CEVA Logistics mulls Middle East expansion, explores potential investment opportunities

Axel Herzhauser, Regional Managing Director of Ceva Logistics

France-based CEVA Logistics, one of the world's leading 10 providers of logistics services in terms of revenue, is planning to expand its presence in the Middle East through an ambitious investment plan, Axel Herzhauser, Regional Managing Director, said in an interview with Argaam last week.

He added that the company aims to boost its market share and seeks new acquisition opportunities.

CEVA Logistics is currently evaluating a number of investment opportunities in the region, and planning to increase its market share amid a remarkable recovery in the global supply chain network that was severely affected by the coronavirus pandemic.

“We are targeting expanding beyond our capabilities in the region. CEVA has a strong presence in the Middle East, and plans to boost its operations,” Herzhauser explained.

CEVA's average annual revenue reaches nearly $12 billion, and it has a presence in 1,000 cities and 160 countries around the world, according to the company's website. Its operations almost cover most of the region’s countries.

“After CMA CGM’s takeover, we have been actively hunting new opportunities and expanding our presence in every almost important city. We continue to evaluate potential acquisition opportunities. This is the core of our investment strategy,” Herzhauser added.

CMA CGM took control of the Swiss-listed logistics company in 2019 after a competition with Danish freight firm DSV.

CEVA was delisted after the French shipping group takeover, and the latter stated that it plans to turn its subsidiary into profitability and increase its revenue contribution to the parent company.

Back to Normal

Herzhauser is optimistic about the future of his company as global supply chains are recovering to the pre-pandemic level.

“I think the pandemic effect on the global supply chain is fading away. It has been a severe test for the industry. Now this is almost over with global supply chains are on the way to pre-Covid levels," he noted.

Global supply chains have been under tremendous pressure due to supply shortages and demand shocks, causing prices of freighting and shipping to record high amid heavy demand.

“I think this is over. Prices now are cooling down and coming back to normal levels. The shipping industry is flourishing now again,” the official said.

According to shipping data, the price of a typical 40-foot container routed from Asia to Europe has more than quadrupled during the pandemic from $2,000 to $9,000, making it cost-prohibitive for many small and medium-sized exporters.

Yet to stay

While the pandemic’s hard times are over, Herzhauser thinks that the pandemic has dramatically shifted consumer habits, which his company is trying to take advantage of.

“It is not an exaggeration to say that the onset of the pandemic triggered the most dramatic shift in consumer behavior and consumption patterns in decades," Herzhauser said.

“E-commerce is shaping a new consumer era, and we, as a logistic company, are trying to maximize our benefits from this change. We are currently experiencing more demand from online business activities,” he added.

According to the Mastercard Economics Institute, eCommerce now makes up $1 of every $5 spent on retail, up from $1 for every $7 in 2019.

“The shift to eCommerce is likely to persist and we are attentive and aware of the slightest changes that provide an opportunity to advance or that foreshadow a market obstacle to avoid,” Herzhauser confirmed.

Dollar is here too

In a world where empires fall and rise, the dollar is still unrivaled, affecting all businesses as it strengthened against all currencies over 2022.

“Strong dollar impacts our operations in emerging markets. We find it hard to find the greenback in some courtiers like Egypt and Lebanon, where there a gap between the official rates and the black markets,” Herzhauser said.

Egypt and Lebanon are among a long queue of countries where currencies have been under pressure as foreign investors exit seeking higher rates in a year, which saw the Federal Reserve raising the interest rate seven times to control high inflations rates.

“Also, the devaluation of South African Rand has dented our business there, but we are trying to diverse our currency pool, so we can use local currencies too in operations which are not in need to the dollar,” Herzhauser concluded.