Last two years have been full of big deals in logistics, mergers and acquisitions market is much more active than last 15 years. XPO acquiring Conway, UPS to Coyote Logistics or Fedex to Genco, by instance; besides there are a few planned for 2016 as DSV to UTi and Fedex targeting TNT. Millions of dollars involved in transactions trending to expand the target market, increase the services, capacity and revenues, of course.
Who would say that? Few decades ago, many logistics companies were family businesses that started with one small truck helping their neighbors to move house! Now they are stories of success and solid corporations billing at least seven digits per year.
While big companies are behaving as predators chasing to small firms, I was wondering what is the future of logistics entrepreneurs? Nowadays, it is not the same formula as old times to build a big company; competency is bigger and fiercer. If someone decides invest its savings in a logistics SME, does it have a chance to survive? Its future is to be bought by a bigger one? Could that business aspire to be big enough for “hunt” smaller enterprises? What is the course of logistical entrepreneurs? I am being rhetoric.
In this post I want to share what I think about the close future of logistics entrepreneurial. First, I am sure that any company can achieve any purpose if a mix of passion, dedication and discipline is injected to the project; so, new companies are not destined to fail or to finish in the mouth of a big fish if correct goals are set and those targets are pursued with effort and perseverance. This is the “romantic” and motivational message of the post, but where or in what concentrate the entrepreneur ideas?
John Anderson, talking for Supply Chain Brain, explains that non-asset-based companies, these are those that don´t own trailers, equipment or even buildings to do their job, are more attractive for investors than asset-based companies because these last “tend to be more cyclical in terms of earnings”. It is clear, all assets get devaluated and need maintenance. Considering this trend, I think that we have the first step taken, non-asset-based is the future. These are 3 areas where I find good opportunities of business.
Ultra-portability is the word of this millennium, as smaller and practical can be a service much better. Many companies are developing applications to cover basic needs of logisticians like shipping tracking or scheduling. There is room for a lot of apps that could offer solutions to trucking companies, warehouses or materials handling.
Software to support the management of vehicles fleet or shipping docks, for example, are ideas played since few years ago and they are still a good business if you are able to offer innovations like “cloud” based systems.
When I say “integral services” I mean to do all that stuff that people and companies don´t want to do. Let´s think as a non-logistics person that want to ship something: I don´t want to carry my heavy package to the shipping local, I don´t want to see my packages out of my door or in neighbor house because the courier didn´t found me at home. A company doesn´t want to pay fines due to omissions on delivery dates or regulations of foreign trade. This is something like doing the “dirty job” that nobody wants to do and offer it as an integral part of the whole business.
This is probably the slowest way to make your investment return but the biggest market available. Most companies operate logistics with old methods but they are reluctant to change their procedures. When future arrives to those companies they will be eager of get help to update their business, I would call it “the upgrader job”.
There are a lot of ideas to start a business in logistics, I hope this post inspire someone to kick off their own; in the mean time, I want to thank you for reading me, leave a comment, share, like it and all that stuff that social networks and internet allows. Until next one!
Armstrong and Associates Inc. (2015, November 10). Third-Party Logistics Mergers and Acquisitions Activity Drives Further Industry Consolidation. Retrieved December 7, 2015, from 3plogistics: http://www.3plogistics.com/3PL_M&A_Activity.htm
SupplyChainBrain. (2015, February 24). The M&A Market for Logistics Companies in 2015. Retrieved December 7, 2015, from SupplyChainBrain: http://www.supplychainbrain.com/content/latest-content/single-article/article/the-ma-market-for-logistics-companies-in-2015-1/
Wich, J. (2014). List: The most promising startups in logistics. Retrieved December 7, 2015, from The digital blueprint: http://jonathanwichmann.com/my-lists/list-the-most-promising-start-ups-in-logistics/