When the going gets tough, the tough get going - and in business lately, that has been on to the acquisition trail. Economic history is littered with sectors - railways, airlines, defence contractors, dot.coms - which, faced with rising costs or a realistic view of prospects, have consolidated.
Now logistics companies are linking trucks after realising that supply chain services are not shackled to high profits in the way they once were.
On Friday, TPG, the sector’s second ranking operator, bought Swedish-based Wilson Logistics for €257 million (just over £170 million).
Today Tibbett & Britten agreed a takeover by Exel, the industry leader.
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The widely-publicised rises in fuel costs are one part of the low-profitability equation. But as Tibbett says, what “really drives” a modern logistics company are its technology and the staff capable of exploiting IT.
“Our IT systems integrate seamlessly with the customers’ own, and our people understand the potential of technology,” the company’s website says.
Both programs and programmers come at a price. Yet, amid fierce competition, the ability of logistics companies to pass on higher costs to customers as seamlessly as their services has remained limited.
Christian Salvesen last week revealed a fourth successive decline in annual profits. Tibbetts trumpet the company’s achievement of annual revenues of £1.63 billion last year, a little more than that of Homebase, one of its major UK customers.
The revenue figures are proudly plastered on the company website. It takes significant further research to reveal that Tibbett’s operating profits were only £25.9 million. Homebase achieved earnings of £246 million.
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Against such a backdrop, it appeared unlikely that Tibbett would put up the same kind of fight against Exel that Marks & Spencer is mounting against takeover by Philip Green.
That Exel, which achieved a marginally-more impressive operating profit of £154 million last year on turnover of £5.07 billion, has offered such a hefty premium made resistance unthinkable. The 668p-a-share offered by Exel may look poor by historical standards, with Tibbett shares spending much of the early part of the millennium above 700p.
Yet in current industry conditions, which sent Tibbett shares below 380p earlier this year, it does not require seamless IT systems to calculate that Exel is offering a good deal.
There is even an “if you can’t beat ‘em join ‘em” justification for the takeover, with Tibbett last year losing to Exel a key Marks & Spencer contract.
If only the takeover of Marks itself was so simple to assess. Yet if Mr Green were to give M&S shareholders the same premium as Tibbett investors will receive, relative to stock price lows, he would have to offer about 470p per share - about 100p more than he appears ready to consider offering.
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For once it is those at the diesel-drinking end of the retail business who are set for greater satisfaction than those at the consumer side.