Dialogues

Making Progress that Makes Sense

Interview with Ditlev Blicher, Chief Executive Officer (CEO) of Asia Pacific, DB Schenker

When we talk about the future of supply chain and logistics industry, we are no longer discussing about increasing low-cost labour and large-scale warehouses. Gone were the days when we focus on low investments while expecting higher returns. The conversation now has squarely shifted to the impacts of new technologies, such as driverless trucks, drone deliveries and robots in warehouses, on the industry.

In fact, it is almost impossible not to hear about a new innovation centres popping up every few months in Singapore. It is an effective way of showcasing these new technologies to future clients and to encourage the perception that the company is progressive by coming up with nifty gadgets and sophisticated tools. But how much have these innovations pushed the industry forward? Short answer, not much.

“The reality is that the individual innovations do not matter. They may momentarily wow us, but the magic ultimately lies on the output that we promise to deliver. The real innovation is not in the hardware. The real innovation is in the numbers that they deliver and what they can do for our clients,” says Mr Ditlev Blicher, who was recently appointed Chief Executive Officer (CEO) of Asia Pacific for DB Schenker in May 2016.

In this issue of Supply Chain Asia magazine, we will look at what sets DB Schenker apart from its competitors, the company’s commitment to the region, and Mr Blicher’s thoughts in managing the challenges in the supply chain industry.

Standing out from the crowd

DB Schenker is a market leader in Asia Pacific offering comprehensive thirdparty logistics services. However, like in any industry, it is important for a company to adopt a unique selling point to outmuscle its competitors. For DB Schenker, it is not just about having the latest, shiny hardware in the industry, which it already also participates actively in, with Enterprise labs for logistics and digitalisation; as well as next-generation automated e-commerce packaging and fulfilment operations with robotics and self-guided AGVs in warehouses. In fact, it is also very much about its rich history and legacy that is distinctive and unique; and where DB Schenker is proud of its dominance in a technology that has been in existence since the early 19th century.

“What sets us apart from the competition as a truly intermodal, integrated supply chain specialist, is our strength in rail freight transport. After all, our owner is Deutsche Bahn, which is what the DB stands for in our name. This is the product that distinguishes us and is increasingly important, particularly in Europe and connecting to Asia. This mode of transport offers time / cost-effective and environmentally viable routes to transport goods across the largest landconnected continents of Europe-Asia and even Middle-East Africa. Rail freight is also particularly critical at this time, especially with the current serious disruptions to major ocean carriers. This is our true differentiator,” explains Mr Blicher, who was the President of Asia Pacific & Europe in UTi Worldwide prior to his current posting.

Struggling in a cyclical environment

The success of the supply chain and logistics industry depends on market demand and economic prosperity. When the latter declines, the former also falls. “In the early year 2000 up until the financial crisis of 2008, it was a fantastic time for logistics, with global trade growing at two to three times of GDP. Businesses were booming and consumers were spending. Fast-forward to the current situation we are in now, that picture has changed. A wide swathe of medium-sized players in the market is struggling in this new environment. A major shipping line is suddenly declared bankrupt and, suddenly, its vessels are stranded on foreign seas,” says Mr Blicher.

While the current industry setting may seem bleak, this is where companies can learn from others’ mistakes and make their mark.

“Clients are not just looking for transportation from Point A to Point B. They want contingency plans in case of disruptions in their supply chain. They need partners that have the capacity, which is the major component of the solutions that we provide. If a company does not have the capacity or the right pricing structure, the company will not last, and I believe this is why many organisations in our space right now are struggling to make their business models work,” shares Mr Blicher, who added that companies without the financial strength or foresight into efficiency will never be at the forefront of innovation.

The Mekong commitment

DB Schenker has set up a fully-owned subsidiary in Myanmar to work with customers in the telecommunications and consumer goods industries. The company will employ around 80 staff in Yangon, and train them with warehouse and supply chain management skills. DB Schenker also has 100 percent-owned businesses in Cambodia and Laos. What is the reason behind the company’s investment in the region? “This is part of our commitment to the Mekong area. We are very excited about this part of Asia Pacific in the region. We have good investments in trucking to connect from China all the way down to Singapore and even to India, so the Mekong area is a very central region for us. The commercial reality is also the other reason for us to focus on this area.

Costs in China are on the rise. Lots of shippers and manufacturers are spreading the risks and setting up businesses in other countries or move their production out of China and completely into the Mekong area. From that standpoint, that is why we are very invested in this area,” says Mr Blicher, who has just recently travelled to the Mekong area to have a stronger understanding of the region.

The 45-year-old CEO is already familiar with the Asian landscape, having lived mostly in the region since 2001 in Shanghai. While he has only been living in Singapore for four months, he is already enjoying his stay here.

“I have lived a third of my live in Europe, the US and Asia respectively, and it is safe to say that I feel equally at home in each region. But there is something magical about Asia. This is where the business growth is. It is an incredible time to be here,” says Mr Blicher. As a self-professed “hands-on kind of guy who does not like to relax too much”, Asia is the perfect setting for Mr Blicher to further his achievements at DB Schenker.

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