A feeling of independence
Damco's Richard Morgan on how the logistics operator intends to build on its new look and achieve its ambitious targets
Last year was an interesting year for Damco Logistics. Not only did the AP Møller Maersk-owned firm have to deal with the impact of recession, it also went through the process of the supply chain services of Maersk Logistics combining under the brand of Damco.
But despite these challenges, Damco’s Chief Commercial Officer, Richard Morgan, says the firm had a good 2009: profit-wise, it was one of its best years ever.
And he says there is a new sense of independence, as Damco is now able to move away from being too associated with other organisations in the APM group.
“Our supply chain solutions must be customer-centric and not built specifically to place containers on assets that our group own,” Morgan says. “Our customers are now beginning to see that we are an independent organisation, thinking independently with their interests at the centre of what we do.”
But not wanting Damco to rest on its laurels, Morgan says he has set a target of this year doubling the volumes obtained through new accounts in 2009. And so far, Damco, which lists more than half of the UK’s top 20 retailers as customers, is on target.
“When we compare ourselves with our competitors we find that we are generally outperforming the market in terms of growth, volume and relative increase in profitability,” he says. “Now we have a merged organisation we are much more focused.”
Although Damco has ambitious growth targets, Morgan says it is unlikely that increases will be fuelled by acquisition.
“At the moment our plans are to concentrate on growing sales through a very focused and go-to-market strategy, which is working for us.”
The growth in volumes is helped by retailers increasing volumes, which Morgan says is not just down to inventory re-stocking, and as a result, Damco is preparing for a busy peak season. However, Morgan predicts finding space on Asia-Europe vessels may become an issue for the industry.
“[The] peak is going to be early and prolonged this year; a number of our customers are already forecasting a peak in volumes for the beginning of June.
“Damco is a key customer of most of the major carriers and we are making sure we tie-up sufficient capacity to make sure we meet the peak and the growth from new customers.”
Because he expects capacity to be tight during the peak season, he predicts all-in spot rates will hover around US$2,000 per teu, around $200 above current levels, when including peak season surcharges.
Morgan says: “The key question is: will capacity be strong enough to disrupt the market equilibrium? My guess is that it won’t, and rates will remain strong. If carriers put in enough capacity to de-stabilise the market, you will see them pull it just as fast.”
He says air freight seems more volatile at the moment, due to its vulnerability to industry consolidation, strikes and uncertainties over new ash cloud threats.
One area where Damco is experiencing particularly strong growth is sea-air. “We can take product from Shanghai to the UK in 11 days by sea-air, and that is an attractive option for customers.”
In order to maintain growth ahead of the market, Morgan says Damco is investing in its air freight and reefer products and its landside operations.
“We’re investing in people resources, new expertise and commercial and operational resources across all of those areas. In the longer term, dynamic market conditions make it difficult to see what the future holds.”
But despite these challenges, Damco’s Chief Commercial Officer, Richard Morgan, says the firm had a good 2009: profit-wise, it was one of its best years ever.
And he says there is a new sense of independence, as Damco is now able to move away from being too associated with other organisations in the APM group.
“Our supply chain solutions must be customer-centric and not built specifically to place containers on assets that our group own,” Morgan says. “Our customers are now beginning to see that we are an independent organisation, thinking independently with their interests at the centre of what we do.”
But not wanting Damco to rest on its laurels, Morgan says he has set a target of this year doubling the volumes obtained through new accounts in 2009. And so far, Damco, which lists more than half of the UK’s top 20 retailers as customers, is on target.
“When we compare ourselves with our competitors we find that we are generally outperforming the market in terms of growth, volume and relative increase in profitability,” he says. “Now we have a merged organisation we are much more focused.”
Although Damco has ambitious growth targets, Morgan says it is unlikely that increases will be fuelled by acquisition.
“At the moment our plans are to concentrate on growing sales through a very focused and go-to-market strategy, which is working for us.”
The growth in volumes is helped by retailers increasing volumes, which Morgan says is not just down to inventory re-stocking, and as a result, Damco is preparing for a busy peak season. However, Morgan predicts finding space on Asia-Europe vessels may become an issue for the industry.
“[The] peak is going to be early and prolonged this year; a number of our customers are already forecasting a peak in volumes for the beginning of June.
“Damco is a key customer of most of the major carriers and we are making sure we tie-up sufficient capacity to make sure we meet the peak and the growth from new customers.”
Because he expects capacity to be tight during the peak season, he predicts all-in spot rates will hover around US$2,000 per teu, around $200 above current levels, when including peak season surcharges.
Morgan says: “The key question is: will capacity be strong enough to disrupt the market equilibrium? My guess is that it won’t, and rates will remain strong. If carriers put in enough capacity to de-stabilise the market, you will see them pull it just as fast.”
He says air freight seems more volatile at the moment, due to its vulnerability to industry consolidation, strikes and uncertainties over new ash cloud threats.
One area where Damco is experiencing particularly strong growth is sea-air. “We can take product from Shanghai to the UK in 11 days by sea-air, and that is an attractive option for customers.”
In order to maintain growth ahead of the market, Morgan says Damco is investing in its air freight and reefer products and its landside operations.
“We’re investing in people resources, new expertise and commercial and operational resources across all of those areas. In the longer term, dynamic market conditions make it difficult to see what the future holds.”
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