Rodolphe Saade, billionaire and chief executive officer of CMA CGM SA, at the ai-Pulse conference at Station F technology campus in Paris, France, on Friday, Nov. 17, 2023. The race for AI dominance has intensified geopolitical rivalries as countries seek to harness the technology’s potential for economic growth and influence. Photographer: Nathan Laine/Bloomberg via Getty Images
CMA CGM announced today that it has completed its $1.4bn takeover of FedEx’s contract logistics business, FedEx Supply Chain, which is set to be folded into the shipping line’s contract logistics arm Ceva.
The deal will see Ceva’s North American footprint almost treble in size, according to CMA CGM, with the addition of around 34m sqft of warehouse space offering combined operations across 150 warehouses in region and employing around 20,000 staff.
“The completion of this acquisition marks an important step in the development of CMA CGM and CEVA Logistics in North America,” Rodolphe Saadé, chairman and chief executive of the CMA CGM group, said.
“By significantly expanding our contract logistics capabilities, we are strengthening our ability to offer customers integrated, end-to-end supply chain solutions across ocean, air, land and logistics.
“It also reinforces CMA CGM’s long-term commitment to investing in the United States, a strategic growth market for the group, and supporting the resilience and efficiency of its supply chain,” he added.
The deal is central to Mr Saadé’s strategy of expanding CMA CGM’s less-cyclical logistics activities. Earlier this month, he said the group would continue to grow “organically in container shipping, while focusing acquisitions on logistics”.
An additional clause in the deal also sees FedEx “enter into multi-year commercial agreements” with CMA CGM’s ocean freight operations and CMA CGM Air Cargo.
“CMA CGM will become a preferred ocean carrier for FedEx, offering transport and carrier services under a non-exclusive agreement,” a CMA CGM statement said.
“The two companies also plan to collaborate on an air cargo capacity agreement on key strategic routes, including Asia-Europe.
“This will strengthen their respective global networks, improving aircraft utilisation and providing greater flexibility on long-haul routes,” it added.
Under the proposed air cargo agreements, Ceva Logistics could gain access to FedEx’s wider capacity network, potentially including space bought from third-party airlines alongside its own freighters.
While neither company has yet to clarify the arrangements, such access could help CMA CGM expand its air freight offering without acquiring scarce freighter aircraft.
The potential cooperation highlights how control of capacity and customer relationships can create competitive advantage, allowing integrators and forwarders to buy airline space cheaply and sell it as part of a higher-value, end-to-end service.