“The Digital Conversion is Noticeable in the Result”
The 46-year-old has been CEO of Schenker AG since September 1 2015, making him head of DB Schenker business activity in the DB Group. The Rheda-Wiedenbrück native’s most recent work was in Singapore as the head of Schenker in Asia and the Pacific. Before that, Thewes was the Senior Vice President for Global Ocean Freight at the head office in Essen. Before his time at DB Schenker, Thewes held several senior management roles at Kühne + Nagel, for example in Brazil, China and Vietnam. His first task at DB Schenker was the planned flotation of the company. However, this was called off in December of last year.
DVZ: The 2016 financial year was good due to a good economy and an e-commerce boom, wasn’t it?
Jochen Thewes: That’s right; it went really well for us. We have grown again with all of our products, in part above the market. That was very, very important for us. What makes me especially happy is that we have grown by 7 percent in contract logistics, meaning that we are at about 2.5 billion euros in revenue. At 4.2 percent, our profit margin is the best in the market environment.
So it sounds like you were surprised by the growth?
We are certainly at least a little bit surprised due to unforeseeable events like the Hanjin bankruptcy. But, by and large, we’ve simply done good work on everything. One example is ocean freight, where we have finally managed to crack the 2-million-TEU mark. And we even have a small 0.3 percent growth in land transport. We’ve reached about 100 million shipments in this area. When you look at the overall picture, that’s enormous.
How great a share in the result would you say that the digital conversion of the Group that you announced last year has?
It’s a bit of a mix. In total, the freight markets have grown. However, I ascribe our outperformance to the fact that we have focused a lot on sales and on the growth markets. We have grown intensely in intra-Asia and trans-Pacific traffic. We have also just sharply increased our quantity of sales personnel in North America. That has worked out well.
But there is still the question: Has the digital conversion made itself felt?
The digital conversion has made itself felt in the result. This means that our conversion rate has improved slightly. This is definitely a field where we are continuing our work. I also see the digitalization of our processes as a driver that helps us to work more efficiently.
So what is your benchmark for the conversion rate – that is, the EBIT as a percentage of gross profit?
There is a total of three top players at the moment: Expeditors comes in first with more than 30 percent, and that’s enormous. Then come Kühne + Nagel and DSV. As shown by the 2016 result, we are also headed in the right direction with the organizational restructuring that we have launched, for example, in the European network.
Major limitations were set under your influence. How did you carry this off – with an argument or an announcement?
Look, you don’t switch a company like ours with 73,000 employees to digital overnight, nor do you radically change the processes. This being the case, we still need a certain amount of time until we can get this tanker moving. On the other hand, we are getting better and faster with regard to time to market. What we have taken on with uShip, the cooperation and investment, is extremely important for picking up speed. With this, we have networked our digitalization strategy very closely with our shareholders and are developing it together with DB Digital Ventures.
Have you selected a couple of lighthouse projects?
Yes, of course. uShip is definitely an important lighthouse project. The second issue that we are working on is autonomous driving. It is for this reason as well that we have entered into a partnership with MAN. Our consideration of the Internet of Things is another driver. In this respect, connectivity is the current global growth driver, which is why we have launched a special project in the USA. We are testing new technologies, procedures and processes under real conditions, but like in a laboratory.
What exactly does that mean?
The so-called digitized warehouse in Houston is a warehouse that we are operating together with Cisco – in a live environment.
So, sort of like a little artificial world.
No, not at all. We are testing how we can bring greater speed and flexibility to our processes. It’s about greater productivity, but it also has to do with increasing quality.
How are things actually going with the Drive4Schenker project? Are there initial figures?
The project is going well.
How should I interpret that? In February, you announced that the approximately 30,000 transport partners of the European land transport network would be brought together with their freight online via Drive4Schenker with uShip technology in the future.
We have started on that. Of course, we’re not expecting the greatest revenue yet this year. There is a lot of work to do in the beginning; the change processes have to be put into place. The truck operators have to be motivated to participate. But I have to say, since we went live, it’s going well. At present, we are already processing cargo loads from 25 industries distributed over 25 countries via the platform.
How do those who participate in Drive4Schenker benefit?
We have the advantage that the process is naturally much more efficient, much faster than calling various carriers, getting prices, renegotiating, etc. If you look at North America: The big FTL and LTL shippers in the USA are all somehow controlled digitally via a platform. Otherwise, they wouldn’t be able to achieve their margins. With this model, the carrier has the option to control the process more simply. They get the order via their app, and then they’re off.
And what is your outlook for 2017?
We defined our aspiration in 2015, and in 2016 we made our first changes. We have to continue to advance and take action on these issues in 2017. This is a major challenge.
Can you be more specific?
It is easier to grow and achieve goals in a recovering economy than when the pie is getting smaller. That being the case, I’m betting that we’ll be getting a bit of an economic tailwind, especially in Europe. This is where a large part of the business is for us. We will accelerate our projects for digitalization, increasing efficiency and customer support here and in the international growth markets accordingly.
You can read the long version of the interview online at: www.dvz.de/thewes
DVZ-Interview Jochen Thewes
“The Digital Conversion is Noticeable in the Result”