France-based shipping conglomerate CMA CGM Group said Thursday it has completed the $1.4 billion acquisition of FedEx Supply Chain, the contract logistics arm of FedEx Corp.
The purchase significantly expands Ceva Logistics’s contract logistics operations in North America, part of CMA CGM’s broader strategy of being an end-to-end logistics provider that can provide freight transportation from the manufacturing origin, customs clearance, warehousing and final-mile delivery to stores and households with its own container vessels, port terminals and a cargo airline, as well as non-asset based divisions that rely on third-party partners.
Privately-held CMA CGM hired Patrick Moebel, who was the head of FedEx Logistics, last summer as CEO of Ceva Logistics. FedEx Logistics is FedEx’s freight forwarding and customs clearance unit.
As promised when the deal was announced on July 1, CMA CGM will become a preferred ocean carrier for FedEx (NYSE: FDX) over several years and the companies plan to collaborate on air cargo capacity on key strategic routes, including Asia-Europe. FedEx operates the largest cargo airline in the world. The collaboration will improve aircraft utilization and provide greater flexibility on aircraft deployment on long-haul routes.
The acquisition triples the North American warehouse footprint of Ceva Logistics, adding about 34 million square feet of warehouse space and 130 customers. The combined business operates about 150 warehouses, expanding CEVA’s presence in North America to more than 240 locations and doubling the workforce to 20,000 people.
Many of the FedEx Supply Chain facilities are technologically advanced, featuring automation and robotics. Ceva will also gain sector expertise in healthcare, technology, consumer and retail, enhancing its ability to manage complex, end-to-end supply chains across the United States and Canada, CMA CGM said in a news release.
FedEx Supply Chain is a small part of FedEx, making up less than 2% of its consolidated annual revenue. FedEx will now concentrate on its freight transportation and parcel delivery services.
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Write to Eric Kulisch at ekulisch@freightwaves.com.
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