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Telling it like it is

15th April 2010, Page 18
15th April 2010
Page 18
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Page 18, 15th April 2010 — Telling it like it is
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Keywords : Dsv, Business / Finance

DSV is one of Europe's biggest hitters in the logistics market. CM caught up with the head of DSV, chief commercial officer Rene Falch Olesen, to find out how the company intends to secure new business.

christopherwattonfarbi.co.uk WHEN WE MET Rene Falch Olesen, chief commercial officer at DSV. he shared with us the kind of anecdote that CM couldn't ignore.

He asked us to send a message to his subcontractors that "some of them need to change their tune if they do not want to change" their relationship with DSV this year.

Since we published that news story, we have had some forthright — and frankly unprintable — responses from subcontractors. but Olesen is resolved about the state of the industry, his customers and being realistic about prices in the market.

Olesen does, however, insist that DSV is loyal to its subcontractors who give DSV "the hest road freight product in the UK".

He says: "We generate a lot of new business for our suppliers. Is it not reasonable, when we arc generating cash for our suppliers, that we say:listen, you participate here? If you want to be a true supplier to us, then you have to participate in what the market is.—

It is the kind of forthright statement to be expected from a man who is at the top of the European transport game. and he does not shy away from wanting DSV to be at the top of the pile in the UK. let alone across the Continent, for logistics —be it sea. air or, especially, road.

When the Danish firm released its annual report for 2009, Soren Schmidt. chief operating officer — road division at DSV, insisted that the company has "a good market position, which should be exploited in 2010".

Top coverage

Olesen admits that the word 'exploited' could be misconstrued.

He adds it is more a statement of intent for the firm to make the best use of its total coverage in the UK. rather than the more derogatory dictionary definition of the word, where the firm would take advantage of its market position for its own ends.

"We have the best road freight product in the UK. In my mind, there are no two ways about it," he says bullishly. "We have better coverage in the UK than all our rivals: we have a better starting point to come from. When we talk about exploiting, we still have capacity in our system in the UK and on the Continent to enable more volume without having to add anything to the organisation.

"Exploiting something always sounds negative, but in this case it is positive. We have maintained a momentum in the UK that means we are not in a defensive position. We have invested more in our systems and our processes, and in our sales, than we have done previously. We are not leaning back and feeling sorry for ourselves because it has been a hard year, and you see that in our results as well."

And those results have caused some consternation. Reported in Danish kroner, revenue in its UK arm of DSV's road division fell to I.53bn DK in 2009 (£186m) from 1.88bn DK (f229m) in 2008. If you convert those into pounds. at the current exchange rate of 8.26 DK to the pound. it looks like a fall from £229m in 2008 to £186m in 2009. But that isn't accurate. The kroner was hovering around 9.3 to the pound in 2008. putting 2008 revenue around £200n and making the fall far less dramatic.

"If I didn't say it was a tough year. I would've been lying. We took over [Belgian logistics finnj ABX at the end of 2008, so another adjustment in 2008 is that we should add that turnover in road to our figures." he says.

In 2008. DSV bought Roadferry, the UK and Ireland specialist, and Olesen admits that the company was fortunate to acquire both businesses when it did. He continues: "I would argue we were lucky we had the amalgamation. We would have had better results out of the integration if the economy had been better all the customers ABX had, and all the customers of DSV have been affected by the crisis."

Good timing

The FM's now is on generating more new business volumes what Olesen tenns as activity-led new business. As a percentage ot' total turnover. what DSV generates in new business is calculated if it runs for 12 months, be it a new client or new routes for an existing customer.

"Our new business, in terms of total turnover, represents between II % and 12%. I think that is a significant figure." he says. "We have generated significant amounts of new business and that would identify that the drop in 'old' business has been bigger than we may have imagined.

"If we look at the business as a whole, we are looking at new business in excess of 10% of our turnover in most of the countries we operate in."

As for how this compares with recent years, Olesen explains it is hard to say, because the firm did not have the level of granularity in its comparative data to justify making such statements.

For anyone looking to work with DSV, take note. This is a business that can firmly put its credentials behind the statements it makes. Changing your tune may not be a bad idea, after all. •


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