Taking its vision forward, Hellmann Worldwide Logistics is operating in about 60 countries for many decades now. With high-performance products for Airfreight, Seafreight, Road & Rail, and Contract Logistics, they offer the right solution for the complex logistics requirements in today’s highly dynamic and volatile world. Taking a different route to know about excellency in facilitating smooth supply chains, we spoke to Martin Eberle (Global CFO, Hellmann Worldwide Logistics) and bring you excerpts from our conversation.
What are the key financial challenges you see while operating in the sector given the current dynamic market situation?
The economy channel in various jurisdictions is experiencing a slowdown, which poses a challenge as it tightens the financing environment. Consequently, our customers and partners often encounter greater difficulty in obtaining funding. Undoubtedly, one of the significant pressures arises from our suppliers desiring faster payments while our customers prefer to pay at a later date. Hence, this subject is an ongoing topic of discussion for us, particularly concerning working capital.
Regarding the geopolitical aspect, numerous countries find themselves in challenging positions. Managing 60 countries, even with some concessions, remains arduous. For instance, Argentina no longer permits overseas freight payments before 90 days, greatly hindering the import and export of shipments. Similarly, Sri Lanka has also faced financial difficulties. These circumstances occasionally make things challenging for us and intensify currency fluctuations.
How did COVID-19 impact the financial landscape of the logistics industry, and what measures did Hellmannn Worldwide Logistics take to navigate through these challenges?
Things are forever changing in the field of logistics. I believe it is a hidden blessing that COVID-19 brought about these transformations. No one could have foreseen the malfunctioning of supply chains, the empty store shelves, the sudden surge in demand for both toilet paper and face masks, or the exorbitant rise in shipping costs. Previously, we used to pay around USD 2000 for shipping lines from Asia to Europe, but that figure skyrocketed to USD 16,000—a scenario unimaginable to anyone. And it was equally unimaginable that the situation would revert to normalcy within a few months. The entire system crumbled and then gradually recovered as the disruptions in the supply chain diminished and shipping rates decreased.
Having been part of this industry for 30 years, I can confidently say that I have never witnessed such volatility before, and I anticipate that it will persist for quite some time. The escalation of shipping prices was just one aspect of the larger issue, which was the congestion in supply chains. This had significant financial implications for us, as our employees faced greater challenges in moving cargo due to the congestion. From a financial standpoint, our main hurdle was ensuring adequate working capital. I am proud to declare that we managed this aspect exceptionally well, effectively balancing our receivables and payables. However, it was undeniably a highly stressful one-and-a-half-year period, particularly for our employees. It is truly remarkable how we managed to recover from it all.
Can you discuss any recent strategic financial initiatives or investments made by Hellmann Worldwide Logistics to enhance its competitive position in the market?
The advantage lies in our status as a privately owned company – one of the few remaining significant logistics companies that remain private. Fluctuations in the short term do not concern us greatly. Brief market shifts rarely cause us alarm. Our path ahead is clear and well-defined. We continue to allocate resources to digitalization, infrastructure, vehicles, and trailers, as well as investing in mergers and acquisitions and of course in our people. Granted, conducting M&As during a crisis isn’t straightforward due to the substantial profits made by various logistics companies. Agreeing on a suitable price was challenging as we needed to elucidate potential benefits. Nonetheless, we managed to execute a few transactions and reinforce crucial areas of our business, primarily focusing on geographical significance.
This is an abridged version of the interview published in the August edition of the Logistics Insider Magazine. To read the complete interview, click here.
