Global logistics: Dachser sets its sights on U.S. expansion

While the United States economy continues to see myriad ebbs and flows, it is safe to say there is by no means a shortage of logistics and freight transportation service providers with established presences there. But at the same time there are many global providers that are looking to take market share from those that have deep roots in the U.S. Some have been doing it for a while and some have their toes in the water and are perhaps considering it. But in the case of Germany-based 3PL Dachser, it is a bit of a case of both. The company initially set up shop in the U.S in1972.  In 2004, Dachser took in $11 million in U.S. business, but since then, its U.S. earnings have grown nearly ten-fold to $120 million. And now it has its sights on increasing its market share and gaining more U.S.-based shippers as core customers.

Logistics Management Group News Editor Jeff Berman recently spoke with Dachser USA President and CEO Frank Guenzerodt about how the $5 billion global 3PL is approaching its U.S growth strategy.

Logistics Management (LM): How is Dachser approaching doing business in the U.S. in terms of expanding its presence? What are the key drivers?
Guenzerodt: We were established in 1930 and have a significant presence in Europe on multiple fronts, including European logistics, which encompasses European trucking, warehousing, 3PL, and inventory management services, among others; food logistics, which is comprised of shared warehousing, over-the-road transportation, and supermarket deliveries; the European logistics division, which focuses on global air and ocean transportation services outside of Europe. While the company has been involved in air and ocean freight for many years, it has been slow to expand on a global basis. We have had an office in New York since 1972, but it was primarily geared to local customers and never got much further than that. And as recently as eight-to-ten years back, Dachser was primarily a German-focused global freight forwarder.

LM: What has happened since then?
Guenzerodt: In that time we have expanded into more than 30 different countries through our European logistics division. In the U.S. at the end of 2004, we had about four locations and have increased that to 11 in the last six years, which is where we are at right now. And during that time we have gone from about $11 million in U.S.-based revenue to about $120 million in 2011. It has been a solid development in that time, which has been led by our roughly 200 employees in the U.S. market that are intently focused on growing our U.S. market share.

LM: Why does further U.S. expansion make sense for Dachser?
Guenzerodt: The U.S. by far is still the world’s largest economy and a top one or two trading partner for every country we expand into, so we need to have the critical mass and size to support our growing business there and in turn become bigger in the U.S. to be able to acquire and go after large customers. This is why we need to continue to invest and grow in North America and the U.S. market.

LM: Are there any specific service offerings that you feel are gaining more traction or are more prevalent than others in the U.S. market than what Dachser offers in Europe?
Guenzerodt: We are very heavily focused on ocean transportation and ocean development export and import operations in the U.S., as well as full container load and consolidation services. Other areas include air import and export services, with most of our U.S.-based sales efforts focused on these areas. Another area we are paying close attention to is brokerage services, as well as warehousing services.

LM: What are some of the differences between U.S. customers compared to customers in other countries?
Guenzerodt: U.S. customers usually expect more from their logistics provider, especially in terms of IT capabilities for order management, freight management, and logistics management, whereas many European customers prefer to handle those things internally.

LM: Why do you think European shippers are less inclined to let 3PLs take on more responsibilities, where in the U.S. 3PLs are often viewed as an extension of the shipper?
Guenzerodt: Part of it has to do with how U.S. companies are focused on outsourcing and focus on their core competencies. This is also happening in Europe but not to the degree that it has in the U.S. Overall, supply chain management planning and processes are much more part of a service providers offerings in the U.S. compared to Europe.

LM: How many U.S-based customers does Dachser currently have?
Guenzerodt: It is in the 15,000-to-20,000 range and of that number we do regular business with about 4,000-to-5,000. Most of our customers are in the retail, energy, consumer electronics sectors. And we recently started an automotive group in the U.S. to go along with ones in Mexico, Brazil, in Europe and are adding one in China. Dachser also has a separate life sciences vertical. We are also working on a vertical in the fashion sector. As a company, we are starting to get more and more focused on vertical markets.

LM: What do you think are some of the hurdles to overcome when doing business in the U.S. in terms of gaining more traction and becoming more established?
Guenzerodt: We still have a ways to go in terms of name recognition and building a domestic U.S. brand as we continue to expand there through public relations work and vertical marketing activities. And we are also focused on reaching a critical mass as far as buying power is concerned; this is where being part of a large global network helps a little bit, as opposed to starting from scratch. This buying power is what helps us compete with large competitors. It takes time to get to certain levels, of course. And more importantly is being able to attract top professionals to join our organization. As a non-asset based service provider, the only things we have to differentiate ourselves are our people. That is always the most challenging and important area to work on: building a team with the best possible people we can find.

LM: How many U.S.-based employees does Dachser have?
Guenzerodt: We have 180 employees in the U.S.

LM: As a non-asset based company, a 3PL like Dachser is keeping a close eye on all modes of transportation in terms of securing capacity. What is your take on the capacity situation in the U.S. right now?
Guenzerodt: Our main focus on that front is international transportation. When we do domestic transportation and distribution as an extension of international, we don’t yet focus on “purely domestic” transportation services.

LM: What are some of the trends you are seeing on the international transportation side, given some of the ongoing difficulties relating to the European economy?
Guenzerodt: A lot of what is happening has to do with the problems occurring in Greece and Italy. The things happening there are going to impact the global economy one way or the other. We are a Germany-based company, and the German economy is doing quite well, especially in regards to exports as a traditional export-driven country for heavy machinery and automobiles. Short of a global economic slowdown or recession, from a U.S. perspective—an economy that is largely based on consumer spending and consumer confidence—we are seeing some slowdown in activity on the consumer product side, as well as a reduction in ocean capacity on Transpacific lanes. That has gotten softer. It is not out of the question to think there will be additional austerity measures put in place to stabilize the global economy in the next year.

LM: What are you hearing from customers in terms of things they want you to help them with or fix?
Guenzerodt: It is a combination of things. Cost optimization is always one of the most important things, not only on the rate level but also by combining certain trade and shipping patterns in a smarter way. Managing and optimizing the overall supply chain in terms of cost levels is at the top, as well as being able to efficiently address urgent matters in different situations. These things are key in developing and building a true partnership with customers, which will increase the longevity of the partnership.