Exel continues to expand

Over 70% of Exel’s activities, mainly in contract logistics, seafreight and road/rail freight, were not significantly affected by the tragic events of September 11,» Exel’s CEO John Allan recently said at a conference for analysts and institutional shareholders at which he presided. «However, there was some short-term disruption in airfreight operations, as a result of which Exel will incur an immediate profit impact estimated to be at most GBP 5 million,» he continued. (Exel achieved an operational profit of GBP 212.6 million last year and GBP 101.6 million this year)
Volumes had meanwhile largely recovered to levels prior to September 11, Allan added. «Barring any further major disruption to markets, Exel should meet market expectations for 2001.» The group says that it secured new contracts worth some GBP 450 million in annual revenues during the first three quarters of 2001, which is ahead of the result achieved in the equivalent period of last year.

Cargo seems crisis-proof

In the first half of 2001 Exel achieved revenues of GBP 2.175 billion with its logistics activities. 54% (GBP 1174.5 million) of this figure came from contract logistics, 46% (GBP 1000.5 million) from «Global Freight Management», i.e., the forwarding business. The lion’s share of this 46%, i.e., 28% (GBP 609 million) was generated by airfreight. The group ships 3.1 million consignments weighing over 520,000 tonnes by air per year. At 470,000 consignments and 3 million tonnes, seafreight contributed 6% (GBP 130.5 million) to forwarding revenues. The remaining 12% (GBP 261 million) came from the road and railfreight sectors.
In airfreight, Exel successfully withstood the general downturn which became apparent by mid-year. Its overall airfreight tonnage increased by 0.4% worldwide, although the international and the US airfreight markets each fell back by 8% in tonnage terms.
Although Exel claims a less than 4% share of the worldwide airfreight market at present, this segment has been prioritised for development. John Allan set the target in airfreight (we want to be) a top 5 player in the world’s 20 largest markets. Exel has in fact already achieved this target in many markets (see Jata figures in ITI 31-32/2001), for example in Germany (5th rank), Italy (5), Great Britain (2), the Netherlands (3), Ireland (5), Sweden (2) and Canada (2). In Asia it dominates the market in Singapore (1) and Hong Kong (1), and it ranks high in Korea (3), Taiwan (4), Malaysia (2) and the Philippines (5). Its 12th position in Japan and Australia and its 15th in India are good starting points for further growth. It is not surprising, therefore, that Japan and Australia — and the US of course – are among the key areas where Exel wants to develop its presence. In some other markets there is still a lot to do, for example in Thailand, France, Austria• and Switzerland.

Growth strategy in Switzerland

Exel Logistics Switzerland Ltd. has been operational for nine months — since February 2001. It did not start from zero but could take over the business developed by Kuoni Transport AG which formerly represented Exel (or MSAS) in
Switzerland. Kuoni last year achieved a lata turnover of CHF 7.805 million and held 11th place among the Swiss lata agents.
Building on the existing customer base, the Swiss Exel team led by managing director Peter Meier pursued a determined acquisition-led growth strategy. «After only half a year a third of our volume consisted of new traffic,» Peter Meier said to the ITI. «By the end of 2001 this should account for about half.»
In view of the results achieved so far, he expects that Exel Switzerland will conclude its first business
year with a modest profit and that he will have paid his start-up costs back to the group. Meier is aiming at an annual revenue of around CHF 12 million for the eleven months of the first year.
The Swiss Exel team has set its sights high for 2002. It wants to position the company somewhere among the Top Ten Swiss lata agents. Peter Meier however clearly dismisses the idea of growth through bargain prices. «We have assembled a qualified team with many years of experience in this business. We are offering high-quality services which are worth their price,» he insists.
His next big in-house project is the development of the IT system. «Our Unitel2l system boasts one of the best tracking-and-tracing functions in the forwarding industry. It is one of our greatest assets,» Meier explains. His Swiss affiliate is heavily engaged in developing Unitel2l. Its order processing will be changed to an Internet-based browser interface next year. «This is not only more user-friendly, but it also improves productivity and quality,» Meier says.
Asked about his main business he replies: «Here in Switzerland we generate around 90% of our revenues from air cargo activities.» In addition, his organisation is also offering seafreight and of course the whole range of forwarding services provided by the Exel Group, he adds.
As part of the «Technology and Global Freight Management» business unit, Exel Logistics Switzerland wants to grow primarily in the forwarding business. «We are not yet very active in distribution, and we are just starting to take part in logistic tenders, together with a suitable partner,» Peter Meier explains.
These latter activities are part of other Exel business units specialising in particular industry products (Auto. motive, Healthcare, Chemical, Retail and Consumer). Exel Logistics Switzerland would accordingly set up separate divisions, if the opportunity arises, Meier concludes.