When large companies go through a merger, months can seem like years, even when there are no major bumps in the road. When Air Cargo World recently spoke with Jens Bjørn Andersen, CEO of Denmark-based forwarder DSV, the weariness and relief were evident in his voice as he described the long but relatively smooth process of merging DSV with U.S.-based forwarder UTi Worldwide – a transition then entering its 10th month.
“I’ve been on five continents this year. I’m traveling more than I ever have before,” he said while touring DSV sites in the U.S., Mexico and Canada. “It’s very important to try and listen to the employees and to personally encourage them.” After spending $1.3 billion to purchase UTi – the largest corporate acquisition undertaken in Denmark in 2015 – Andersen added that handling the details of the merger and explaining DSV’s corporate culture has taken up nearly all of his time beyond daily operations.
DSV is now about 95 percent complete in the first stage of the merger, Andersen said, which involved physically merging the hundreds of DSV and UTi locations and eliminating redundancies – a task that he said should be complete by January 2017. The UTi brand has also all but vanished as the DSV Air and Sea brand is rolled out across North America.
One of the most important milestones was the removal of UTi’s “One View” proprietary IT system, which was plagued with problems and had been partially blamed for UTi’s poor opertational performance that later made them an acquisition target for DSV. In its place, Andersen said, DSV has deployed its own proprietary transportation management system (TMS) across all former UTi offices.
At the end of the third quarter, ended Sept. 30, DSV reported that it was just beginning to see the positive effects, in the form of volume and net revenue growth. According to DSV, the forwarder’s Air and Sea Division total revenues rose by almost 54 percent to US$1.24 billion, while gross profits for air cargo alone increased by 55.3 percent to $313 million.
“In Danish kroners, we just passed 1 billion in total revenue for the first time – which is a nice marker to breach,“ Andersen said of the Q3 results. “We’ve turned the UTi business into a profitable one now after it had seen relatively heavily losses when we bought it. We have achieved synergies, and we’ve seen a lot of cost savings – on head count, on facilities, and on IT.” Before the UTi purchase, DSV did some scalability testing of its TMS system, Andersen said. “We’ve moved approximately 5,000 new users onto the system, so we needed to make sure that it could cope with the new volume,” he said.
According to the Q3 report, DSV’s overall freight volumes rose by 84.5 percent, compared to the same three-month period in 2015, reaching nearly 148,000 tonnes. Once the airfreight tonnages handled by the two companies are combined, the new DSV will likely become one of the top 10 forwarders in the world, based on volume. “The financial synergies are expected to fully materialize within three years after the acquisition,” which would be early 2019, DSV said.
As the calendar turns to 2017, Andersen said he looks forward to seeing the conclusion of the UTi integration. “We will be a much stronger player on the market, but also see the effects in some of the new geographies, where we have increased the strength in our company.”Like This Post