Silk Logistics, an ASX listed port-to-door services provider offering warehousing, distribution and port logistics services and whose clients include major CE retailers such as JB Hi-Fi, has seen its share price nosedive by more than 20% on Thursday after the country’s competition regulator raised objections to its proposed acquisition by DP World Australia. Silk’s shares traded at A$1.58 around 11.30am on Thursday.

The Australian Competition and Consumer Commission (ACCC) has outlined preliminary competition concerns with DP World Australia’s proposal to acquire 100% of Silk with a cash offer of A$2.14 per share – valuing the deal at approximately A$174.5 million when it was first announced in November.

DP World operates container stevedores at the Ports of Botany (Sydney), Melbourne, Brisbane and Fremantle.

On average, it services approximately a third of the containers processed at these ports.

 

Silk is one of the only national door-to-door container logistics providers in Australia. It hauls import and export containers using trucks to and from the ports where DP World Australia is operational.

DP World Australia is an indirect subsidiary of the UAE-headquartered DP World Limited (DPW) which handles approximately 10% of global containerised trade.

“We have heard concerns that DP World’s ownership of a national container transport provider is likely to reduce competition in the supply of container transport services. This could lead to higher prices and reduced quality for Australian importers and exporters,” said ACCC Commissioner Dr Philip Williams.

“Our review is focused on DP World Australia’s ability and incentive to either increase terminal fees or worsen the quality of terminal services for container transport providers that compete with Silk, after the acquisition.”

Silk has 46 facilities across New South Wales, Victoria, Queensland, South Australia and Western Australia. Silk’s operations are broadly categorised into two divisions.

The first is port logistics such as road transport of containers and ancillary services such as quarantine inspection and packing/unpacking services.

The second is contract logistics and relate to warehousing services and include receiving containerised freight, unpacking it, palletising it, storing it and then distributing it to warehouses or delivery points including retail premises, factories or households.

“We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” said Williams.

“This is because a discounting strategy involving below-cost prices could reduce container transport competition allowing a combined DP World Australia and Silk to raise prices later.”

Some of the other concerns raised by the ACCC is that DP World Australia could potentially be able to access and use commercially sensitive data about Silk’s rivals “in a way that damages competition.”

While the objections are part of its preliminary findings, the regulator has called or submissions from interested parties by March 27, 2025.

In addition to its stevedoring services, DP World Australia operates an empty container park in each of the areas surrounding the ports of Brisbane, Melbourne and Botany. It also has a 50% interest in a vehicle booking system that container transport providers use for the purpose of collecting/delivering containers at several Australian ports. It even operates a limited fleet of container transport trucks in Melbourne and Sydney.