In the post-coronavirus world, supply chains will be more complex, e-commerce demand will accelerate and the largest forwarders will continue to increase market share, believes Jens Bj?rn Andersen, CEO of DSV Panalpina.

As reported in Lloyd’s Loading List, the financial stresses coronavirus lockdowns and disruptions have imposed on operators up and down supply chains have increased counterparty risk. According to Andersen, the desire to reduce this risk and the accelerated adoption of digital freight services will favour the largest forwarders in the post-coronavirus era.

“I respect all players in our industry, but we have seen a very clear trend over the last 6-7 years where the largest freight forwarders take market share,” he said. “We take market share from each other also, but the trend has been that the big  investments that we do in digitalisation and technology actually helps our customers a lot, and when we invest as much as we do in IT, the very small and local freight forwarders have difficulties doing so.

“So ultimately the product that we offer is a better product and that has been a trend  and this I think could accelerate now – that you want to use a safe freight forwarder or supplier in a situation like this. 

“You cannot afford to have that negative [financial risk] element coming in on top of all the other stuff you have to deal with. You need to make sure that you work with somebody who is financially strong.

“This is why we are super happy that we have very strong foundations. We have safeguarded the company to be able to sustain even some of the worse scenarios.”

Andersen also expects that in a post-coronavirus world, supply chains will become more complex. “There’s no doubt that a lot of customers have asked themselves how can we make sure that we do not get caught out again in a situation where a country closes down and we are basically in limbo,” he added.

Andersen said the reactions of manufacturers to the U.S.-China trade war tariffs offered some insight into how companies would source products in future.

“We saw during the trade war between U.S.-China that countries like Vietnam, Indonesia and Thailand benefitted, and I think that kind of trend will continue to accelerate,” he said.

He does not expect mass onshoring or near-shoring by companies serving European and North American markets, however. “I don't so much believe that you will take production back home to your next door neighbour,” he said. “It's for good reason that the companies have sourced products from a suppliers in Asia.

“You will simply in many cases not be competitive if the price [of production] differentiation is large. You will find a few examples of U.S companies dragging some production into Mexico maybe, but I don't think it's going to happen to a large degree.”

He also predicted the strong surge in e-commerce in recent months would continue post-coronavirus. While some have predicted e-commerce markets will be dominated by the likes of DHL, Amazon, Alibaba, UPS and FedEx, Andersen believes freight forwarders will prosper.

“This trend will not negatively impact freight forwarders,” he added. “On the contrary, there will be a higher demand for the services that we offer our customers.

“Assuming that products still come from Asia, the container freight market will still be the same, with the same amount of products coming from Asia into Europe. It’s just when it hits Europe that the product and services we offer customers will need to be different, of course. 

“Instead of doing high speed freight or retail deliveries, we will do deliveries to consumers directly, which is a more interesting business proposition, a more complex product. 

“Obviously, you make less money – we all know how cheap it is to get shoes sent to your home, you basically pay nothing for it. But still it’s a very high volume business.  “This is something we are considerably strengthening now by rolling out our e-commerce platform into more and more countries.”

Source:lloydsloadinglist