French logistics service provider CMA CGM Group has agreed to acquire FedEx Supply Chain for $1.4 billion, saying the move would nearly triple the size of the North American contract logistics operations of the CMA CGM subsidiary CEVA Logistics.
According to FedEx, its Pittsburgh-based FedEx Supply Chain division provides warehousing, distribution, fulfillment, returns, recycling, and transportation management. By integrating those assets and nearly 10,000 employees, CEVA Logistics will grow to operate approximately 150 warehouses and manage a combined workforce of 20,000 people located at more than 240 locations across North America.
FedEx created its FedEx Supply Chain arm in 2015 when it acquired the third-party logistics (3PL) provider Genco Supply Chain Solutions for an undisclosed sum. At the time, FedEx said the deal was part of a strategy to expand into areas beyond its core transportation offerings, and to compete against companies like UPS Inc. and DHL Corp. in the contract logistics sector.
Now that experiment is over. The move marks the second time in recent months that FedEx has shed a major part of the company, following its decision to spin off its FedEx Freight division into a standalone less-than-truckload (LTL) carrier last month.
In addition to the acquisition, CMA CGM also plans to make a multi-year commercial agreement with FedEx Corp. Under that deal, CMA CGM will become a preferred ocean carrier for FedEx in a non-exclusive agreement. The companies will also work together on select air cargo capacity solutions to enhance their respective global networks in the interest of higher aircraft utilization and flexible long-haul capacity.
“Today’s announcement enables FedEx to further increase our focus on providing our unique expertise for high-value verticals, including healthcare, automotive, aerospace and data centers,” Raj Subramaniam, President and CEO of FedEx, said in a release. “By streamlining our portfolio, FedEx is better positioned to execute our long-term vision and continue to serve as the heartbeat of the industrial economy, delivering unmatched connectivity, reliability, and value to our customers globally.”
