Maersk completes acquisition of HK-based LF Logistics

Shipping firm expands to 549 global warehouses, enhances strength in Asia

A.P. Moller-Maersk, a Danish shipping and logistics service provider, announced on Wednesday that it had completed the acquisition of LF Logistics, a Hong Kong-based contract logistics company with capabilities within omnichannel fulfillment services, e-commerce and inland transport in the Chinese mainland and the Asia-Pacific region.

With a total transaction value of $3.6 billion, Maersk will add 223 warehouses to its existing portfolio, bringing the total number of facilities to 549 globally, with a total floor area of 9.5 million square meters, said the company.

"Maersk in Asia has historically been primarily focused on ocean transportation out of Asia and related logistics services, transporting and managing goods manufactured in Asia for consumer markets in other parts of the world," said Ditlev Blicher, regional managing director of Asia-Pacific at A.P. Moller-Maersk.

With the addition of LF Logistics, Maersk gains unique capabilities to serve the fast-growing consumer markets throughout Asia. Furthermore, LF Logistics' expertise in omnichannel fulfillment positions the company well in the global e-commerce market, he said.

Backed by more than 5,600 employees, LF Logistics currently operates 73 warehouses across the mainland.

Experts said that the completion of this deal will enhance Maersk's earning strength in non-shipping and port operation businesses in the Asia-Pacific region.

"There are significant opportunities in China as its economy is becoming more advanced. Consumers are upgrading in terms of their expectations, so global shipping companies, encouraged by the surging profit growth over the past two years, have become more competitive in conducting new services in this market," said Zhou Zhicheng, a researcher at the Beijing-based China Federation of Logistics and Purchasing.

From the perspective of market competition, the competitive strategies of shipping companies are differentiated. With abundant cash flows, the industry concentration of major companies will gradually rise this year, said Zheng Jingwen, a senior analyst at Shanghai International Shipping Institute.

For instance, Geneva-based Mediterranean Shipping Co S.A. has placed more orders for new container vessels, while France's CMA CGM S.A. has been involved in the aviation field and ordered more liquefied natural gas-powered ships.

Domestic shipping group China COSCO Shipping Corp Ltd also said in June that it will continue to deepen the integration of its container shipping unit and terminal business segment, continuously reinforce business model innovations via digital technologies, and build a new ecology of smart and green shipping this year.

"The era of scale competition and low-price competition has passed, while green, digitalization, supply chain stability, land-based businesses and multi-modal transportation services have become the focuses and growth points for the global shipping industry," Zheng said.

Supported by over 10,000 employees, LF Logistics operates an extensive network in the Asia-Pacific region, which specializes in business-to-business (B2B) and business-to-customer (B2C) distribution solutions within retail, wholesale and e-commerce, according to Maersk's statement.

As one of the world's largest shipping groups by sales revenue, Maersk operates in 130 countries and regions and employs more than 100,000 people.

Eager to further compete with other rivals, Maersk will add three new B767-300 freighters to its air cargo service between China and the United States later this year.

Apart from shipping companies, Ko Kwang-ho, president of the China unit of Seoul-based Korean Air Co Ltd, the largest airline by fleet size in the Republic of Korea, said the implementation of the Regional Comprehensive Economic Partnership agreement－which came into force in January－will boost China's exports from electronics and consumer goods to medical supplies. The airline is keen to offer cargo operations to ship goods from the country to other RCEP member countries to meet the market's soaring demand.

He said the company expects to expand routes between China and the ROK, upgrade services and expand cooperation with Chinese airlines in the coming years.