Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 452

Two companies well-positioned amid supply chain disruption

As we review the daily headlines chronicling the tug-of-war between inflation and interest rates, we are reminded what a difficult job macroeconomic investors have and how grateful we are to be fundamental investors.

As challenging as it was to predict Covid-19, it would have required truly profound foresight to conceive that a supply chain crisis would rank amongst the most impactful financial consequences of the world’s first pandemic in modern history. And yet, as of this writing, the supply chain situation and its resulting inflationary implications have captured investors’ and policymakers’ attention to the degree that the New York Federal Reserve has recently created a new Global Supply Chain Pressure Index (GSCPI) to help track the health the global system.

While the underlying cause of this newfound supply chain focus is unfortunate, we believe the increased attention will be positive in the long run for both the companies innovating within the supply chain space and consumers globally.

Since before the outbreak of Covid-19, our Global Growth team has been analysing and investing in companies working to increase supply chain efficiencies. In this article, we take the opportunity to review two companies that we see as well-positioned to support a more efficient and robust global supply chain to the benefit of all stakeholders.

Sources: New York Federal Reserve Bank, Bureau of Labor Statistics; Harper Petersen Holding GmbH; Baltic Exchange; IHS Markit; Institute for Supply Management; Haver Analytics; Bloomberg L.P.; authors’ calculations. Note: Index scaled by its standard deviation.

Note: The information provided should not be considered a recommendation to purchase or sell any particular security.

Zebra Technologies Corp – Omnichannel automation and integration for retailers

Zebra Technologies Corp (Zebra) designs, manufactures and sells automatic identification and data capture products. Its barcode printers and scanners help companies manage their inventories and assets investment more accurately and efficiently.

Zebra’s products and solutions facilitate the digitisation of a company’s physical workflows so that they can be more effectively implemented, tracked, and analysed in real-time. For example, Zebra’s RFID solutions enhance warehouse managers’ capacity to audit and record incoming and outgoing freight, by enabling significantly faster throughput and reduced error rates. Pairing these RFID capabilities with Zebra’s barcode scanning technology allows for real-time, point-to-point freight tracking throughout the world, which enhances resource planning and customer response. These scanners and data analysis capabilities allow retailers to accept returns and reintegrate merchandise back into existing inventory.

The company is one of the leaders in its market. Its research spending is nearly twice that of its nearest competitor, helping to maintain its market position. Zebra has reduced its debt and now has the capacity to pursue acquisitions and or share repurchases. Profitability metrics have also improved in recent years.

Zebra is experiencing robust growth, due to both recent acquisitions and several underlying secular trends. Companies are increasingly investing in scanners and other equipment to compete with Amazon's fulfillment speed and customer service. Retailers are also investing more in omnichannel sales, and Zebra's products help keep track of inventory and route sales to customers through the most convenient location. Other areas such as health care are underpenetrated but growing markets for data capture and analysis technologies.

Increased expectations of on-demand fulfillment and rising costs of logistics and inventory storage, places the company in a compelling position to help its clients and their consumers reduce waste and increase service reliability through more effective inventory management systems technology.

DSV Freight Forwarding – Creating scale-based economies for all stakeholders

DSV is a global transportation and logistics company. Acting as a facilitator and coordinator, DSV serves companies looking to ship goods across the globe across a variety of transport methods including, land, sea and air. The company acts as the metaphorical grease in the wheels of a complex global supply chain. In 2021, the company shipped over 4 million tons of air and sea cargo, with each shipment having its own unique requirements that DSV had to coordinate.

2021 was a very challenging year for DSV due to Covid-19’s disruption of global supply chains. However, the scale and capabilities that DSV possess placed it in a compelling competitive position to serve its customers.

For example, with a large portion of transcontinental passenger aircraft grounded - planes that usually carry 40-50% of all airfreight - a severe shortage of airfreight capacity developed nearly overnight, often stranding freight in various regions. DSV’s large-scale and established agreements with dedicated freight aircraft owners enabled it to secure air cargo space for its customers to keep their freight moving.

Air Freight Inbound Price Index (2006-2022)

Additionally, with airfreight capacity materially reduced, rates to ship freight via air increased substantially. Here too, DSV’s scale and existing rate agreements enabled them to provide superior relative cost to their customers.

DSV is one of the largest and fastest-growing freight forwarders in what has historically been a highly fragmented industry. We see significant room for continued market share gains and consolidation in the large, highly fragmented freight and logistics markets. DSV’s recent acquisition of Switzerland-based Panalpina Welttransport Holding AG has the potential to create significant value for both stakeholders and shareholders, similar to what the company achieved with its successful UTI acquisition.

DSV’s culture and people are at the core of its competitive advantage. Logistics is a complex and rapidly evolving business, and it requires both rigorous processes and employee focus to achieve excellent customer service while preserving margins.

We believe the combination of greater scale, focused culture and strong global trade trends over the longer term places the company in a compelling position to expand its market-share whilst achieving attractive margins.

Better supply for a better-coordinated future

Economists have long remarked upon the power of trade to bring people together, but it took the Covid-19 pandemic to show the degree to which we are all adversely impacted when our supply chain infrastructure breaks down.

It is our expectation that the renewed focus on the infrastructure underpinning our economies from stakeholders spanning individuals to corporations, NGOs and governments will highlight the value that companies such as Zebra and DSV provide by investing in innovation to deliver more reliable and efficient supply systems.

 

Francyne Mu is a Portfolio Manager of the Franklin Global Growth Fund. Franklin Templeton is a sponsor of Firstlinks. This article is for information purposes only and does not constitute investment or financial product advice. It does not consider the individual circumstances, objectives, financial situation, or needs of any individual.

For more articles and papers from Franklin Templeton and specialist investment managers, please click here.

 

RELATED ARTICLES

Is there an Uber or Amazon of wealth management?

5 key investment themes for the next decade

Reshoring supply chains: What does it mean for investors?

banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Latest Updates

SMSF strategies

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Superannuation

The huge cost of super tax concessions

The current net annual cost of superannuation tax subsidies is around $40 billion, growing to more than $110 billion by 2060. These subsidies have always been bad policy, representing a waste of taxpayers' money.

Planning

How to avoid inheritance fights

Inspired by the papal conclave, this explores how families can avoid post-death drama through honest conversations, better planning, and trial runs - so there are no surprises when it really matters.

Superannuation

Super contribution splitting

Super contribution splitting allows couples to divide before-tax contributions to super between spouses, maximizing savings. It’s not for everyone, but in the right circumstances, it can be a smart strategy worth exploring.

Economy

Trump vs Powell: Who will blink first?

The US economy faces an unprecedented clash in leadership styles, but the President and Fed Chair could both take a lesson from the other. Not least because the fiscal and monetary authorities need to work together.

Gold

Credit cuts, rising risks, and the case for gold

Shares trade at steep valuations despite higher risks of a recession. Amid doubts that a 60/40 portfolio can still provide enough protection through times of market stress, gold's record shines bright.

Investment strategies

Buffett acolyte warns passive investors of mediocre future returns

While Chris Bloomstan doesn't have the track record of his hero, it's impressive nonetheless. And he's recently warned that today has uncanny resemblances to the 1990s tech bubble and US returns are likely to be disappointing.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.