CMA CGM has agreed to buy FedEx’s third-party logistics business for an enterprise value of $1.4 billion as the French shipping group seeks to expand its presence in the logistics sector and in the United States.
The deal is expected to close this year and will mean CMA CGM, through its CEVA Logistics subsidiary, will have about 150 warehouses and 20,000 employees in contract logistics in North America, it said in a statement.
CMA CGM and FedEx also plan to develop partnerships under which the French company will be a preferred ocean carrier for FedEx in a non-exclusive agreement, CMA CGM said, adding that they will also collaborate on air cargo capacity.
Those partnerships represent potential additional revenue for CMA CGM of nearly $3.5 billion over 10 years, a source close to the matter said.
The air cargo and ocean freight agreements are expected to commence in phases between now and 2028.
CMA CGM has pursued diversification into logistics, port terminals and non-transport activities to offset volatility in ocean shipping.
The world’s third-largest container shipping line has faced upheaval in trade routes in recent years, including the virtual closure of the Strait of Hormuz during the Iran war.
FedEx, in an effort to focus on its delivery business, spun off its trucking unit, FedEx Freight.
CMA CGM’s acquisition of the third-party logistics business was reported earlier by the Financial Times.
Source: Reuters