TRADING UP

Mexico 2016 | TRANSPORT | INTERVIEW

TBY talks to Enrique Valera Holthus, MD of DB Schenker, on its biggest differentiator, expanding into land transport, and incorporating sustainable practices into operations.

Enrique Valera Holthus
BIOGRAPHY
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, Holthus 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, Holthus studied business administration and holds postgraduate degree in logistics management.

How has the Mexican market developed for DB Schenker over its time here?

DB Schenker has undergone several different stages in Mexico. We have been in Mexico for almost 40 years, which makes it the country in Latin America with the third-longest history for DB Schenker, only behind Argentina and Brazil. In 2017, we anticipate having around 500 employees in Mexico and a revenue stream of over EUR100 million. The importance of Mexico for the organization is obvious when you consider that other major markets in Latin American are struggling. Our strategy has always been to maintain offices all over the country; we will be in close physical proximity to our customers, which will facilitate building strong relationships.

What distinguishes DB Schenker from its competition?

Almost 50% of our costs are related to human resources. Our biggest differentiator in this market is our staff. We take care of them, we train them, and we place them in management programs, which translate to a low turnover rate among our customers. Our customers usually work with us for a long time. For example, L'Oréal has worked with us for over 15 years.

How has your sectorial focus changed over the past few decades, and what does that say about the Mexican economy?

We are involved in almost every vertical market in Mexico, whether it is automotive, consumer goods, aerospace, fashion, or retail. In the past, one of our core businesses was perishable exports, exporting handicrafts, and relocation services. When it comes to industry, Mexico is on the edge of becoming a developed country, because we do business here like they do in the US or Germany.

What have been the challenges in expanding the land transport segment?

The first challenge is to get the transport management system (TMS), which can interface with different subcontracting carriers. My customer receives a platform where they can see their shipment moving from A to B, even though the carrier can change. That is one of the challenges, and we are working with our colleagues in the US to make a uniform platform for all of our customers. The second challenge is to get the right carriers on board. It is a segmented market, as there are hundreds of carriers that are international, local, and small. Getting a matrix of quality carriers that comply with health and safety, social security, and other laws is not easy. The third challenge is that the margins are rather low in land transport. NAFTA trucking for us represents less than 10% of our revenue, and land transport is mostly focused on trade with the US. What is interesting for us is that 80% of the trade of Mexico is with the US; if only 10% of my business represents the US, and then there is a large gap to be covered.

How big is trade with South America and Central America for you?

Today, our biggest markets are Europe and Asia. Asia is heavily involved in ocean freight, while Europe dominates consumer goods. On the import side, we have good business with Argentina and Chile for commodities. For example, from Argentina we bring in lemon peel, which is used to make aromas and salts. With Brazil, we work with more industrial goods. On the import side, Latin America would be our third largest market, even stronger than the US.

How do you integrate sustainable practices into your operations?

Our holding company DB, has announced a strategy called “DB 2020." The project focuses on three pillars: social responsibility, financial responsibility, and ecological responsibility. It started different programs under ecological responsibility. Corporate customers tend to value sustainability; if you work with importers of toys from China, however, it is not a high priority. There are other companies, such as SC Johnson, that value that, and even ask us what the CO2 footprint of their transport is. We are working toward developing our practices further.