By Alessandro Pasetti
Ahead of second-quarter results for all the major 3PLs – the earnings season opens next week with Panalpina (18 July) – I have spent a bit of time talking on the record to market veterans who have lived and breathed logistics since they were born, professionally speaking.
So, we’ll soon get to the numbers side of the logistics story, but here is the outlook and soft skills requirements and M&A considerations, through the words of a true market veteran, Hans Willam, chairman of WCL Worldwide Consultants in Logistics, who understands the changing mechanics that characterise our fast-evolving industry landscape.
Mr Willam – whom I first interviewed before the M&A news boom in January – discussed with me some key topics, most of which were also previously nailed down by another senior logistics expert, who received lots of traction in the marketplace via our last week’s article, Time to return to good ‘old-fashioned loyalty’ in logistics.
Trends for staff and new requirements that are key for employers in logistics: what does the 2020 “top executive/board member” in logistics need to be ahead of the pack?
“Apparently, the GLSP [global logistics services provider] industry does not care anymore to employ entrepreneurial managers. The exception is certainly DSV. There is a trend called leadership skills. Thus the question is whether large corporations should bank on smart entrepreneurial freight forwarding professionals or appoint highly intelligent managers with a limited experience in the industry. Most probably, it all depends on the culture side of the equation.”
But what about remuneration and the gender pay gap? Or the massive gender gap in an industry with very few female executives? Just look at the board of Kuehne + Nagel, a 3PL you know well.
“What does it take for a female exec to make it to one of the top five players? Good question. The only female executive I have met in the GLSP industry was the former chief human resources officer at DB Schenker. She moved on to BMW.
“Possibly the GLSP industry does not appeal to women. On middle management level, particularly in sales-related roles, I came across a very large number of very successful women. But I have also come across male managers resigning because they could not find a way to create a relationship with a female boss.”
We are strongly focused on M&A at Loadstar Premium, as you know: do you have views on the latest deal-making and, specifically, DSV + Panalpina? What about large cross-border M&A (such as one involving, say, DHL Global Forwarding or K+N or Expeditors, one of the best American companies in the industry)?
“Without knowing how DSV will try to integrate Panalpina, it is difficult to comment. Others? I expect more M&A activity in the future, but I do not expect any large M&A project to be pursued by K+N, DHL, DB Schenker or Expeditors. There are some financially strong GLSPs (top six to top 15), but such GLSPs will either be sold (one day) or they will buy one or another somewhat smaller company. And some others do not understand the GLSP business sufficiently well to make a growth-led move spurred by M&A.”
In there any true leader you have met in the logistics marketplace in the past 30+ years? What was so unique about him/her?
“Having worked for 20 years with K+N, there is just one name: Klaus-Michael Kuehne. He did not mind me saying ‘no’ to anything, as long as I was able to come up with good reasons. On the other hand, it wasn’t always easy, but 30 years ago I had asked him for an investment in sales ($1m within three years). After the initial ‘no’ I kept trying and finally managed to get a ‘yes’, because he wanted me to grow K+N’s market share significantly, and this required financial investments. It did not happen overnight, but within one week.”
You have been in logistics for many years. How has the industry changed? What’s next – in 2050? What will be the top three company names?
“The key changes I have observed are the large companies not focusing on opportunities anymore; making investments (even small ones) is no longer possible unless it had been budgeted for, but you cannot budget opportunities on a mid/long term basis.
“2050? I still believe in the European GLSPs remaining in the top three. So you ask if it will be DHL GF, K+N and DSV/Panalpina, in that order, topping the ranking? It depends on M&A activity within the next 30 years. Some years ago, Mr Kuehne said that he would be willing to give up his shareholding majority ‘if the right opportunity comes along’… if Deutsche Bahn will be forced by politicians to sell DB Schenker, then I can envisage a DHL/DB Schenker merger. DSV? Who knows. If the Panalpina integration turns out to be very successful, there will be more to come and thus DSV would be steadily part of the top three.”
How about training programmes by some of the majors? Are they doing what they should to deliver value to their clients across different staffing tiers? And what’s “value” to customers in logistics, in your view?
“Most large GLSPs have training modules. Some are better than others. One of my recommendations has always been to identify internal talent being business development driven, which means they ought to educate such talents to become professional sales persons. As far as value for customers is concerned, it really depends on the customer. Certain customers prefer to be looked after by just one key account person. Others prefer to just look at data. There is no general recipe how to service customers.”
“Value for customers depends on the customer”. Can you elaborate a bit, telling us what it means, for example, to deliver value to such a large corporation such as Siemens or any comparable, diversified shipper?
“Very large GLSP customers are interested in complex supply chain solutions. Today I see fewer GLSPs being able to service such customers. But if we look at the thousands of customers shipping between 500 and 1.000 teu a year, it’s a totally different scenario. This explains why you find thousands of NVOCCs across the globe.”
Europe vs Asia vs US staffing markets: leader? laggard? why?
“One of the reasons for the strength of the European GLSPs is certainly the fact that some countries offer an apprenticeship. On top logistics and freight forwarding is quite highly regarded in Europe. Talking about Asia and the US, I think we need to compare US and Asian GLSPs instead of looking at particular regions. When will a US or Asia-based company become a top five player? It’s difficult to answer that but, traditionally, the Europeans have sent key staff from Europe to Asia and the US, which kind of ensured global success.”
You seem to suggest that Europeans “know it better”….why is that, in your view?
“The GLSP industry is similar to the trading business: it all depends on margins and ‘gut feeling’ as far as the development of market rates for air and ocean are concerned. You also need to understand the operations’ cost structures (predominantly manpower cost). And somehow this mixture is part of the tool box provided by the Europeans to their talented staff. If you then look at the key managers of the Europeans (many have them on two or three different continents), you find a ‘very special breed of talents’.”
“Most probably M&A, but it’s hard to guess who will be the next targets. But another topic will be to wait for DSV to observe what will happen to the top 200 staff of Panalpina by or before the end of 2020.”
If you had to guess two targets that nobody expects (only size and/or names)?
“There is no evidence, but I would not be surprised if Rhenus will continue to grow based on M+A. On the other hand, some family companies (top 16 to top 30) are turning over the power to the next generation. If the transition does not work out, such companies must be sold. Certain companies may not have sufficient funds to stem the required changes regarding TMS and customer solutions. Another observation: very possibly, certain M&A targets will depend on IT considerations (TMS). Panalpina did not seem to be happy with SAP, but DSV was happy with Cargowise…”