Hermes Germany launches €300m bid to attract SME clients

Parcel carrier Hermes Germany has announced plans to invest EUR 300m in modernising its logistics systems over the next four years, targeting smaller e-commerce clients. The company said it will open new locations and launch more customer-focussed services as it prepares for further growth in the e-commerce field.

In particular, Hermes said it was aiming to set itself up as a partner for small and medium enterprises.

The company’s German network will be restructured into 35 “highly-efficient” and well-located logistics centres that will be capable of handling 400m parcels a year.

At the same time, Hermes said its management is being realigned, with the sister companies Hermes Logistik Gruppe Deutschland and Hermes Transport Logistics unifying their executive boards, with chief executives Frank Iden and Frank Rausch set to act as joint CEO presiding over the whole executive board together.

Investment

Hermes, which is the logistics arm of the distance-selling retail giant Otto Group, has traditionally been set up to prioritise the needs of larger companies.

The company said its new strategy will see it aiming to attract more SME clients in the e-commerce sector. As a result, the restructuring of the company’s German network will take on a more regional look, aiming to emphasize a geographical proximity to prospective clients.

Construction on new logistics centres needed for the new-look 35-strong network will start in 2015. Hermes said it would be building facilities of around 8,000 square metres in size (a little over 86,000 square feet), each able to handle about 10,000 parcels per hour.

Hermes will be merging 29 of its depots in the coming years, it said, which could involve integration within nearby existing buildings or a complete relocation. Talks with works councils are expected to take place in the coming months over the plans.

Hanjo Schneider, the executive board member for services at Otto Group and CEO of Hermes Europe, said the reshaped German network would put his company in the “best possible position” to serve the growing needs of distance selling.

“We will be achieving three significant effects: greater regional proximity to clients, later cut-off times for parcels and shorter run times,” he said.

“From now on, customers will receive their parcels quicker and more conveniently. This will help us not only meet market demands at the highest level but we will also remain a reliable partner for trade and for millions of private customers.”

Board restructuring

Meanwhile, Hermes is bringing together the executive boards of its Hermes Logistik Gruppe Deutschland unit and Hermes Transport Logistics.

Hermes Logistik Gruppe is the part of Hermes that specialises in delivering to consumers, claiming to deliver one in three B2C parcels in Germany, while operating a network of 14,000 parcel shops. Hermes Transport Logistics is the business-to-business supply chain logistics firm that specialises in transporting goods for industry.

It said the sister companies “on the whole” address the same target clients, and so running them under a joint board would improve the coordination of the company’s market presence.

Schneider said traditionally, the two subsidiaries had worked in close cooperation, adding that ultimately goods ordered online can only reach the consumer through a coordination of logistics services.

Under the new structure, the two firms will also have a joint sales approach to help cut overheads.

Schneider said: “The new management structure will assess how a market-focussed inter-company organisation can be developed and how to generate operational and financial synergies.”

The new joint board will see one of its CEOs, Frank Iden, leading on sales, marketing and strategy, while the other, Frank Rausch, heads up the operating business and commercial departments.

Other board members will include Stephan Schiller, responsible for Sea and Air logistics, Eckhard Fechtner, who will lead international development, and Thomas Horst, who heads up a newly created sales business unit. Dirk Rahn will be responsible for operations, and Olaf Schabirosky will take over the projects and services division.