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DSV readies itself to integrate Agility GIL, aims for more profitability

Post By : Karvi Rana
Post Date : July 30, 2021
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Announcing the second-quarter revenues, which were up by 31.4% ($6.04bn), DSV spoke about the high yields, market conditions – and competition, as it commences to integrate Agility GIL.

While losing customers after the M&A is a common phenomenon, DSV which is the M&A expert feels confident that it will still be standing on solid grounds. DSV CEO Jens Bjorn Andersen and CFO Jens Lund said that while things may be a little “bumpy”, they will settle.

“The Agility deal will take inspiration from Panalpina. We are more experienced; it’s smaller and we are well prepared. Once we include Agility, we’ll put a smokescreen over the numbers, but our performance will continue in terms of market share,” they said while speaking about the merger, which is likely to happen next month.

“We are 100% committed to market share. It sounds arrogant, but we are humble, that’s what we do. Profitability needs to follow. There are so many ways to compete with mom-and-pop shops. We have been able to outgrow the market,” they added.

Also Read: DSV Panalpina set to be the world’s largest forwarder after the proposed takeover of Agility GIL

While DSV feels confident about the M&A with Agility and shows its commitment towards market share and profitability, it also understands the risk of onboarding new customers at such times.

“Given the situation in ocean freight, it’s not the time to go and take a chunk of new business. We need to look after our customers first. But some business is just coming to us… so we will try to take a little of it, just to establish a connection with these customers.”

Although the current market conditions had led to lower productivity, the forwarders have advantages over shipping lines selling direct to shippers, DSV said.

“Volumes are up, costs are flat, headcount is flat. But on working hours and productivity, we are probably down. We have to hand-carry shipments more than we did.

“With blank sailings [and the current market] we always have to be alert, and ensure the freight is being moved, and when it is not, find new solutions. This is what forwarders can do. But you can’t do that if you are dealing directly with the carrier.

“Our staff have stepped up to the plate. We don’t expect a deterioration in productivity with Agility, but it’s a KPI we have our eyes fixed firmly on.”

Buying power is the best advantage for DSV, the management said.

“We’ve been shocked at ocean rates over the last months. We’ve seen rates we’ve never dreamed about. But as one of the largest procurers of ocean freight in the world, we do have some buying power.

“There are lots of levers we can use, going forward, and the size and buying power of DSV is one of these.”
At present both the air and sea freight are changing.

“In the sea, contract rates are up, and we can pass that on to the customer. But customers are asking for more in the spot-driven market. We’ve done some good deals, but it also depends on the carrier, DSV said.

“In our latest negotiations, we haven’t made any big changes to the carriers we use. We use the biggest, and have good relationships with them.”

Speaking of the air freight, the company informed that it uses about 50% spot and half contract.

“After integrating Panalpina, mainly in the air but also in the sea, we are doing blocked space agreements and more charters, and we gained access to fixed capacity through Panalpina’s controlled network. You run the risk of vacant capacity, but this could change, and we may change the DSV procurement strategy and take on more BSAs.”

As per DSV management, air freight was likely to see structural change, with greater use of freighters over bellies.

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