DSV’s CEO, Jens Bj\u00f8rn Andersen
\nIf the dismal second half of 2015 made it seem like a year of missed opportunities for the airfreight world, 2016 may end up being remembered as the year of second chances. Already we have seen the revival of the courtship of TNT by FedEx after the romance with UPS fizzled. Now we have the merger of Danish logistics firm DSV and U.S.-based UTi Worldwide, after a failed attempt in 2014.
\nDSV is a company that tends to grow through acquisition, and it had long been interested in expanding its footprint into the U.S. market. But many observers in the industry couldn\u2019t quite see the attraction, given UTi\u2019s long-simmering financial problems. Some balked at the US$1.35 billion price tag, at $7.10 per share.
\nIn the months since the DSV\/UTi deal was finalized, Air Cargo World reached out to DSV\u2019s CEO, Jens Bj\u00f8rn Andersen, to find out how the deal was progressing and how it has changed the landscape for logistics in both Europe and the U.S., and what he thought of the critics who said he overpaid.
\nHow has the UTi acquisition changed DSV\u2019s strategy for handling air cargo?
\nMergers and acquisitions [M&A] is an integral part of DSV\u2019s growth strategy, and our network has been established through a number of large and small acquisitions over the last 15 years. With this merger we will significantly strengthen our global freight forwarding network, both in terms of volume and geographical footprint. Our strategy in the market does not change \u2013 and right now we must do all we can to ensure that we maintain a good service towards the clients in the integration phase. Going forward we will operate in the market under the DSV brand and we wish to continue to serve a good mix of small and mid-sized clients along with larger global accounts. Especially with the large accounts UTi has some strong capabilities which will strengthen us going forward.
\nWhat was the main rationale for the merger?
\nConsolidation in the transport and logistics business is generally a good idea, because of the achieved advantages through economies of scale, stronger network, greater buying power, etc. This merger doubles our size in airfreight, bringing the combined volumes above 600,000 tonnes. Historically, DSV has always had the strongest foothold in Europe, and less exposure to other parts of the world with greater potential for growth. The acquisition and merger with UTi offered a great and complimentary match in terms of business areas and geography. We expect to harvest most of the synergies by merging the two global freight forwarding \u2013 or Air & Sea, as we call it in DSV \u2013 networks. UTi and DSV have overlaps in a number of cities and we can consolidate offices and IT systems. Furthermore we can benefit from combining administrative and back-office functions.
\nThis is the second time DSV had attempted a purchase of UTi. Why was this attempt successful compared to the failed bid a year before?
\nAt the time, the business case, based on asking price, was not attractive to DSV. However UTi remained an attractive match for DSV and during 2015 the valuation of UTi changed and we decided to approach the company again. And this time the process was successful.
\nSome critics said DSV had paid too much for UTi, which had been struggling for some time. How does DSV justify the final price it paid ?
\nWe believe that we paid a fair price for UTi Worldwide. And we firmly believe that we can integrate UTi\u2019s activities and turn the combined business around to the profit margins DSV had before this merger.
\nWhat are your future plans in terms of M&A within the 3PL market?
\nAt the moment, and for some time to come, we will be concentrating on the integration with UTi. We expect that the integration will take two to three years. M&A remains an important part of DSV\u2019s growth strategy, but it is unlikely that we will be looking for a new M&A opportunity right now.
\n2015, overall, was a relatively stagnant year for air cargo. Do you expect 2016 to be more of the same, or will better times be coming?
\nWe have not given a specific outlook for the air cargo market for 2016, but we expect that global trade will grow in line underlying GDP-growth in the coming years. So we are looking at low single-digit growth rates. Regionally we expect that Europe and US markets will see the lowest growth and emerging markets higher. This means that the days of a \u201cGDP multiplier\u201d in global trade most likely are over. Outsourcing of production to low-cost countries used to drive growth in both air cargo and containerized ocean cargo, but this outsourcing has peaked. Having said this, we believe that the air cargo markets still hold a number of possibilities for the shippers and for freight forwarders. Supply chains are more complex than ever and efficient airfreight solutions are an essential part of this.
\nSource: aircargoworld<\/p>\n","protected":false},"excerpt":{"rendered":"
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