Delays. Miscommunications. Contract disputes. These are just a few of the throes of having a fragmented supply chain, which is the case for just about any company trying to ship goods globally.
It makes sense — to connect every touch point of the global supply chain would require infrastructure, visibility, software integrations and a host of other features along every step of the journey, a seemingly impossible task. But one company is getting very, very close.
Those acquainted with the supply chain likely already know that A.P. Moller – Maersk (OCTUS: AMKBY) is one of the world’s largest global shipping companies, boasting tens of thousands of customers all over the planet. But what they might not know is that Maersk is no longer just an ocean dweller — it’s an amphibian.
Beginning with the $545 million acquisition of logistics provider Performance Team and its 58 U.S. facilities in April, Maersk has steadily been evolving its core ocean shipping business into an end-to-end global supply chain, inching closer to unifying the journey from factory to doorstep. But Maersk’s purchase of Pilot Freight for $1.8 billion last week just accelerated things.
“We focus on value-added B2B transportation, large and bulky home delivery, and full mile and last mile in North America, as well as a full suite of other transportation logistics services,” Zach Pollock, CEO of Pilot, explained to Modern Shipper.
Formed in 1970 and based out of Glen Mills, Pennsylvania, a suburb of Philadelphia, Pilot owns and operates a North Americawide network of 87 facilities that will merge with Maersk’s existing network, which includes the facilities it acquired from Performance Team, bringing Maersk’s U.S. facility count to around 150.
The company also leverages an asset-light ground network, as well as a third-party network with full truckload and less-than-truckload capacity. For Maersk, adding those capabilities was like finding the missing piece of a jigsaw puzzle.
“Total focus is on the land side,” Tom Boyd, media relations manager for Maersk North America, told Modern Shipper. “This acquisition brings us everything — we did not have the full mile, we did not have the middle mile and the last mile, we did not have enough capacity, we did not have any white-glove service, and we did not have, say, a Pilot network.”
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E-commerce growth is one of the major trends driving Maersk’s and Pilot’s collaboration. That was made clear in August when Maersk acquired another logistics company, e-commerce fulfillment and parcel delivery company Visible Supply Chain Management (Visible SCM).
“While our customers trust us with a wide part of their supply chain, this acquisition will contribute to an even better end-to-end experience by providing more key e-commerce capabilities,” said Vincent Clerc, CEO of Maersk Ocean and Logistics, at the time of the deal. “The new supply chain architecture allows more of our small and medium-sized customers to tap into the growth driven by the increased online consumer shopping.”
But even with Performance Team and Visible SCM in tow, Maersk had gaps to fill, which is where Pilot comes in. Maersk and Pilot have identified a massive shift toward e-commerce for big and bulky items, as well as the increasing expectation among consumers that goods will be shipped directly to their doorsteps. And Pilot just so happens to have the United States’ second-largest residential big and bulky delivery network.
“As these types of products — which already formed something like 50% of Maersk’s import volumes — hit the United States and then become distributed, Pilot really has the network in terms of facilities … that allows us to take possession of that product, distribute it around the country, and then facilitate that delivery to a distribution center or retail scenario, an industrial delivery or even potentially a white-glove delivery into somebody’s home,” Pollock explained.
Pilot’s offering will complement Maersk’s other land-based acquisitions seamlessly. While Performance Team’s network of facilities enables functions like pick and pack, drayage and replenishment and Visible SCM’s proprietary technology allows for tracking across the supply chain, Pilot will provide the transportation infrastructure to tie everything together.
“Density, volume and scale are essential to execution,” Pollock asserted. “And when we look at a partnership with Maersk, and the access that they have on large-scale contract logistics through Performance Team and the e-commerce parcel fulfillment through Visible Supply Chain, we know that there is tremendous capability for Pilot to be a provider, to be a solution that those customers need.”
Previously focused on first- and last-mile deliveries, Pilot joined the two modes by adding middle-mile capabilities when it acquired LTL carrier American Linehaul in August. With all three legs of the journey covered, the company has been able to create a unified U.S. supply chain, a feat that has eluded many.
“That provided the opportunity for Pilot really to gain better control of that middle-mile component,” explained Pollock. “Handling the first mile and the last mile is kind of central to any domestic freight forwarding model, and the devil is in the details when it comes to moving the freight to and from those points.”
Pilot has plenty of access to those details through its embrace of automation. The company uses it to streamline processes like load planning, route optimization and capacity forecasting, gathering data and providing customers with visibility and consistent transit times. What Pilot didn’t have access to was a worldwide network of customers — now that’s changed.
“We’re talking about an integrated, end-to-end solution on a global scale, that factory-to-couch kind of concept. And in fact, it might actually be the couch that we pick up from the factory,” Pollock said. “We move it across the world, import it, handle customs clearance, cross-docking, transloading, domestic distribution and white-glove delivery into the home. And that provides customers with a solution that gives them visibility at every step of the way.”
Think about that for a moment. With Pilot, Maersk can unify the entire product journey from the factory, to the port, to the warehouse or distribution center, all the way to the customer’s doorstep. No changing hands. No gaps in visibility.
Already, Maersk boasts an ocean liner fleet that comprises nearly 17% of the world’s cargo ships and handles one out of every five containers shipped by sea. Now those ships have direct access to one of the largest domestic markets in the world and a network of transportation services that can deliver goods just about anywhere in the U.S.
“This is really about connecting Maersk’s vast global network of ocean and logistics services with Pilot’s North American network of stations and hubs with first-, middle- and last-mile solutions so that we can offer our customers a truly integrated service solution,” Pollock said. “When you look at it in this way, our opportunities are virtually limitless.”
Maersk’s acquisition of Pilot is still in the process of regulatory approvals, which have clouded the exact date the transfer will close. But when it does, the massive shipper will have doubled its U.S. facility count and added a key piece to its landside strategy and tackled one of its greatest challenges — getting products out of ports.
“We have 70,000 customers in our ocean business, and now that we have a better inland network with Pilot, with the big and bulky home delivery, this is something we really can grow,” Boyd predicted.