eurozone) saw an uptick in deal volume and a sizeable increase in deal value.
“We believe that underlying fundamentals in the industry – a drive to globalisation, corporate outsourcing of the logistics function, the continued global growth in e-commerce and the fragmented nature of some of the key subsectors—will continue to drive growth and associated M&A activity,” the report stated.
“Further, we expect Asia to continue to be a strong contributor to this M&A activity, as consolidation of the sector continues in many countries in the region and companies continue to seek access to the capital markets that help them capture these opportunities.”
