The world’s largest container shipping line is enjoying calm seas and a prosperous voyage. Container freight rates are at record highs as global supply chain disruptions push up demand. Maersk is doing its best to ensure following winds continue with its latest acquisition.
The Danish giant will buy LF Logistics, the global freight management unit of Hong Kong supply chain group Li & Fung, for $3.6bn. It should give Maersk a new and complementary source of revenue from ground transportation. But the deal would also make Maersk, a member of the world’s shipping elite, even more powerful.
Li & Fung is waning as Maersk waxes. It was once the world’s largest sourcing company. However, the $3.6bn valuation of LF Logistics is more than twice what Li & Fung was itself valued at during a $930m buyout last year. Li & Fung has been caught in a decade-long downward spiral, failing to adapt to the online shift in the sourcing and distribution of consumer goods. The deal gives it a decent exit.