The joint way forward
Following the takeover of Panalpina by DSV the focus is now on the former’s integration into the latter’s structures. Executive vice-president Flemming Ole Nielsen told the ITJ how DSV plans to make the most of Panalpina’s strengths and create one of the world’s largest logistics corporations.
The Danish logistics group DSV acquired Panalpina this year, thus strengthening its role as one of the major logistics firms with a global reach. DSV, based in the town of Hedehusene (Denmark), purchased Panalpina for around CHF 5.1 billion (EUR 4.6 billion), which catapulted it into the global logistics industry’s top division.
The significance of this symbiosis soon becomes apparent in the light of the two companies fortes. Panalpina is very strong globally in the air and ocean freight business, whilst DSV’s strengths lie more in overland transport, as well as in industry and contract logistics.
The merger of the two companies will thus create powerful synergy effects that will primarily benefit the conglomerate’s clients, as DSV executive vice-president Flemming Ole Nielsen emphasised. “Panalpina World Transport has been at the top of DSV’s wish list for ten years; now we’ve finally succeeded in reaching a deal.”
EUR 300 million savings a year
The name Panalpina will not disappear in the next two to three years, as it will initially remain in the corporation’s new name – DSV Panalpina A / S. Once the integration has been completed, however, DSV will once again operate under its now traditional three-letter abbreviation worldwide. DSV Panalpina will then be a group with 60,000 employees and annual sales of around EUR 15 billion as a result of this latest takeover.
Consolidation in the administrative field will result in annual savings of approximately EUR 300 million. The acquisition is expected to pay off for DSV by 2021. Nielsen does not yet want to answer the question of what effects the move will have in individual countries. It is still too early to discuss country-specific details, he explained, as the overall integration process will take around three years.
DSV Panalpina now ranks second worldwide in the airfreight segment and third worldwide in ocean freight activities. The merger will also increase capacities enormously. Worldwide, DSV Panalpina now has no less than 600 locations and many millions of square metres of logistics space. “We need state-of-the-art facilities with a high degree of automation and, in some cases, highly-specialised functions and capabilities,” says Nielsen.
Ongoing industry consolidation
E-commerce services and multi-channel and omni-channel fulfilment solutions are now firmly established all across the industry. DSV accompanies these developments with its own logistics solutions. Logistics professionals are largely driven by the desire for optimisation, standardisation, innovation and cost reduction.
There’s thus a permanent need to optimise, and DSV regularly finds ways to work more intelligently, according to Nielsen. Consolidation by acquiring new companies is another way to make progress. “There’s still plenty of room for consolidation in the transport and logistics sector,” Nielsen believes, with one eye naturally always looking to the future.
Logisticians don’t really have to fear the ‘Uber-isation’ of their industry; it’s unlikely, because certain infrastructure and qualifications are required to transport and handle goods, as Nielsen well knows. Examples include transporting dangerous goods, as well as pharmaceutical, food and animal logistics. They are subject to strict rules and require professional logistics partners who can master the tasks at hand.
Even air and sea freight transport cannot be taken lightly. A contract logistician can best make himself indispensable to the customer through on-time performance along the entire supply chain. “It’s easy to promise on-time delivery and complete transparence throughout the supply chain, but in practice it’s not that easy to achieve,” Nielsen explains.
3D printing represents an opportunity
3D printing is one of the hot topics at DSV these days. “We’re following developments closely, but so far we’ve found that it hasn’t revolutionised the logistics industry – yet,” says Nielsen. But as 3D printing becomes more commercial for certain types of production processes and types of products, DSV is likely to follow suit and look for new opportunities in this area, Nielsen emphasised.
Logisticians’ complaints about falling margins and rising costs are well-known – DSV is no exception there. Nielsen knows that the logistics industry is very fragmented and the market extremely competitive, both in terms of price and quality. “The market determines our prices. We offer high quality services, but at the same time we also have to work more intelligently to become more productive,” Nielsen closed.
