Little known to the uninitiated, German ocean freight forwarder J.F. Hillebrand has succeeded in gaining control over the years of more than 50% of worldwide wine and spirit traffic thanks to the talent of its managers and the commitment of its personnel. Founded in Germany 177 years ago, it claims a turnover of €1.4bn today and handles 625,000 TEU, flexi-bags included, per year.
In France, Hillebrand is also a leading player in a market segment which is particularly important for the country's export trade. Wines and spirits are the leading export category at the port of Le Havre, which sends a little over 100,000 teu per year to destinations all over the world.
DHL's acquisition of Hillebrand is not just another acquisition but an operation with major consequences for the entire market.
For a shipping company, Hillebrand is a top client by virtue of the volumes it handles and the quality of the professional relationship attached to its name. This has been built over decades of working together, with highs and lows according to the policies applied by one or other party but without any breakdowns. Despite its size and its international range, Hillebrand has always managed to keep human values to the fore in its approach to day-to-day management.
In acquiring the group, the Deutsche Post DHL group has obtained Hillebrand's recognised and highly appreciated know-how but also a large amount of new business which will enable it to consolidate its own position. Even if Hillebrand is not merging with DHL Global Forwarding, the DHL group's own forwarding arm, a look at the new consolidated entity gives a clear idea of the new firepower which has been brought into play on the market. The accumulated freight volumes handled by the two groups put Deutsche Post DHL in second position in the global ocean freight forwarder rankings, behind Kuehne + Nagel but ahead of Sinotrans (see our Financial Panorama of the World's Leading Transport Groups).
The DHL group's interest in wines and spirits forwarding is not new. It bought specialised Italian forwarder Giorgio Gori in 2014. The activities of Hillebrand and Giorgio Gore consolidated will leave little space for other market operators and some big direct shippers like Pernod Ricard and Bacardi Martini will need to make greater use of the new ensemble to ensure they have global coverage of their markets.
In France, DHL and Hillebrand's combined market share can account for close to 40% of the export portfolio of certain leading shipping companies. In this period in which power lies in the hands of the transporters, it is interesting to see such a high level of concentration on the demand side. Even if European export markets are between three and five times less profitable for companies than import markets for goods, notably from Asia, the increase in reefer exports and cargo volumes generated by the takeover are going to have an impact in the balance of power between clients and suppliers.
Controlled temperature shipping creates constraints in terms of the supply of suitable containers and plug-in capacity at terminals. This high value-added segment of the market has been growing steadily in recent years - by about 10% per year - thanks to an increase in interest from the pharmaceutical industry, which has been boosted by the pandemic.
There is intense competition, therefore, for containers and plug-in capacity. The size of the new DHL-Hillebrand ensemble can be an advantage in competition with other kinds of merchandise. There are also enormous synergies to be had through optimisation of the use of empty reefer containers returning on a "reefer as dry" basis, particularly given the current shortage of dry containers.
Flexi-bag technology, which was developed by Hillebrand and its partners years ago, is today perfectly viable and offers an opportunity to turn a dry container at little cost into a giant "cubitainer" which can be used for the transportation of all sorts of liquids, not just wine.
This technology involves advanced know-how which brings it into direct competition with operators of ISO tanks like Stolt. These tank operators, who own their equipment, have been able to win back market share over the last two years as dry containers have been generally in short supply.
It is by no means sure, however, that the end client is the main beneficiary of these grand manoeuvres. For the time being, the battle is being fought out between the big forwarders and the shipping companies.