MEXICO - Transport
Director General, DB Schenker
Enrique Valera Holthus has been CEO for DB Schenker Mexico since 2014. Before that, he was CEO for DB Schenker Argentina for 14 years. From 1991 to 2000, he was with DB Schenker Mexico in the commercial division until he became commercial manager. He entered the DB Schenker division in Panama in 1990. Before starting his career with DB Schenker, he worked for a logistics company in the fuel sector. Born in Langenhagen, Germany, he studied business administration and holds postgraduate degree in logistics management.
It has been a successful year. Over the last three years we have been able to double our top line results, while quadrupling our bottom line results. In 2017, we will reach almost USD200 million in revenue in Mexico. The quality the last year is reflected in all our market segments: air, land and sea. We have added some country logistics and new business segments like customs brokerage and project cargo. Apart from the growth in our traditional business segments, we have been gaining market share in these two new segments.
The Mexican market is still growing, though perhaps not at the pace we wish might be. For us the major factor has been capturing market share. We have outgrown the market in all segments. We have also been able to do this without reducing margins, and typically it’s one or the other. In this case we have grown and maintained the same level of profitability. The logistics and freight forwarding business has been growing much faster than the rest of the economy, reaching 8-9% growth in recent years and in 2017 we will see growth of 35% compared to 2016’s figures. One of the reasons we have been able to grow so strongly is our excellent team. Over 40% of our costs in relation to gross profit are personnel expenses. We are a service company, and if you don’t have the right talent and talent that is motivated then your operations will suffer. We have a good mixture. We have also been able to reduce our staff-rotation every year. The secret was reducing customer churn and adding new customers, which we did thanks to our great team. We have some new talent in the project cargo and customs brokerage areas and in the sales area, and we have seen marked improvement.
We know that customs brokerage is one of the links in the supply chain, so if you want to provide a customer, be it on the import or export side, with the full supply chain then you have to offer customs brokerage services. This especially true in Mexico where customs brokerage is still related to a specific broker who is a physical person and the cost is quite high. Mexico has been improving and become more competitive in this segment. Customs brokers are now much more transactional, which has brought down costs and improved customer experience. Our approach to this issue, considering that Schenker Mexico cannot be a customs house broker, is to be the sole interface for our customers. This means we must either outsource this service with a third-party customs broker contacting our clients, or take ownership ourselves. We have opted for the later, and we will now be the interface for our customers. We have established a portfolio of suppliers because no single customs house broker can supply a single solution for the whole country. We are in the process of building this supplier portfolio, and we have our own system for the production of customs house brokerages, meaning that it interfaces with our operational system as well. Our customers can see the full track and trace process and the full follow up of their cargo in our systems.
In different business areas, we have different levels of success. All are successful but to varying degrees. We have been successful when it comes to consumer goods and retail. This has been quite successful on the import side for ocean and airfreight. On the export side, our perishable business has been excellent, especially in airfreight. In terms of contract logistics, we run two big operations for a major high-tech customer and we were able to get a new large customer within our portfolio. We have also established a larger pool of sales executives in the logistics area. In this area, we need process engineers, implementation managers and other skills sets that we don’t typically require in the freight forwarding business. We have all of these people now, and this is an investment that will lead to continued growth this area.
There is a direct correlation between cost of personnel expenses and gross profit. You need to have the right talent on board and you need low staff rotation, otherwise you lose expertise. Our business is moving away from its traditional orientation towards people and becoming more and more automatized and robotized. In the meantime, though, people are key. We have big customers with considerable volumes and they want to know who is tending to their account. They want their shipments to be taken care of constantly, and our people ensure that. At the end of the day, the quality of our customer service and our commitment to them is what makes the difference. This is in the DNA of the company. The best proof our success in this area is the low churn we see in our customers. Our top ten customers have been extremely stable over the last few years, and we are adding new brands without losing the old ones.
I have had the good fortune to be involved with the company for 12 out of the last 40 years. I have seen many different stages of the company. In the beginning, it was just a small freight forwarding company with no logistics area, no customs house brokerage, almost no ocean export business and less than 25 FTEs. Today, we are at almost 500; hence, the scale is different. The professionalism with which our services are offered is also totally different. Systems and infrastructure help, of course, but the way we do business has totally changed. We have made huge strides in terms of efficiency and productivity in the last few decades. Business moves much faster and volumes are much higher too. One of the main advantages of being an international firm with a global presence is that we can introduce new technologies and processes into the Mexican market.
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