GXO's purchase of Clipper Logistics 'could lead to higher prices'

25 February 2022

GXO’s potential aquisition of Clipper Logistics would be likely to result in higher logistics costs for companies, according to consultants.

GXO, worth $9.3bn and the largest pure-play logistics company in the world, announced a deal had been agreed to buy Clipper for £940m.

Dave Howorth, executive director at supply chain and logistics consultancy Scala, told Supply Management the deal was part of consolidation taking place in the logistics sector and it could lead to a “hardening” of rates.

“Overall, the success of Clipper demonstrates how logistics has gone from a cost centre to an area of competitive advantage, and this acquisition is the latest indicator that Clipper has very successfully ridden that wave,” he said. “In particular, this move highlights a quick way to leverage the growing boom in online retailing and all that this involves, which is an area is where the major third-party logistics providers (3PLs) want to be.

“This acquisition is an extension of consolidation in the 3PL marketplace. This could lead to a future continuation of the changes to pricing that have stemmed from the current hardening of rates and costs, with a shortage of warehouse space, increased labour costs, and tightening of transport capacity notable contributors to this.”

Clipper delivers around 500m units per year, providing logistics for a range of retail and fashion customers, including John Lewis and Asda.

It was founded in 1992 in the UK by Steve Parkin with a single van. Parkin has said that if anyone orders an item online from John Lewis, there is a 90% chance it came from a Clipper warehouse.

Clipper employs more than 10,000 people across 55 sites in the UK and Europe, with 11.8m sq ft of warehousing space.

GXO described the deal as “a compelling strategic combination which significantly increases the opportunities for both businesses in the high-growth e-commerce/e-fulfilment areas, creating significant value for all stakeholders”.

Benefits included “significant cost synergies based on procurement”.

The deal is subject to shareholder and regulatory approval.

Recently BT announced a deal to outsource logistics to GXO as part of work to improve procurement and supply chain management.

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