Report indicates DSV has interest in acquiring C.H. Robinson’s Global Forwarding business

Earlier this month, a Reuters report indicated that Hedehusene, Denmark-based global 3PL DSV A/S had interest in acquiring Minneapolis, Minn.-based global logistics services provider and freight forwarder C.H. Robinson’s (CHR) Global Forwarding business.

The report said that DSV is looking to expand in North America, adding that CHR’s global forwarding business would provide DSV with what it called critical access to trans Pacific ocean trade lanes, with the global forwarding business potentially having a $9 billion price tag. What’s more, it added that DSV has long been interested in expanding into North America, having previously noted it would like to do so through mergers and acquisitions, at a time when the global logistics market has seen heightened M&A activity

CHR and DSV officials did not provide comment for the Reuters report.

Morgan Stanley transportation analyst Ravi Shanker wrote in a research note that when Cleveland-based Ancora Holdings was announced as a strategic investor to CHR in late February in a cooperation agreement, his firm observed that potentially breaking up CHR and spinning or selling the forwarding unit could help to quickly unlock value for the company.

“CHRW [management] has long stated that they believe the NAST [North American Surface Transportation] and Forwarding business belong together but perhaps the involvement of the strategic investor has driven a change in mindset,” wrote Shanker. “Global Forwarding has undoubtedly been one of the biggest pandemic ‘winners’—gross revenues are nearly 3x of 2019 levels and net revenues are ~2X. It would make sense that CHRW is looking to sell the business at the very top—but DSV is a savvy buyer which is also a key player in the business and will know as much.”

And he also wrote that M&A is part of DSV’s strategy, making it plausible it would look at CHR’s Global Forwarding unit, adding that DSV thinks scale is very important in freight forwarding, with the industry being highly fragmented.

Evan Armstrong, president of Milwaukee-based supply chain consultancy Armstrong & Associates, told LM that DSV’s interest in C.H. Robinson’s Global Forwarding division makes plenty of sense.

“With DSV’s successful acquisition history in the International Transportation Management (ITM) space of Agility’s Global Integrated Logistics (GIL) business for $4.2 billion in August 2021, then Panalpina in 2019, and UTi Worldwide in 2016, DSV has grown to be the third largest ocean freight forwarder globally with 2.9 million TEUs and the third largest air freight forwarder with 1.6 million metric tons,” he said. “Last year, its Americas division grew year-over-year gross revenue 88.2% to $6 billion and net revenue by 48.3% to $1.1 billion with solid increases in both air and ocean volumes and revenues. C.H. Robinson has grown rapidly via organic growth and acquisitions since 2011, when it had net revenue of $100 million. In 2012 it gained significant capabilities and scale via its acquisition of $807 million Phoenix International. From there, it added $251 million Aussie provider APC Logistics in 2016, $124 million Canadian ITM Milgram in 2017, and $84 million Madrid, Spain-based Space Cargo in 2019.”

As for CHR, he said that C.H. Robinson’s Global Forwarding division more than doubled in 2021 with gross revenue growth of 117.1% to $6.7 billion, and its net revenue increased 70.7% to $1.1 billion.

“C.H. Robinson is now a top freight forwarder in the Asia to U.S. trade lane and with 1.5 million in total ocean export TEUs (20’ container equivalents) managed,” said Armstrong. “It has surpassed long-time U.S.-headquartered competitor Expeditors International. When comparing the ocean and air freight forwarding volumes of our Top 3 Global Freight Forwarders [Kuehne + Nagel, DHL Global Forwarding, and DSV], DSV is the only freight forwarder of the three that maintained an upward trajectory in volumes. When you add C.H. Robinson’s 2021 volumes of 1,500, 000 ocean TEUs and 300,000 air freight metric tons to the mix, you see it continues to play out well for DSV, especially in ocean freight.”