a whole lot of shaking going on

Just when you think the dust has settled in the logistics software market, along comes word of another acquisition or merger that shakes things up all over up again. That's happened twice in the last few months. First came Sterling Commerce's announcement in late December that it had purchased Yantra, a company that provides distributed order management and supply chain fulfillment solutions, for $170 million.

Then, in early January, JPMorgan announced that it had acquired trade management software maker Vastera in a $129 million deal. Why was a billion dollar financial conglomerate intent on acquiring a relatively small player like Vastera? As it turns out, it wasn't about the money (Vastera showed a net loss of $1.2 million in 2004's third quarter). What caught JPMorgan's attention was Vastera's solution for automating the required trade management processes associated with the physical movement of goods internationally. The plans are to combine Vastera with the Logistics and Trade Services businesses run by JPMorgan Chase's Treasury Services unit in order to enhance JPMorgan Chase's solutions for moving goods across international borders.

At least one analyst says he's not surprised. "The role and value of finance in global trade management is often more critical and valuable than the actual movement of goods," says Adrian Gonzalez, an analyst with ARC Advisory Group. "The ability to finance inventory, for example, can have significant implications on cash flow, taxes, and other balance sheet entries [that] ultimately grab the attention of chief financial officers and Wall Street." Gonzalez points out that UPS already operates in a similar structure, with its UPS Capital Group and its Supply Chain Solutions Group, which acquired Menlo Forwarding in December.