MSAS, FedEx expand their reach

By Staff -- Logistics Management, 9/1/1999

The buyers and the companies they bought may have been quite different, but the aim of two recent acquisitions was the same: to expand into complementary business lines by acquiring transportation companies with solid customer bases. Both MSAS Global Logistics, one of the world's largest international logistics companies, and FDX Global Logistics, the contract-logistics arm of FDX Corp., recently bought their way into new markets by acquiring smaller but well-established companies.

In late July, London-based MSAS announced that it would acquire Mark VII, a nonasset-based third-party logistics provider headquartered in Memphis, Tenn. Mark VII's traditional focus has been on managing intermodal shipments, but it has expanded into broader-based logistics-management services in the last few years. The company serves more than 7,000 customers and has annual sales of about $725 million.

The acquisition gives MSAS a lot of bang for its buck. First, the global provider gains a strong presence in the U.S. domestic intermodal market, which will allow it to offer fully integrated transportation services in North America to multinational clients.

FedEx's purchase of GeoLogistics Air Services (GLAS)--which it will rename Caribbean Transportation Services Inc.--also was designed to acquire capabilities in a specific geographic region. GLAS is a freight forwarder specializing in pharmaceutical shipments from Puerto Rico to the United States. Its parent company, Golden, Colo.-based GeoLogistics, includes the former Lep Profit freight forwarder, Bekins Logistics, and Matrix International project-cargo companies. GeoLogistics had itself acquired GLAS just last year.

FedEx will run the forwarder as an operating subsidiary of Caliber Logistics, its third-party logistics arm. GLAS, with its strength in the pharmaceuticals, medical-equipment, and high-tech industries, complements Caliber's services for high-tech and value-added markets, said Joseph C. McCarthy, CEO of FDX Global Logistics. "With the addition of airfreight forwarder services, FDX Global Logistics can better streamline its customers' supply chains to cut costs and improve operating efficiency."

FedEx's foray into the world of freight forwarding will be closely watched by competing forwarders, which are already uncomfortable with FedEx's penchant for bypassing forwarders and working directly with shippers. The fact that FedEx now includes freight forwarding in its service mix--however limited in scope--is small comfort to them.