- Study: Terminals and ships in demand among investors
Container terminals and ships remain attractive investments for investors, according to a study. Strategic investors like companies consider such investments essential to maintain supply chains, the semi-annual report by accounting firm PwC on mergers and acquisitions in the global transport and logistics sector states.
In the first half of the year, there were 86 mergers and acquisitions in the transport and logistics sector, involving deals worth at least $50 million. This is 12 fewer than in the first half of 2023, marking the lowest level in the past decade, according to PwC.
"Economic uncertainties, volatile market conditions, persistently high inflation, and new regulatory requirements are putting pressure on logistics companies," said Ingo Bauer, co-author of the study. Companies must therefore reduce costs and improve efficiency.
The attacks by the Houthi rebels in the Red Sea continue to disrupt container shipping, the authors write. Shipowners are avoiding the route through the Red Sea and instead using the longer route around the southern tip of Africa, the Cape of Good Hope, leading to delays. Freight rates have also increased significantly, according to the "Transport & Logistics Barometer".
The air freight sector is benefiting from the disruptions in shipping. Global air freight transport increased in the first three months of the year, driven by e-commerce and demand for special cargo such as lithium batteries. However, there was weak demand in road freight transport at the beginning of the year, and companies are also facing rising operating costs.
Twelve "Megadeals"
There were still relatively few so-called "Megadeals," although there was an increase. The authors define a "Megadeal" as a merger and acquisition worth more than $1 billion. There were 12 such "Megadeals" in the first half of the year, compared to five in the same period last year. One reason for the increase is the continued demand for infrastructure, for which investors are paying high prices.
One of the "Megadeals" involved the Hungarian state acquiring a majority stake in Budapest Airport, as announced in June. The Hungarian Ministry of Economy stated the purchase price at 3.1 billion euros.
Prognosis: more business activity
PwC expert Bauer expects a "revival" in mergers and acquisitions in the second half of the year. "This is also because the easing inflationary pressure and the prospect of interest rate cuts will create a more favorable environment for financial investors."
The Red Sea continues to pose challenges for container shipping, with the Houthi rebels' attacks causing delays and increased freight rates. Shipowners are opting for the longer route around the Cape of Good Hope to avoid these disruptions.
Despite economic uncertainties, the Red Sea remains an important route for global container shipping, making investments in its security and infrastructure potentially lucrative for long-term investors.
