Kuehne & Nagel profile
“With the acquisition of US company Usco Logistics. which was formally completed in June (see ITJ 232001,page 10). and the alliance and equity swap with SembCorp Logistics. Singapore (see ITJ 502000, page 15), we have now risen to the top ranks of globally active 3- and 4PLs (Third and Fourth Party Logistics Providers),>> explained Klaus-Michael KUhnc, president of the board of directors at Kuehnc & Nagel AG (KN), at a press conference in Zurich last week.
Dirk Reich, member of KN’s contract logistics management team, has already noticed the first positive effects of the new network line-up. “In the last three months, we were able to sign a number of interesting contracts with multinationals in the contract logistics business. These would not have succeeded were it not for the new alliance.>>
Compared with competitors such as Exel,TPG,Tibbet & Britten, Ryder. DPWN, UPS etc., KN now sees itself in the lead with a very strong market coverage in the U SA and the Asia—Pacific region. “Only in Europe do we have some catching up to do, for example in Italy, France and Scandinavia. We will he working on this in the next months,>> explained CEO Klaus 1-terms.
Stilla lot of work to do
We are now at the threshold of a two-year integration phase,>> says Herms. A few important questions must still he answered in the next weeks, however: will the integration of the IT systems
be restricted to Usco and KN or will SemhCorp Logistics also be included? Within the next six months, KN’s and Usco’s warehouse IT systems at least are expected to be integrated. 1-low will the respective warehouse IT systems be integrated with KN Login to ensure the required traiisparencv is available for customers all along the supply chain? H low can the company guarantee consistent processes and the same high standard of quality worldwide? Will Usco and KN appear use a common brand name in future? <>
Increase revenues and yields
KN’s strength is still in the ocean and airfreight businesses, where the group is placed first and fifth respectively on the global ranking lists. Contract logistics’ share in total revenue will increase to th% with the integration of Usco Logistics. Usco Logistics is setting a new benchmark for operating margins. While KN’s contract logistics division only achieved a meagre 2—3% in the past, U sco scored 10%. The company is now aiming to push its present average performance up to 5%. Reich is hoping to improve yield mainly by implementing a number of innovative Usco IT systems
and operational processes (“best practices”) which would still, however, have to be adapted to European standards.
The alliance also intends to increasingly exploit the potential of its common customer base. 50 key customers have already been targeted for focused crossselling activities.
Expand customer base
Finally KN is planning on filling in the gaps in the joint product/customer range. If one alliance partner is strong in a certain industry segment. the other partners are expected to put that segment on the top of their priority list. At Usco, for examplc. pharmaceutical companies account for 14% of revenues. President Robert R. Auray. JR, is proud that his company has nearly 80% of the outsourced pharmaceutical businesses in the USA under contract. KN, in contrast. had signed on hardly any pharmaceutical companies in the past, hut now intends to increasingly target its logistics services at this segment.
The partners in the alliance are planning on keeping their focus on selected industries, however. These sectors include the high-tech manufacturing, aviation, and pharmaceutical industries. health care, the retail trade, consumer goods, foodstuffs, industrial
goods — especially for the energy ind
