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Wed 3 Aug 2005 04:00 AM

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Going global

The US $454 million acquisition of GeoLogistics, PWC Logistics’ third major deal of the year, has tansformed the Kuwaiti 3PL into an industry giant.

|~||~||~|Nearly a year ago, PWC Logistics’ Charbel Abou-Jaoude outlined the company’s plans for the future by saying that: “We are focused on distinguishing ourselves in the region and then taking the next logical step, which is to go East or West, as the opportunities present themselves.”

The company’s managing director for logistics operations has been more than true to his word since then, with PWC expanding in all directions through a series of takeovers, joint ventures and new investments. “There is never a dull moment at PWC,” he jokes.

The latest move by the Kuwaiti 3PL is the US $454 million purchase of global freight forwarder, GeoLogistics. Following the acquisitions earlier this year of the Singaporean events & exhibition logistics specialists, Trans-Link, and of the New Orleans-based project forwarding company, Transoceanic, the deal has turned PWC into a truly global logistics giant. Its combined total revenues, for instance, will top $3 billion per annum, and it will have a workforce of more than 10,000 people spread across 100-plus countries.

“Where we were in freight forwarding on our own, especially in general freight, is completely different to where we will be as a combined PWC/GeoLogistics entity,” says Abou-Jaoude. “We did have those [international forwarding] capabilities working through various networks and alliances. However, we now have our own network in over 100 countries, which certainly gives us a scale and breadth that we did not have before.”

The three businesses that PWC has bought this year have helped the company quickly expand its operations both in terms of geography and service offerings, as they are focused on separate markets and in different areas of logistics. “What we see is a significantly enhanced position from combining the strengths of each business,” says Abou-Jaoude.

“GeoLogistics, for instance, moves a tremendous amount of freight volume, and that can be leveraged on positively for the work that we do in both the exhibitions & events logistics that Trans-Link does, and also the project forwarding that Transoceanic does,” he explains. “There are also strengths in GeoLogistics geographically that are completely complementary to Trans-Link and Transoceanic.”

However, ensuring that customers will feel these benefits will require integration of the different companies. This will mean not just combining the different service offerings and networks, but also creating a unified IT system that will provide the transparency needed in modern supply chains. The company is also creating a unified salesforce, so that customers can get all of the services on offer from one contact, as well as implementing best practices found in each of the subsidies across the entire operation. “We have an integration team that is looking at the combined offering, looking at gaps and opportunities in various dimensions: geography, service offerings and the industries that we service,” says Abou-Jaoude. ||**|||~||~||~|“We will also go after combining our strengths, extending our position and expanding the offerings that we will be able to take to key industry segments... We will also look at what are the best options for us in terms of a consolidated brand going forwards,” he adds.

The various networks of partners and offices supporting the PWC-owned entities will also be consolidated as part of the integration. However, because the different companies have distinct regional and operational focuses, there are only a few geographies where the partner networks overlap. “There are not many cases like this, but there are a few,” says Abou-Jaoude. “In these cases, we will sit as a team with the partners on both sides, and evaluate the best way forward. If it makes sense to keep two partners, because of their areas of focus, we may do that. If it makes more sense to combine it, we will look to do that in a professional manner with all of the partners, but we will not rush into any decisions.”

“However, all the partners need to look at the fact that GeoLogistics was owned by a private equity firm, a buy-and-sell company…. What partners are going to see now is a strategic buyer that has the intent of strengthening the offering of GeoLogistics and strengthening the position that GeoLogistics has. All of our partners and customers should see this in an extremely positive light,” he continues.

For customers, the combination of the different companies will give them access to a wider range of services on a global basis through a single solutions provider. The greater volumes now being handled by the combined entity will also give it more leverage when negotiating shipments, which should result in customers getting more flexibility and lower transport rates.

“The GeoLogistics customers that we have talked to so far have been delighted by this [takeover] news,” says Abou-Jaoude. “Everybody is looking at the strategic fit between PWC and GeoLogistics… as well as the fact that we now have under one roof the capability of serving a broader geography. They also now have access to the financial resources of a stable and prospering company, which customers are delighted to see.”

Aside from its three big international deals, PWC has also expanded its presence in the local market over the last year through a number of smaller acquisitions and joint ventures. These have included setting up a Lebanese operation through the purchase of Spinneys Lebanon’s distribution centre — which was part of a 14 year 3PL contract with the supermarket chain — and the formation of a UAE joint venture. PWC has also teamed up with Dnata, the Emirates Group-owned monopoly groundhandling agent at Dubai Airport, to launch a regional inter-airport air cargo trucking service.

However, despite this list of deals, the logistics company’s plans for the future remain much as they did 10 months ago. There is a strong focus on combining the entities bought so far, but in the main the goal is to expand even further and to push into yet more markets. “Clearly, we have a big task ahead of ourselves with the integration… however, we will continue to evaluate our options in terms of organic growth, new customer acquisitions, new facilities or new services that we can bring to various markets on our own,” says Abou-Jaoude. “I will not speculate or try to guess what we will do [in terms of acquisitions]… but there may well be future opportunities that we will not rule out looking at,” he adds.||**||

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