Gefco Group: Interview with Louis Defline
The French Gefco Group is one of the leading European providers of transport networks and logistics services. Between 1998 and 2000 the group enjoyed the third highest growth rate worldwide among European-based logistics specialists due to the strong expansion in the automobile industry. ITJ editor-in-chief Ursula Schmellng recenily talked to CEO Louis Define in Paris about the results for 2001 and his expectations for the future.
Mr. Defline, a survey conducted by Datamonilor has given Gefco an excellent bill of health. Would YOU like to comment on this?
We are very proud that 850 European shippers value our transport and logistics services so highly (see chart). After all. the competition is tough.
Gefco has grown very strongly over the last few years. Were you able to maintain this rapid growth
in 2001?
Yes, we were 2(X)1 was a very good year for us. c managed to increase our turnover by 13.5% from EUR 2.3 to 2.ñ billion. If you exclude the turnover of Transauto-Stur — a haulier that we sold in May 2001— the growth rate was as high as
What was the share of turnover attributable to activitie.s on behalf of the parent PSA Peugeot Citroen Group?
Group activities accounted for approximately 60% of the total. It is still fairly high. Howev er, we are increasingly involved with other car makers and automotive industry suppliers. and not only in Europe (see 1TJ41/200, pages 16—17).
The whole vehicle distribution and inspectionlpreparaflon segment (PD!) grew by 17.5% last year to EU R 968 million (37% of turnover). Gefco transported ver 3 million new vehicles.
Our "Supply" business unit (international forwarding and l gistics) registered an increase of 15,6%. The opening of a new w a rehouse in Poland. and the construelion or expansion of existing distribution centres in I rance. Brazil, Argentina. Spain and Italy boosted our turnover in the logistics sector by 41%. Our overseas freight husiness. however. was hard hit by the aftermath of September 11 last year and the economic problems in Argentina, and only improved by 2%. Ocean freight to South America in particular declined in 2001. With a turnover of EUR 21.1 million (11% of the total turnover). this business unit has significant growth potential.
The ‘Network” business unit (express services. groupage. LCL and FCL operations) generated revenues ol LLR 1.375 billion (52% of our total turnover). This makes it our primary business area as far as turnover is concerned.
But turnover by itself is not the decisive factor. How about profits?
Our operating result rose even laster than our turnover, i.e. by 19% from 100 to EUR 119 million. corresponding to 4.5% of turnover.
Our initiatives to increase productivity in the multimodal transport and logistics segments by standardising processes and by introducing of new IT systems etc. are now producing results. With "Genistic" we have created a B2B-platform for forwarders, which allo order processing ( for sourcing and distribution). shipment tracking. the generation ol statistical information, and paperless billing.
We also succeeded in increasing turnover in the value-added serv ices. The result could have been better still. Particularly high oil prices during the first half of the year had a negative impact, as did the increasing regulation of work and road haulage in Europe. not to forget the 35-hour week in France. Our profit margin ot 2% in overland transport is totally unsatisfactory.
The same as the losses incurred by Gefco KT in Germany?
That's true, hut our results are heading in the right direction. I'm convinced that Gefco KN will be in the black by the end of this year. We’re on the right track.
Is is true that this firm is now 100% owned by Gefco despite the KN in the name?
Yes, that’s right. We like to be totally in control of what we do so that we can offer our customers more valueadded services and at the same time provide our business partners such as Kuehne & Nagel (KN) with the best possible service.
Despite various subsidiaries abroad, most of your activities are still centered on France?
Correct. France accounted for 63% of our turnover in 2001. We only generate 35% in the rest of Europe and 2% of our turnover outside Europe. But over the last few months we have been laying the foundations for rapid expansion in the rest of Europe, so that our geographic focus will shift considerably in the years to come.
Our activities in Brazil are also developing very satisfactorily. As planned we managed to increase our turnover with new customers there. We now operate a total of five distribution centres. We have a good reputation as a customs broker in all the member states of the Mercosur free trade zone. We’ve acquired a number of interesting new customers for our services in this field, particularly in Argentina.
Turnover in the automobile industry is expected to drop by an average 10% worldwide this year. To what extent will this trend impact turnover at Gefco?
I personally do not believe that that turnover will fall by this amount. Maybe by 5%.This global trend won’t have any effect on Gefco’s result. PSA for example, projects a turnover improvement this year. Gefco also expects considerable growth in v alue-added services. In addition, we entered a new market segment at the beginning of this year: the servicing and reconditioning of rental cars and company fleets.
How do you see the financial performance of your company for this year in general terms?
I expect sustained growth in turnover and profit. The automotive business unit is on an expansion course for the reasons mentioned above.
Our Supply business unit launched a new spare part distribution service in Poland last December. We have also just announced plans to construct a 32,000 sqm logistics platform at Le Havre. From the second half of the current year, we will concentrate the handling of exported car parts for assembly plants in America and in Iran through this facility. Ultimately we aim to turn this platform into a genuine multimodal hub for imports and exports, for transport operations by sea, inland waterway, road and rail.
In the next few months, we will also concentrate on expanding our transport network between the Czech Republic, France and Germany, and between Hungary and France/Germany. We are studying the possibility of establishing a logistics platform in the Czech Republic which would eventually be even bigger than the one near WThis should add new impetuS to our business between Germany and Turkey.
I'm convinced that we will also boost the Gefbox business (container management) by acquiring new customers. A recovery of the economy will also improve our overseas freight business.
The Network (overland transport operations) business unit should also achieve a higher turnover, especially in Eastern Europe. in the laghreb countries and in Brazil.
What other plans do you have?
We plan to go on enhancing our IT services and intend to invest heavily in this segment. Imaging is the next step in our programme of realising a genuinely paperless logistics systems. When a container or the goods therein are damaged, a photo will be scanned into the system which will give customers an immediate visual impression of the nature and extent of
damage. The digital image can then he forwarded to the insurance company, etc. Documents such as delivery invoices can also he transmitted digitally, of course.
This is all very rosy. Do you not have any problems?
I am following the growth of state-owned enterprises in Europe with concern. They quite obviously dont seem to he subject to the same economic rules as every one else. They are somehow able to finance takeovers without having earned the money first. Private industry has to resist such unfair competition more strongly.
I have another worry in connection with the government. The delays regarding infrastructure investments and the liheralisation of certain economic sectors (railroad, ports, the maritime industry etc.) in Europe are impeding growth in the transport industry and are thus hampering the growth of the economy at large. I hope that we will soon have a chance to discuss these important issues with EU transport commissioner I ovola de Palacio.arsaw (Poland). We will open a new branch in Turkey in September 2002.
Rank Turnover (million EUR) 1998-2000 Rank
(size) Company Country 1998 1999 2000 ±% (growth)
1 Stinnes-Schenker Germany 12,990 11,761 12,026 3.8 21
2 TNT Post Groep Netherlands 7,409 8,468 9,810 15.1 5
3 Danzas (Deutsche Post) Germany/CH 3,004 4,450 8,289 66.1 2
4 Exel Ocean UK 2,177 4 120 7 109 81 8 1
5 Kuehne & Nagel Switzerland 4,249 4 260 5 294 11 6 9
6 Hays UK 2,492 3014 3591 20 4
7 Geodis France 2,829 3 147 3414 99 11
8 ABX Logistics Belgium n c 2 480 2 900 n C 6
9 Tibbett & Britten UK 1 865 2 110 2 410 13 7 8
10 Gefco France 1 473 1 761 2 329 25 7 3
11 CAT France 1,011 1,102 1,223 10 10
12 N. Dentressangle France 647 744 838 13.8 7
