Jochen Thewes

Schenker Braced for Brexit Downturn

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Schenker plans to grow in Asia.
  • Why it matters

    Why it matters

    German railway company Deutsche Bahn wants to float its logistics business Schenker to raise capital to pay down its debts, but Schenker must first prove it knows how to grow its business and become more efficient.

  • Facts

    Facts

    • Jochen Thewes took charge of Schenker last year.
    • Schenker is one of the leading logistics companies in Europe, with revenues of €15 billion.
    • If it comes to market, it is likely to become one of the DAX 30 group of Germany’s biggest publicly traded companies.
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    Audio

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Jochen Thewes, the chief executive of German logistics company Schenker, warned that his company and customers could be impacted by an economic downturn triggered by Britain’s exit from the European Union.

“Our clients are automobile manufacturers and trading companies, and, of course, what we are hearing from them right now is a great deal of concern,” Mr Thewes said in an interview with Handelsblatt. “If Brexit has an effect on the economic climate of Europe and the global economy, then that will also have consequences for logistics companies like ours.”

But from an operational point of view, he added, “it’s no big deal for us if customs authorities are involved in future trade with Great Britain or not; we have to wait and see first of all how things develop.”

Schenker, with revenues of €15 billion, or $16.5 billion, is one of the leading logistics companies in Europe. Its parent company, Deutsche Bahn, is planning a partial stock exchange flotation in 2018 to raise capital to help reduce its debt load.

Mr. Thewes’ predecessor, Thomas Lieb, resigned in May 2015, after reporting disappointing business results. No official reason was given for his departure, but German state prosecutors had been investigating whether Schenker executives paid bribes to Russian customs officials to speed up clearance at the Saint Petersburg port.

“A Boeing 777 has a cargo capacity of 25 tons. And that is the smallest machine in the Emirates fleet. There is enormous cargo capacity coming onto the market.”

Jochen Thewes, Schenker chairman

Mr. Thewes, who moved back to Germany from Singapore, where he worked for Schenker’s Asian division, has been tasked with preparing the company for a stock exchange flotation, to raise capital for Deutsche Bahn to pay down its debts. If Schenker does float, it is likely to enter the DAX Index of Germany’s 30 biggest companies, and would be in a position to take on rival Kühne & Nagel, the sector’s benchmark.

“We want to close the gap,” he said. “It cannot be the end of the road for a company like Schenker, with all its potential, to languish somewhere in mediocrity.”

Mr. Thewes admits there is overcapacity in the shipping freight markets, resulting in cut-throat pricing. “You can bring a 40-foot container from Shanghai to Hamburg for €300 ($333),” he said, adding that air freight is also coming under pressure. “Just look at how the Gulf airlines are expanding. A Boeing 777 has a cargo capacity of 25 tons. And that is the smallest machine in the Emirates fleet. There is enormous cargo capacity coming onto the market.”

International expansion is top priority for Mr. Thewes. “We have to grow, especially in Asia, where we already have double-digit growth rates, both in logistics and trade within the region,” he said. “And we want to ride on the wave of the new consumer societies in Asia. In about 10 years Asia will generate half of global trade. ”

The second growth market for Schenker, according to Mr. Thewes,  is clearly North America, especially cross-border traffic with Mexico. “Not just BMW, but many other companies are currently investing huge amounts of money south of the U.S. border because of the favorable wage costs,” he said. “That is very important business, and Schenker has a lot more potential there. “

Digitalization is also a topic. Schenker recently agreed to cooperate with the U.S. freight exchange platform uShip in Europe and has invested a double-digit million figure. As part of the cooperation, Schenker will receive an advanced Internet platform designed to meet its specific requirements. The platform, Drive4Schenker, which the company will launch at the end of this year and will operate for five years, will allow the company’s 25,000 transport partners to see in real time and online where they can pick up additional loads on their route and and help manage their business.

Servicing technology companies has promising potential, according to Mr. Thewes. “For the computer manufacturer Dell, for example, we take care of the entire repairs business on the European continent, including return logistics,” he said. “For other clients we prepare smartphones for the second-hand market. This kind of business is extremely interesting because it is something completely different from just delivering or removing a palette from a warehouse — and it is a growing market.”

 

Dieter Fockenbrock is Handelsblatt’s chief correspondent for the companies and markets desk, focusing on corporate governance, opinion and rail transport. To contact the author: fockenbrock@handelsblatt.com.

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