Global logistics: Crane Worldwide is in growth mode with four new acquisitions
New contract logistics/freight forwarding provider taking initial steps towards meeting aggressive expansion goals
Jeff Berman, Group News Editor -- Logistics Management, 11/21/2008
HOUSTON—At a time when the global economic downturn is having a decidedly dour impact on the freight transportation and logistics sectors, a new industry player in the global freight forwarding sector—Crane Worldwide Logistics—appears to be in expansion mode, growing to more than $125 million in revenue since launching in August with 29 locations in 15 countries. What’s more, Crane has made four acquisitions in recent months that it said expand its freight management and contract logistics services reach throughout Asia, Europe, and Latin America. Led by Jim Crane, former CEO and founder of Eagle Global Logistics (EGL), the Houston-based company said in July when it formally announced its launch that it expects to generate more than $1 billion in revenue over the next five-to-seven years. The company’s long-term goal is to operate globally in the Asia/India sub-continent, the Americas, and Europe, and it expects to hire more than 40,000 employees.The four strategically located freight forwarding operations acquisitions made by Crane Worldwide are:
· Houston-based McLean Cargo Specialists and its integrated network of offices around the world, primarily focusing on the freight needs of the energy industry;
· InterStar Global, with branch offices in Scotland, Brazil and Colombia, based in Houston, Texas, has a decade of logistics expertise in Europe and Latin America.
· Magno International LP, a global Miami, Florida based forwarder with offices in Brazil, Chile, Peru, Colombia, and Mexico to support Crane Worldwide’s extensive Latin America network; and
· Qifan International Transportation Co. LTD., a Shanghai China based global forwarder with Trans-Pacific and intra Asia expertise, expands Crane Worldwide’s Asia presence.
“Our management team researched acquisitions of some of the most effective supply chain companies in the industry,” said John Magee, Crane Worldwide CEO, in a statement (Magee was formerly a senior vice president at EGL). “By adding the expertise of these leaders, our company quickly put the foundation in place for a customer centric, best in class supply chain organization. Magee added that the company’s expansion will continue through the remainder of 2008 and into 2009, when it plans to have more than 50 global offices. And in the next five to seven years, Crane expects to be operating with more than 4,000 employees in over 40 countries, concentrating in Asia/Indian sub-continent, the Americas, and Europe.
In a July interview with LM, Magee said that Crane Worldwide Logistics will provide shippers with myriad services, including expedited heavyweight transportation on a global scale such as customs brokerage, international air, ocean (LCL, FCL, break-bulk), as well as project work and domestic transportation both air and ground.
Magee also stated in that interview that Crane Worldwide Logistics will feature a single source supply chain management system to ensure seamless operation. This is in contrast to other freight companies who typically juggle numerous systems inherited through acquisition—often resulting in duplicate data entry, hidden financials, and human error.
Crane’s system, according to Magee, will provide its customers with complete data, financial and physical visibility of their shipment from pick-up to delivery.
“Crane Worldwide Logistics will operate as a lean company with competitive prices and complete efficiency,” he said. “Many logistics companies today are so large they sell ‘brand’ and let the machine roll. Crane Global Logistics can boutique the logistics solution,” noted Magee.
When Crane Worldwide Logistics was first launched earlier this year, company officials said it intended to operate in more than 40 countries, but Magee cautioned that some of this is dependent on which acquisition(s) are successful. He added at the time that Crane is confident that it will have company-owned offices in the U.S., as well as the largest Asia markets before the end of the year. With these announced acquisitions, it would appear that the company is taking the initial steps to make good on that promise.
Despite making some early inroads, one industry expert said that building up the company will not come easily.
“I would expect that Jim Crane has some friends left and build fairly quickly, but CEVA is not going to hand him business nor is any else (BAX/Schenker, DHL, Expeditors),” said Richard Armstrong, chairman of Armstrong & Associates, a supply chain consultancy. “He is moving into very strong competition, will need good people around him, and need a solid IT base with good processes. Remember that EGL was not strong as a supply chain manager and not in a league with quality companies like Expeditors or CH Robinson.”
And Armstrong President Evan Armstrong said that Crane has made a nice start in getting back into the business, noting that by piecing together a group of small freight forwarders, Crane Worldwide Logistics now has $125 million of turnover which would put its net revenues—after subtracting out purchased transportation—at somewhere around $25M.
“With the war chest Crane and company have and its financial backing, we should expect more acquisitions are on the way,” he said. “The real question will be how quickly they can get operations integrated and how much debt is being taken on. In this environment a 3PL does not want to be highly levered.”
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