Given how fast the economy is growing in places like Brazil, India, the Middle East, and some locations in Africa, you'd think that logistics companies would be concentrating their resources in these developing regions. And they may well be. But for the moment, it appears they are not neglecting mature markets either. In the case of Europe, the continent's economic woes seem to be creating new opportunities for US logistics companies.
Unfortunately, the FedEx announcement was followed up with less-than-happy news last week from the World Trade Organization. The WTO said that while global trade in goods will increase by 3.7 percent this year after expanding a less-than-forecast 5 percent in 2011, the debt crisis in Europe continues to weigh on the commerce sector, BusinessWeek reported.
FedEx doesn't seem worried. The Opek acquisition is expected to give the FedEx Express business unit access to a nationwide domestic ground network with an estimated $70 million in annual revenue and 12.5 million shipments annually, the company said in the statement referenced above, adding that it is continuing "its European expansion through smart, strategic investments."
Frederick W. Smith, FedEx's chairman, president, and CEO, had this to say about the company's European expansion:
In recent years, we have made significant investments throughout Europe, greatly expanding our network coverage and improving service to customers. Our presence in Europe is backed by strong leadership and management and dedicated team members. We have an excellent strategy that has steadily advanced our position in the region, and we are well positioned for profitable growth as we increase the number of direct-served locations in Europe.
FedEx is definitely on a multiyear European growth streak that started in 2006 with acquisitions in the UK, and then in Hungary the following year. In 2010, FedEx Express relocated its Central and Eastern European hub from Frankfurt to Cologne, Germany, and in 2009 it expanded its European hub at Roissy-Charles de Gaulle Airport in Paris, making it the largest FedEx hub outside the US, according to the company.
It doesn't end there. So far in fiscal 2012, FedEx Express has opened 26 new stations across France, Germany, Italy, the Netherlands, Northern Ireland, and Sweden. Additionally, FedEx Trade Networks has added 22 European locations in recent years to complement its express services.
The Wall Street Journal made some interesting points on this broader logistics trend. The newspaper's Ishaq Siddiqi reported:
Analysts said the recent deal activity suggests that cash-rich companies in the logistics sector are looking to put their money to work. Investment bank Morgan Stanley noted that prospects for an increased level of merger and acquisition activity across all sectors are reasonably good in Europe. They cite healthy balance sheets and cash flows for European companies, return on equity that is above historical averages as well as higher share prices.
Unfortunately Europe's loss is other nations' gain. It doesn't look like these acquisitions were heavily discounted, but you have to think that companies are worried about their shareholders and will sell now rather than later.
With money getting in the European capital markets through acquisitions, the European corporations may well get their liquidity problems solved. This in turn might stabilize the debt crisis in Europe as debt repayment schedules will be met and therefore financial institutions will be able to offer funds to the corporations looking to expand.
Also investment in the logistics sector is an indication of confidence by investors in the European manufacturing and service corporations who are definitely the prime customers of logistics providers. If these corporations expand, so will the logistics corporations. All these developments will also mean that the investors are seeing a potential of growth in the already mature markets of Europe.
Considering the recent acquisitions esp in the logistics sector by the US companies, the news might also give a kick to the share prices of the European logistics companies. With a speculation, esp when backed by a reputable investment bank like Morgan Stanley, that US companies are performing feasibility analysis on European logistics providers, investors would love to invest in those shares esp the ones who are looking for short term gains. Whatever may be the benefits accruing to the individual shareholders, these speculations and acquisitions are likely to give a helping hand to the European economy which is good for the Euro society as a whole.
"In recent years, we have made significant investments throughout Europe, greatly expanding our network coverage and improving service to customers".
FedEx business expansion in Europe is certainly a thumb up. Despite Europe's ongoing economic crisis. Investment of this nature is highly required to kick start the economy. Brilliant!
A new report shows that most of the worrisome issues that the supply chain industry has been dealing with for years are not new, but there are some new concerns that need answers. Here’s a look at what keeps supply chain professionals up at night.
When it comes to shipping supplies from China to Europe, trains might be the most cost-effective way companies have available to them. DHL is looking to jump on that bandwagon.
For many dealing with the enormous task of tracking,
reporting, and resolving issues associated with
potential counterfeit parts, there is a collective
hope that 2013 will bring clearer guidance on what
needs to be done by whom and when.
A necessary foundation for moving efficiently at real-time speed, supply chain analytics is still very much at the beginning stages of development at many companies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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