Deutsche Bahn in talks to buy Schnellecke, claims newspaper

Both companies refused to comment on the report. If it occurs it will mark another buyout in thewave of consolidation underway in the European logistics market. Deutsche Bahn is the German state-owned railwayoperator. Schnellecke is a German logistics firm.

The trend is part of a move by Europe's logistics companies to expand their operations,technological capabilities, and their services to meet the increasing number and complexity ofdemands by their customers, according to the survey last year by EyeonTransport.

Another trend is for companies to increasingly require contract logistics providers to be able tosupply a fuller range of services, including the traditionally outsourced second-tierfunctions such as warehousing and freight forwarding.

These services are provided by what are being called lead logistic providers (LLPs), such asDeutsche Bahn and Schnellecke, which provide full supply chain management, from sourcing toconsumption, providing consulting services, re-engineering the supply chain as well as executingoperations.

The Financial Times claimed the negotiations between the two companies are at an early stage and may still collapse. The purchase price could be around €200m, the paper said.

Schnellecke does not published financial results, but the newspaper estimates it has annual sales ofabout €500m to €600m.

Logistics covers the planning, organisation, management, control and execution of freighttransport operations in the supply chain.

A European Commission study last year found that the centralisation of logistics organisations inEuropean and regional distribution centres is taking place. The study found that competition in theEuropean logistics sector is intense, due to the low concentration rate of third-party logistics inEurope. The top 20 companies have a market share of 33 per cent, a relatively low share.

On average, logistics costs account for 10 per cent to 15 per cent of the final cost of afinished product. The European Commission estimate includes costs such as transportation andwarehousing.

Spending on logistics amounts to about €5.4 trillion or 13.8 per cent of the global grossdomestic product, GDP a year. Annual logistics expenditure in Europe amounts to about €1 trillion,about the same as in North America, the Commission stated in its policy outline

The overall logistics spend in the European retail market is set to increase by 10 billion by2010, Datamonitor forecasts in a report published in January last year