News / DB Schenker CEO: 'Changes forced on supply chains by the pandemic are here to stay'

Changes in the logistics industry are constant, but those forced through by effects of Covid-19 have taken on a greater significance, offering an insight into how a forwarder such as Germany’s DB Schenker can improve connections.

In particular DB Schenker’s airfreight business has taken on a new look and this will not return to its pre-Covid type operations, according to CEO Jochen Thewes.

It meant the company had to adjust its skill set to meet the new challenges set by the pandemic.

He said: “In our airfreight business, the minute belly capacity disappeared we had to find a solution for our customers. We went to the market and secured significant charter capacity.

“Like others, we developed our own flight operations and network, with various flights and hubs around the world, and that has systemically changed the way airfreight is produced,” explained Mr Thewes.

DB Schenker CEO Jochen Thewes.

“These are fundamental changes. I don’t believe we will ever go back entirely to the commercial space, because it also brings additional benefits, because the land infrastructure in certain locations is congested, we can fly 12 hours around the world and then it takes us days to get it through a terminal.”

That problem, readily reported on for freight in all modes of transport in some regions, meant forwarders and others looked for different ways to transport goods. In the US, the problem was particularly acute, with the now well-documented difficulties besetting inland transport.

As a result of those complications, DB Schenker decided it could use its chartered aircraft to fly to more convenient locations.

“We can fly to secondary airports, for example, in the US we don’t fly to Chicago any more and are able to go to Rockford, a smaller airport about one and a half hours south. With tarmac access you get to the cargo faster, break it down and distribute it within days, so we won’t turn back.”

Next, the company needed to distribute the freight, with the US like other regions experiencing shortages and capacity constraints.

“Trailers, trucks and, in particular, drivers are a problem, not only in the North American market but here in Europe too,” explained Mr Thewes, who acknowledged that the recent acquisition of USA Truck was a direct response to the need to meet the delivery times for US clients.

“One of the reasons we looked at USA Truck was that it has own fleet. We acquired 1,900 trailers, which guarantees us access to a more capacity in the market. As, with some of the tenders from large customers, if you cannot prove you have your own capacity, you’re not even invited to participate.”

While the acquisition of USA Truck has solved the immediate problem of distribution in the US, Mr Thewes agrees the company will need to develop its trucks to meet the fast-changing demands imposed by another global challenge, climate change.

Trucks are here to stay, he says, the company can put as much on rail as possible, but demand for truck capacity will remain, so “we will look at the fleet, utilising maximum capacity and looking for better solutions with fuels.”

Just as a company gets used to one new dynamic, another imposes itself, which, agrees Mr Thewes, will boost costs all along the supply chain.

“But that is something we will all have to accept, that we enjoyed prices that were too low pre-pandemic and now that dynamic has forced us to confront the true costs of doing business.”