April 2000

E-commerce a key to Exel-Ocean merger

E-commerce figures strongly in the rationale for one of Britain"s biggest-ever logistics mergers that announced between NFC (parent company of Exel Logistics) and Ocean Group (parent of MSAS Global Logistics).

John Allan, chief executive of Ocean (and in line to head the enlarged group), told e.logistics Magazine: "The e-commerce angle is not just a spin on this story. In many ways it is the story."

He added: "The impact of e-business on the supply chain will be pretty dramatic. It will bring much lower transaction costs. Both companies in the merger have large business-to-business suppliers in their customer base, and we aim to provide them with services that reflect the changes taking place in their logistics requirements."

Neither Allan nor Gerry Murphy, the outgoing NFC chief executive who helped engineer the deal, would be drawn on specific e-logistics plans by the new group. However, both organisations are known to have been positioning themselves to take on e-commerce fulfilment services, and have been developing what Allan calls "e-commerce based tools".

The strengths of Exel"s domestic and international distribution presence and MSAS"s global air freight forwarding network put the group in a particularly strong position to handle fulfilment services for companies importing product sold to British Web users by overseas suppliers. As a business turning over £3.5 billion, the enlarged group will now reinforce its dominance on the UK logistics scene, and seems certain to press its strengths home in the e-commerce marketplace.

NFC emerged in the 1970s from the state-owned National Freight Consortium, and has progressively divested itself of what are deemed non-core activities such as its BRS truck rental business, its Lynx parcels network and its Pickfords removals service. Ocean has likewise trimmed down its resources; only this January it sold off its Cory Towage tug business for £8 million to focus on logistics services.

The terms of the deal make it nominally a takeover of NFC by Ocean, although ownership is expected to end up split more or less evenly between shareholders of the two groups. Ultimately the new group will be known simply as Exel, although the MSAS branding, strengthened in the past year, seems likely to survive for some years especially overseas. "It won"t go lightly," John Allan says. UK logistics subsidiary McGregor Cory has only lately adopted the MSAS name, and a further change might be deemed counter-productive in the short term.