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CMA CGM, Ceva ink tie-up in large financial, operational pact

Ceva launches IPO with CMA CGM taking a one-quarter stake, and with the two planning to build integrated services.

Dutch 3PL giant Ceva Logistics filed a US $1.3 billion initial public offering on the Swiss stock exchange today, and announced that French container line CMA CGM, the world's third largest, would take a roughly 25-percent stake in Ceva, with the two entering into a strategic operational partnership.

In a statement, Hoofddorf-based Ceva said that CMA CGM will invest between $390 and $462 million, and that the companies "plan to work together to expand their commercial co-operation and to develop complementary services which address the increasing customer need for integrated end-to-end solutions and one-stop shop providers."


The liner and global 3PL trades don't usually see moves that combine financial and operational ties, as this one does. Rodolphe Saadé, CMA CGM chairman and CEO, said in a statement that the Ceva investment extends the liner company's reach beyond the traditional container trade and into higher-margin areas like warehousing and distribution and freight forwarding. The companies will "explore possible co-operations, allowing us to propose an ever-more differentiated and qualitative offering while integrating services beyond maritime transport," Saadé said.

Ship lines bruised by rate wars over container space are pushing toward integrated logistics strategies where their global networks are leveraged in an effort to expand their service offerings. Moreover, those services typically generate fatter margins, and often with fewer headaches for the carriers, than their core container trade.

In a comment that appears perfectly logical, but is rarely spoken by container shipping executives, Saadé said the logistics and shipping industries are "closely related."

Maersk Line, the Danish behemoth and the world's largest container line, has a three- to five-year strategy to establish an end-to-end physical and IT infrastructure, supported by multiple service offerings. Maersk's objective is to be the seagoing equivalent of FedEx Corp., UPS Inc., and DHL, all of which provide a wide range of services across their own networks and with their own, probably unrivalled, IT networks

Ceva, which generated $7 billion in revenue last year, said today its first-quarter revenue was up 5.3 percent in constant currency. It did not issue a separate statement on its first-quarter results. It operates in 160 countries and is the fifth-largest provider of contract logistics—otherwise known as value-added warehousing—with more than 9 million square meters of warehouse space under management. It is the world's 10th largest freight forwarder, and is known for a blue-chip customer base, especially in Asia.

The three largest shareholders of Ceva Holdings LLC, investment funds Capital Research and Management Company, Franklin Advisers Inc., and Apollo Global Management LLC, will remain invested in the company following the IPO, Ceva said.

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