Subscribe to our free, weekly email newsletter!



Schenker is making the right move in the U.S.

By Jeff Berman, Group News Editor
July 27, 2011

LM recently ran a story on how DB Schenker Logistics is making significant changes to its North American business model.

In short, the company said it is transitioning from operating its own dedicated air fleet to a non-fixed asset model and focus on a smaller number of customers who require North American domestic transportation management services. Schenker added that it will continue to provide shippers in North America with international ocean, air, contract logistics, and warehousing operations and services.

In a company-issued statement, Heiner Murmann, CEO of Schenker Inc explained that as a result of the prolonged recession and spiking fuel prices, more of its customers are opting for expedited ground-based solutions instead of domestic air freight and are looking for partners who can provide transportation management services rather than transactional transportation.

Given the uncertain nature of the economy, coupled with lessons learned from DHL Express in the U.S. and how it was forced to exit the U.S. market not all that long ago, this seems like the right move by Schenker. After all, should things improve, it can always come back with dedicated air cargo service here in the U.S.

And since I filed that story a few days ago, I have since heard back from a Schenker spokesperson who explained to me in detail the rationale for this decision.

“Over the past 24 months, there have been several unprecedented events that have significantly changed the marketplace—a rapid and sustained rise in fuel prices, a global economic crisis, and a sluggish U.S. recovery,” she said. “These events have driven many of our customers to transition their airfreight requirements to expedited ground.  We have seen a corresponding decline in Domestic air business and growth in our expedited ground offering.  Our decision to restructure the way we provide our air services to a non-asset based model reflects the market direction and customer demand.  We have been actively taking measures to make our air business more viable over the last 24 months as the demand has shifted. The final decision to restructure was made within the last month.” 

With this announcement pertaining only to the North American Domestic dedicated air fleet, the spokesperson said that Schenker has thousands of customers in North America who utilize its International Air, Ocean, and Logistics services, which will not change.  But with respect to its North American Domestic Air/Ground product, she said the company is still working through which customers will find the new offering attractive.

Another difference, she explained, is that Schenker’s current offerings will be enhanced with transportation management technology to help shippers optimize their supply chains.

It looks like Schenker made the right decision at the right time. When it comes to asset-based models, it is fair to say even the most profitable and well-run companies are always thinking more than a few steps ahead to see what is coming next. And what Schenker is doing in this case is no exception.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

With lower energy prices sparking domestic economic gains, coupled with solid manufacturing and industrial production activity, improving jobs numbers, and a GDP number that shows progress, there is, or there should be, much to be enthused about when it comes to the economy and the economic recovery, which has been raised and discussed and dissected from basically every angle possible, it seems. But that enthusiasm regarding the economy needs to be tempered, because big headline themes seldom tell the full story at all really.

The annualized turnover rate for large truckload carriers in the third quarter rose one percentage point to 97 percent, according to the ATA.

The Pacific Maritime Association (PMA), representing employers at 29 ports, and the International Longshore and Warehouse Union (ILWU), which represents 20,000 dockworkers, have come to a tentative agreement on a key issue in ongoing contract negotiations.

Diesel prices continued their ongoing decline, with the average price per gallon falling 6.7 cents to $2.866 per gallon, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

Unlike other shipping companies, the Postal Service is not implementing any new dimensional weight charges with this pricing proposal

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA