Conf call redux: does Kuehne + Nagel know its toys from its teus?
Yo bro, where’s the growth?
© Jonathan Weiss
By Alex Lennane
Kuehne + Nagel appears to be moving closer to a DSV-style organisational structure, announcing today it was “streamlining”, with cluster and national managers reporting directly to the management board.
K+N said the move would create “further efficiency gains and profitable growth”.
It explained: “The new structure will enable business and functional units to sharpen their strategy in line with rapidly changing market developments and implement business decisions even faster. It will also ensure greater global consistency, as well as customer proximity.
“The historically evolved regional structure will be discontinued and responsibilities integrated into Kuehne+Nagel’s group functions, as appropriate.”
“Streamlining” tends to mean job losses, but a spokesperson for K+N told The Loadstar: “The change impacts fewer than 1% of our employees, the majority of whom will move to new functions.”
With a headcount of some 81,000, that 1% would translate into about 800 people, and comes amid a new hiring freeze at the forwarder.
Kuehne + Nagel’s organisational changes were met with some scepticism from the market.
Anthony Miller, consultant and former WiseTech executive, noted on social media: “The differentiation at the top really is narrowing. K+N has been an interesting case study through their difference in organisational structure, their approach to tech and their powerhouse status.
“This new move feels fragile … this may be a sign of a weakening position that they are struggling to keep hidden.
“Whatever the case, it seems like all the players are shifting towards more centralised structures with unique decision-making and very influential C-suite.
“What we will likely see from this is global initiatives that will impact strategy, HR and tech. Tech is an important one, as this may be the loss of local freedoms to choose the best tech for the region versus what head office wants.
“K+N did recently announce CargoWise for global customs. Are they finally deciding to bite the bullet and go for a global roll-out for their entire business now?”
Bill Paul, founder of Logitalent, noted: “Discontinuing the regional structure looks like they are trying to imitate the DSV lean model. As for “customer proximity”, when you eliminate as many account manager folks as K+N has done in recent months, I’d say they are a lot further away from their customers today.”
K+N, in line with other major forwarders, saw declines in 2023. Year on year, operating cash flow fell 61%, sales gross profit fell some 20% and sales fell nearly 40%.
Listen to this clip from The Loadstar Podcast about why DP World is expanding its forwarding footprint:
Loadstar Premium, which broke the story of K+N’s hiring freeze in February, reported that CEO Stefan Paul told staff at the time: “As you are aware, the current market environment is challenging. This situation is impacting not just Kuehne+Nagel, but our entire industry, requiring us to take immediate action to reduce costs.
“Given these circumstances, as of Monday, 12 February, a global hiring freeze will be in place, requiring the stop of all replacement hires and new hires.”
Loadstar Premium will have the full story on the organisational changes soon.
Comment on this article
Ronald Meier
April 08, 2024 at 1:51 pmDo not forget approx 2 decades ago KN had a centralized structure.
John Schnitzel
April 10, 2024 at 2:20 amIt’s concerning to see Kuehne + Nagel moving forward with their restructuring plans. Not only does the layoff of 1% of their workforce equate to around 1000 staff, but the dissolution of the historically successful RX structure raises even more red flags. Operating country organizations from the mountains of Schindellegi will undoubtedly pose challenges, not just due to time zone differences but also because of the crucial country-specific knowledge required for effective decision-making. This move could seriously hinder the company’s ability to adapt and respond swiftly to local market dynamics, potentially resulting in long-term damage to the organization’s competitiveness.
Moreover, by undervaluing the expertise and loyalty of long-serving staff in favor of cheaper alternatives, Kuehne + Nagel risks losing the very essence of what made them successful. This decision also tarnishes the company’s reputation and service quality.
Additionally, this move may inadvertently benefit competitors who now have access to a pool of talented staff, some of whom may harbor resentment towards their former employer. This could lead to strategic information leaks and even attempts to undermine Kuehne + Nagel’s position in the market. Ultimately, the short-term cost-saving measures may pale in comparison to the long-term consequences for the organization.
While international experience is not the sole determinant of effective leadership, it does provide invaluable insights into diverse markets and cultures. Without this broader perspective, decisions like restructuring country organizations from afar may seem more viable on paper but fail to consider the practical challenges and nuances of operating in various regions across the globe. This disconnect between leadership and the realities faced by the company’s global workforce could exacerbate the negative impact of the restructuring efforts and further erode employee morale and trust in leadership.
Jesse Damsky
April 15, 2024 at 11:34 amThe global forwarders tend to have difficulty remaining agile and relevant as they become overly top heavy.
Forwarding is a niche industry in which relationships with one’s customers at the local level is essential as well as the forwarder’s ability to react immediately to changing customers’ changing needs as and when they happen.
The big global forwarders, often armed with the latest and greatest consultant inspired management “paradigm-changing” ideas, tend to sway towards increasing standardization and centralization (ignoring the need for agility), excessive manual reporting on irrelevant or menial matters while ignoring the important ones (such as customers), and extreme HQ politics as those that the top jockey for relevance in an organization with diminishing returns. All of which move them further away from what their customers actually want or are willing to pay for . . . AKA the Damco recipe.
Forwarding is an industry that has suffered a long time from the falacy that the mathematical prowess of its Sr. Staff is a measure of their leadership skills, or that previous professional success of a given executive in a Shipping Line would guarantee success on the forwarding side, unencumbered with things like experience or forwarding knowledge.
I hope K+N can strike the right balance. Let’s see if it works for them.