A.P. Moller-Maersk has agreed to buy LF Logistics for around $3.6 billion including lease liabilities, a move that would give the ocean shipping giant a network of warehouses. Maersk, the world’s largest container shipping line by capacity, has been reaping the benefits of the rattled global supply strains that have pushed up ocean freight rates to record levels this year and caused backlogs at U.S. ports. It has been using acquisitions to expand beyond ocean freight into inland logistics. It wants to capture a bigger share of the market moving goods between Asian and U.S. ports, and then from ports into warehouses or businesses and even the last mile to a person’s home. By acquiring LF Logistics, an arm of Hong Kong supply-chain manager Li & Fung Ltd., Maersk gains control of a network of 223 distribution centers across Asia and more than 250 customers globally, according to LF’s website. LF also provides freight forwarding services for retailers, manufacturers, and other cargo owners. The Wall Street Journal had previously reported a deal was near.
The LF deal is Maersk’s biggest move so far to boost its inland logistics business which it hopes will eventually bring in half the group’s earnings. Now, around 80% of revenue comes from ocean operations. Maersk is paying more than twice LF Logistics’ value of $1.4 billion in 2019 when Singapore’s Temasek Holdings Ltd. acquired nearly a 22% stake in the business. Maersk’s top competitor, Geneva-based Mediterranean Shipping Co. on Monday made a $6.4 billion offer to buy the African logistics assets of French-based conglomerate Bollore SE. If the deal goes through, it will give MSC control of 16 terminals in the Ivory Coast, Ghana, Nigeria, and Gabon along with three rail concessions. Maersk has around 70,000 ocean customers that include U.S. retail chains, car makers, furniture suppliers, electronics makers, and clothing importers. But less than a quarter of those customers use the company to move their goods from ports to warehouses and distribution centers.