The alliance should be a good fit for both firms, since it is in line with their strategic goals. It will increase SembLog's global contacts, allowing it to capture a greater share of Asian-Western trade, whilst cementing Kuhne & Nagel's transformation into a global logistics firm. Further joint ventures between the companies - possibly including US acquisitions - are likely.
Kuhne & Nagel and SembCorp Logistics (SembLog) have agreed to take 20% stakes in each other as part of a strategic alliance. The German firm will act as SembLog's global freight-forwarding partner, whilst the Singaporean firm will be Kuhne & Nagel's exclusive Asia-Pacific partner for supply chain management.
The alliance represents a perfect fit in terms of each other's strategies; both partners will be strongly committed to the alliance. SembCorp began talks with European and US firms back in August, with the aim of increasing its global reach. By increasing its attractiveness to Asian firms looking for global coverage, this deal will help SembLog to raise its earnings growth target of 20% a year. For Kuhne & Nagel the alliance fits with its repositioning as a global logistics company rather than a freight forwarder. The arrangement will also allow the two firms to increase their potential customer bases by cross-selling logistics services to each other's customers.
At a time when international logistics operations are increasingly driven by geographical coverage and size of operations, more joint ventures between SembCorp and Kuhne & Nagel are likely. The firms are particularly likely to explore acquisitions in the United States, if the opportunities arise.