DSV: subbies must share customers' price pressure
Page 8
If you've noticed an error in this article please click here to report it so we can fix it.
CM COVER STORY
c hristophe r walton@rbi.co.uk DSV HAS WARNED its subcontractors that they must work within its current market prices for haulage if they don't want their relationship with DSV to change this year.
Tlie warning comes oil the back of the European logistics giant's 2009 results, in which its road division says it has shifted a considerable part of customer price pressure — a consequence of lower volumes — onto its subcontractors, leaving DSV with a reasonable profit.
Rene Falch Olesen, chief commercial officer and head of DSV Road in the UK, says: "We have core suppliers, and those core suppliers have not changed that much in the last year.
"Some of them probabl■ need to change their tune if they don't want to change [their relationship with DSV] this year. You cannot isolate yourselves [by expecting prices to remain the same Olesen is adamant that DSV has to pass on price pressures from its clients to subcontractors, and that the current price structures in place for subcontractors are the ones they have to do business in.
"We generate a lot of new business for our suppliers as well. 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 participate in what the market is." he stresses. "We are a good customer. capable of paying our bills on time."
But Olesen insists the company is loyal to its subcontractors, who give DSV "the best road freight product in the UK". He adds: "We still have capacity in the UK to absorb more volume without having to add to the organisation."
Revenue in the UK arm of DSV's road division fell to I53bn Danish Kroner (DKK) in 2009 (I:186.9m) from 1.8bn DKK in 2008. Operating profit before tax and amortisation fell from 11 I m DKK in 2008 to 70m DKK (.03.,5m) in 2009. Olesen insisted that currency fluctuations, which involved the exchange rate falling from 9.36 Kroner to the pound to 8,22 between 2008 and 2009. meant the fall in UK business was not as pronounced as the results suggest.