Damco chief outlines new operating model for "pockets of growth"

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Global freight forwarders are entering a new phase in which growth markets will be increasingly hard to single out, Damco chief executive Rolf Habben-Jansen told The Loadstar in an exclusive interview yesterday.

The Hague-headquartered logistics provider recently announced plans for the new phase of its ambitious global expansion plan, taking the number of owned offices from the current level of 350 to 600 over the next three years.

Despite the headline-grabbing number, Mr Habben-Jansen cautioned that they should be understood in a more nuanced way, given the disparate manner in which many of the world’s economies are currently developing.

“If you are looking for growth you will have to look in a much more granular way at markets; we need to be a little smarter to find the pockets of growth that exist; it is completely different to 10 or 15 years ago when everywhere was growing, and we are looking to change our model,” he said.

He said that that the new offices would be split into two categories – there are 50-70 main customer service centres planned, which would undertake operations such as billing and invoicing, to be complemented by smaller, commercial offices close to the markets themselves.

“These will be customer-focused locations staffed by five to 30 people involved in customer support, key account management and sales – if you want to grow in our business you have to know these local markets and have the contacts. For us this is different approach, and one of the things we hope to get from it will be a growth model.”

This comes in conjunction with the company moving away from traditional freight forwarding: “The basic sea and air freight forwarding market is increasingly commoditised – it is very difficult to make money out of it. We much prefer to provide end-to-end solutions.”

He also defended the company’s dealings in the ocean freight sector and claimed it had not contributed to the severe decline in rate levels.

“We are not one of the very aggressive port-to-port bidders, and I don’t think we should aspire to work with customers who change carriers every month over a few dollars freight rate. Of course there is always an element of volumes that shippers will want to shift amongst carriers, but longer term, do we want the sort of customer that changes supplier every week, because apart from anything else it’s a colossal waste of time.”

In the same vein Mr Habben-Jansen said that a conscious decision had also been made to limit its contract logistics activities: “We are willing to do contract logistics only if it is connected to international business, and is an extension of a consolidation, import and export distribution centres. But we don’t want to focus on domestic warehousing and distribution because there are players much bigger than us that already dominate that market.”

Instead, the decision has been taken to focus on a few key verticals: retail, lifestyle and apparel, chemicals and industrial, government and defence, and technology. Both pharma and automotive are markets that it has little interest in.

“You need a big upfront investment in systems, equipment and training to provide pharma services, while automotive is a mature segment with established players. Sometimes you just have to make some choices about the markets you want to serve.”

Its core sector is retail, which now accounts for 52% of its business, and he said it was looking to replicate its capability here in other sectors. “These are large and complex supply chains, and it is interesting to see that defence contingency logistics, for example is very similar to retail supply chains. In many respects the logistics industry is still very young – there are still enormous efficiencies to be gained,” he said.