Dachser USA to focus on expansion over the next two years.
At the end of July, Dachser USA — the American branch of the German-based logistics provider that generated 4.99 billion euros ($6.68 billion) of revenue in the 2013 fiscal year — celebrated its most recent expansion into the St. Louis market.
Earlier in the year, the company opened a new facility in Chicago. This recent growth fits in with Dachser’s immediate strategy of ramping up its presence in key American regions.
According to Frank Guenzerodt, president and chief executive officer of Atlanta-based Dachser USA, more expansion is planned for the next year and a half. He envisions Dachser branching out to Minneapolis, Detroit and Cleveland, as part of the company’s goal to increase its footprint in the Midwest.
To keep Dachser’s momentum going, Guenzerodt is also looking to beef up the company’s western U.S. footprint — where its presence is “still relatively soft” — beyond locations in Los Angeles and Phoenix with new offices in Seattle, San Francisco and, possibly, Denver. In the Northeast, expansion in Baltimore and Philadelphia is a possibility, as well as adding a satellite location in the Southeast in cities like Nashville, Tenn. or Charleston, S.C.
“The United States, as far as development is concerned, is vitally important for the organization,” he said, explaining that as Dachser expands to more worldwide locations, it is important to have a substantial U.S. network because the United States is among the top two trading partners with these new overseas locations.
“For us, it’s very important to be able to have the infrastructure network in place to serve those Dachser organizations on a global scale, and for that we need to continue to grow aggressively in North America,” he said.
It’s for this reason that Guenzerodt puts the U.S. operation’s importance to Dachser third behind Germany and China. During fiscal year 2013, when Dachser brought in nearly 5 billion euros in revenue, just a shade more than 3 million euros came from European logistics, a 13.5 percent rise year over year and the largest part of its business by far. The company also derives a significant portion of its revenues from food logistics, which ended the fiscal year at 620 million euros, an 8.2 percent increase. Dachser’s air and sea logistics arm generated just under 1.41 billion euros during the period, representing growth of 7.7 percent.
To put things into perspective, Guenzerodt said U.S. turnover is just under $170 million — a 12-percent increase from last year — but that represents a substantial increase from the $15 million seen in 2004, when Dachser first started pushing the U.S. market. The goal, he said, is to double that $170 million by 2018, and have offices in 18 to 20 locations throughout the region.
“Our key asset is people,” he said. “As we can attract new people to come on board, we continue to open new locations.”
Dachser USA has experienced growth amid a sluggish air freight market and an ocean freight industry not only by growing with the market, but by taking business from other providers, Guenzerodt said. The company focuses on midsized firms that need to move between 100 and 500 tons of air freight. When large transportation providers represent these companies, he explained, they might not get the most attentive customer service due to their lower volumes. This, he said, is where Dachser comes in, siphoning off business from its competitors.
Even with Dachser USA’s success, there are still challenges on both the air and ocean side of its business. The company’s air business is growing, but the overall market is stagnant. Guenzerodt said they’re waiting for the peak season to develop out of Asia, and air freight into and out of Europe to the United States remains soft. More generally, the extreme weather felt during the first few months of the year derailed some of Dachser USA’s business, leading to an “unusually slow” start to 2014.
“When you have areas like Chicago and New York being closed for a couple of days, you never make that up for some reason,” he said. “I don’t know what happens to the freight; it kind of disappears.”
Handling ocean shipments out of Asia, which Dachser USA has been striving to grow in 2014, was impacted by the ongoing dock labor negotiations at the West Coast ports. Pricing for shippers has increased due to the uncertainty, and Dachser has rerouted a number of customers to East Coast ports, where possible. Freight is also coming in through Canadian ports, and some shippers are even opting for air freight services.
“We have our regular customers covered with alternative routings and contingency plans,” Guenzerodt said. “There have been quite a few additional costs for importers so far this year.”
Guenzerodt expects the West Coast labor negotiations to be worked out by this fall, which will help rates dip back down to a more “reasonable level.” From that point forward, shipments out of Asia to the West Coast should be back to normal, “if there is ever a normal in the Pacific these days,” he said.
This article was published in the October 2014 issue of American Shipper.