FASTEN YOUR SEAT BELT AND PREPARE FOR TAKEOFF

FASTEN YOUR SEAT BELT AND PREPARE FOR TAKEOFF

While I'm convinced that the new century and the new millennium do not begin until Jan. 1, 2001, there is no arguing that a New Year will begin in barely 10 days.

And whether any of us celebrate the start of the new century this year or next, there is not much question that our industry has already begun its entry into our own New Age.On a recent trip home from Europe, I sat next to a woman who worked in the high-tech industry. I was fascinated by her story of having worked for companies that had been acquired by other companies 13 times in the past seven years.

I thought about how relieved I was to be working in the stable confines of the international transportation and logistics business.

How quickly things change.

In my last column, I wrote about the acquisition of my employer, Cargo Management Services, by AEI. Within a month of the completion of this deal, it was announced that AEI would be acquired by Deutsche Post/Danzas.

During about the same time period, the long-awaited initial public offering of United Parcel Service took place, bringing ''Big Brown'' more than $5 billion. Much of that, it is expected, will be used to acquire other companies.

It can be expected that these two examples are merely the tip of the iceberg of radical changes that will follow in this industry in the coming months and years.

While predictions of industry consolidation have been around for several years, the actual pace has been rather slow.

Each year has brought its share of deals, with the occasional blockbuster - P&O Nedlloyd, for example, as well as NOL-APL and Maersk Sealand - mostly amongst the ocean carriers, thrown in for interest.

The airline industry has been relatively calm, with most companies arranging themselves into alliances and code-share deals.

There have been many deals in the forwarder/third-party sector. But again, these have mostly been on a local or national level. They have typically involved the purchase of similarly situated companies - forwarders buying forwarders, for example, and brokers buying brokers.

What has been missing has been the creation of globe-spanning, full-service, all-service, multimodal logistics service providers.

What has happened with the DP/Danzas purchase of AEI, and will likely happen when UPS begins spending its $5 billion, is the creation of just such a group of companies.

Once this process gains momentum and others - such as FedEx, various European forwarders, and possibly even some ocean carriers - enter the fray, we will see a dramatic, transforming change to our industry.

While being fairly confident that this prediction will prove accurate, I am far less confident predicting what the industry will look like in five years time.

Will the creation of these global logistics companies prove successful? Will it result in the formation of five, 10, 20 massive, global logistics companies, with a few local, niche players?

What will be the reaction of the customer base, which seemingly is pushing the industry in this direction, but which has changed its mind in the past?

Will the merging of the various international and business-sector cultures be successful? How far can the advantages of size be pushed before the law of diminishing returns kicks in?

The list of questions goes on and on, without the possibility of immediate answers.

The one thing that is certain is that the process will go forward and likely do so with increasing speed as companies struggle to keep pace with the competition.

Big companies are forced to compete with other big companies, and when one adopts a new strategy, others are sure to follow. The short-term result is that many familiar industry names will disappear and a great deal of uncertainty will exist.

It is difficult to argue that there are no significant benefits to this development. There is clearly a need for the type of global services described by the new entities.

Customers are more and more often demanding the type of consistency and integration of service that can only be available from a large company in control of a string of world-wide offices, offering all and every service and connected by an information system that is fully capable of complete information transfer via electronic data interchange, the Internet, or some combination.

So fasten your seat belts, raise your tray table to its up-and-locked position, turn off your laptop, and get ready for take-off. Our industry is embarking on a new journey, and will move at ever increasing speed.

All best wishes for a happy and healthy holiday season, and for the very best of new years - even though we have a year to wait until the new millennium.