Transport & Logistics: An overview of mergers and acquisitions in 2023

A road haulage sector under pressure from current economic conditions

The price of diesel fuel increased by 48% in fiscal 2022, affecting road hauliers’ margins significantly. Despite the fact that diesel prices rebounded to early 2022 levels in 2023, operators were unable to rebuild their margins. Road haulage companies had to cope with a fall in freight rates in 2023, linked in particular to monetary tightening and the slowdown in goods trading, which inevitably affected the entire sector. Online shopping, which limited the decline in sales during the global pandemic, is losing momentum, dragging road transport down.

All of these issues contributed to a fall in volumes in 2023, which had a direct influence on hauliers’ turnover, which declined by 1.3% year on year. At the same time, the inflationary environment caused by global geopolitical tensions increased the cost of maintaining tractors and trailers, as well as the price of motorway tolls. In 2023, these various increases meant that despite the fall in the price of diesel, the high level of other purchases and external expenditure was maintained at 53.6% of turnover, a level similar to that in 2022.

In terms of human resources, the industry continues to struggle with recruitment. In practice, these difficulties are reflected in salary increases to retain staff while responding to the inflationary economic climate. As a result, personnel costs will rise to 30.7% of annual revenues in 2023, up from 28.3% in 2022.

However, it is currently quite difficult for hauliers to pass on rising costs to their contractors: there is still a large number of players with little competitive differentiation, and the tendency is to maintain volumes rather than consolidate margins. This is particularly the case for small transport companies; for larger operators, dialogue is smoother when dealing with clients who prefer to secure their own transport capacity and are therefore less inclined to negotiate on the basis of rising costs.

A logistics sector still growing but forced to trim margins

After a record sales growth of 5.5% in 2022, 2023 has seen continued growth, albeit at a different pace. On average, logistics operators recorded sales growth of 2% over the last financial year. However, there are some disparities between the two main segments of the logistics industry: refrigerated logistics has seen more sustained growth than traditional logistics. This growth in sales was mainly driven by increased prices as volumes remained similar to the previous year. Logistics companies benefited from an increase in the amount of parts stocked by the aerospace and automotive industries, but a fall in household purchasing power reduced volumes.

Despite these price rises, the sector has not managed to fully offset the increase in current costs: the EBITDA margin fell by 6 points in 2023. The major reasons for this are wage increases and rising energy and property rental expenses.

Energy transition at the heart of transport and logistics investments

Hauliers are already being forced to invest in the decarbonisation of their fleets, largely as a result of the Climate Law of August 2021, which will gradually restrict access to major conurbations for polluting vehicles by 2025. At the same time, contractors are increasingly sensitive to the challenges of decarbonisation and are encouraging hauliers to accelerate their green transition. Constrained by legislation, the road haulage industry must now focus its investment on new, greener fleets in order to maintain its operations. To facilitate this transition, they can count on the support of public authorities: the State has allocated a budget of €100 million to support the decarbonisation of heavy transport. Some giants in the sector have already begun this transition, such as CEVA Logistics, which plans to introduce an additional 1,450 electric vehicles by 2025. GEODIS, for its part, has entered into a partnership with Renault Trucks to develop new electric heavy-duty vehicles whose cost will have to be competitive with their internal combustion counterparts.

The logistics sector has also started its decarbonisation process. Since 2021, the Tertiary Sector Decree has encouraged logistics operators to take steps to improve the energy efficiency of their warehouses. Those involved in refrigerated logistics are particularly affected by these changes, as they face greater constraints than traditional logistics operators. The energy required to maintain controlled temperatures is closely linked to the energy efficiency of buildings.

Following the example of road transport, some companies have already taken the initiative, such as GEODIS, ID Logistics, FM Logistic, and STEF, which have launched their energy efficiency plan in 2022. This sober strategy includes upgrading building insulation and using low-carbon energy sources.

For mid-sized operators, the transition is also underway and should soon extend to a larger number of companies, spreading the wave of decarbonisation-related investment that is sweeping the sector.

Inorganic growth operations as solutions

Faced with diminishing profitability and new environmental standards that necessitate ever-increasing investments, the main transport businesses are reinforcing their position by continuing the consolidation process that began a few years ago with the acquisition of smaller companies. Groupe Rousseau made two acquisitions at the end of 2023, as did Jardel and Jacky Perrenot.

In the logistics sector, CMA-CGM acquired Bolloré’s logistics business for close to €5 billion, making it one of the largest M&A transactions in France in 2023.

Although there have been fewer transactions this year than in 2022, this is due more to the rise in interest rates than to the end of the consolidation phase among industry players. Most acquisitions by large groups are financed by equity to avoid the cost of debt, as in the case of Jacky Perrenot’s acquisitions mentioned above.

In terms of financing, the funds have carried out a number of Development Capital and Innovation Capital operations, mainly focusing on “soft” mobility solutions and the infrastructures linked to these types of transport.

What does 2024 hold in store?

In 2024, transport and logistics businesses are projected to continue to experience problems due to the current economic situation. However, transport operators will gradually be able to pass on cost increases, leading to revenue growth. At the same time, the cost of diesel fuel should continue to fall, as it did in 2023, helping to partially offset the expected rise in wages. The logistics sector is projected to grow at a similar rate as the transportation sector in 2023, while confronting comparable labour cost challenges.

Furthermore, investments related to the ecological transition will remain a key strategic expenditure for all operators in order to maintain their volumes in the coming years. The publication of the decree on the HGV ecotax at the end of 2023 completes the government’s ambitions in this area and will accelerate transport operators’ financing needs. All the investments required to adapt to these new standards will be deemed too costly for some transport and logistics companies, leaving more room for the consolidation phase already underway in the sector.

At the same time, the stagnation and subsequent decline in interest rates initiated by the FED and ECB in 2024 will reduce the cost of debt in the medium term, allowing other large groups to implement their inorganic growth strategy. Similarly, mid-sized transport companies will also be able to consolidate.

As a result, 2024 should see a large number of mergers and acquisitions in the sector.

Our experts at your side

Logistics companies with innovative solutions and transport SMEs with a strong local presence are particularly closely watched by the giants of the sector. AURIS Finance’s experts are specialised by industry. They will support you throughout your sale and acquisition operations.

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Sources:

Décret tertiaire 2021 

Loi Climat 2021 

Xerfi :

• Le marché de l’entreposage
• Le transport routier de marchandises

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