DSV's sea freight division is a clear bright spot in the company's annual report, published today, says CEO Jens Bjørn Andersen in an interview with ShippingWatch.
From a market currently under pressure, he believes in European growth in the years to come, and when the economy and industry are back on track at some of Europe's major economies, DSV will be well placed to take advantage of the growth.
"We're very exposed toward Europe, which hasn't been very sexy over the last 3-5 years, as we haven't had any growth. But we actually believe this could be a strength for DSV. Europe is currently at a low level, and if some of the strong countries in Europe improve, we'll be in a very strong position to benefit from it," says Jens Bjørn Andersen, adding:
"We're already seeing some positive trends in Italy and Spain, and if we can get the major industries such as Germany and Sweden going, then that would significantly improve our situation."
Good time in sea freight
The annual report for 2013 more or less maintains the cadence from 2012, with a total result of USD 326.2 million. In the past year the company's Air & Sea freight division contributed USD 211.8 million in gross profits, which is 3.7 percent more than 2012, and in sea freight alone volumes increased by 12 percent in the last quarter, compared to the same period 2012.
"We're pleased that sea freight was the segment that developed most positively of all our segments in 2013. We can see that the market grew by four to six percent in the quarter, and by 2-3 percent for the year as a whole. It doesn't sound like much, but if you compare it to truck transports in Europe and the logistics markets it general, this is actually the best division, and of course that's very positive," says Jens Bjørn Andersen, highlighting the solid freight results on the route from Asia to Europe.
DSV also puts its faith in the sea freight division going forward, as it is expected to grow by 1-3 percent.
Room for improvements on land
Asking Jens Bjørn Andersen to point to places that have performed less positively during the last year, terms such as efficiency and centralizing are quickly named as future focus points.
"We're under some pressure in terms of profit margins on our truck division in Europe, which has been a very tough market due to heavy competition. We'd like to see that improved once we get a good ways into 2014, and then we'll have to see if we can keep our cost base in line with last year's," he says, adding:
"We're still in a market characterized by very low growth, and if we want to grow our bottom line in an environment where there's no growth on the top, then we'll have to work on our cost base."
DSV's current cost base is at USD 1.35 billion, and the group plans to save USD 29 million by centralizing certain units that are currently spread out across 75 countries in which the company operates.
One way in which this will be done is through the efficiency program "Operational Excellence 2.0," and by incorporating more functions into DSV's International Share Service Center in Warsaw. All in all, Jens Bjørn Andersen expects that the savings will apparent already in next year's annual report.