APL Logistics is moving aggressively to expand its global capabilities with the acquisition of Carmichael International Service, a Los Angeles-based customs broker and freight forwarder that will fill out the largely missing U.S. brokerage component of its logistics portfolio.
Tuesday's announcement of the Carmichael deal comes hard on the heels of the October acquisition of 100 percent of APLL-Zhiqin Group, its joint venture partnership in China with Legend Holdings, and Beijing Willway Information Technology.
APL Logistics did not release the financial details of either deal.
Both acquisitions are part of the growth strategy laid out in NOL Group’s five-year plan for its logistics unit through external acquisitions and organic growth. Although the Carmichael acquisition brings APL Logistics a company largely centered on service to U.S. importers, its expansion strategy is focused on growth in faster-growing emerging markets. It kicked off its emerging market strategy in India in 2007 with the launch of the APL IndiaLinx intermodal rail service.
“The Carmichael acquisition brings the customs brokerage component into the APL Logistics family,” said Tony Zasimovich, vice president of International Logistics at APL Logistics. APL Logistics has been using Carmichael’s customs brokerage services for its U.S. importers for almost 20 years. “We’ve long had a very close working relationship with the family that owns it, so this is moving to the next logical step in our relationship," he said.
APL Logistics will maintain the Carmichael brand when it completes the acquisition. Carmichael founder and Chairman Enrico Salvo and his sons Vincent and John Salvo will continue to manage the company as a subsidiary of APL Logistics. Its small international forwarding component will be rolled into APL Logistics. Carmichael conducts its core customs brokerage activities through offices serving ports and rail hubs in Los Angeles-Long Beach, New York-New Jersey, Chicago, San Francisco-Oakland, Seattle-Tacoma, Miami, Boston, Baltimore, Atlanta, Savannah, Louisville and Memphis. It employs a staff of 245 professionals, including 35 licensed customs brokers in 13 offices nationwide.
Carmichael was one of the first customs brokers develop IT links with its customers, Zasimovich said. The 300 U.S. beneficial cargo owners that use its services are tied into it through electronic data interchange, which will enable APL Logistics' import customers to transition smoothly into using its service. APL Logistics has its own customs brokerage unit, but it decided in 2003 to outsource almost all of it to Carmichael under a strategic alliance, “because many of our customers were their customers, and they were so strong and such a good partner.”
After the acquisition is completed, Carmichael will continue to serve beneficial cargo owners who use shipping lines other than APL, the stable-mate of APL Logistics. It also will continue to make its brokerage service available to logistics providers other than APL Logistics. “Only where their accounts want to use more of our services will we get more involved,” Zasimovich said. Carmichael’s small forwarding unit will be rolled into APL Logistics.
APL Logistics will continue to pursue growth in emerging markets, which are already contributing to the company's business. The company has enjoyed its three best years in the last three years and continues to grow this year, Zasimovich said. It reported third quarter 2012 revenue of $365 million, up 10 percent year-over-year. Revenue at its contract logistics segment in the first nine months of the year was up 16 percent year-over-year to $740 million, mainly due to strong demand for rail and land-based logistics services. Revenue for its international logistics services improved 1 percent amid a soft retail and apparel environment. Third quarter core earnings before interest was up 19 percent through September, to $19 million.