Denmark's DSV eyes more big acquisitions in fragmented freight market

* DSV CEO says bigger takeovers are the way forward

* Jens Bjorn Andersen plans to keep DSV asset-light

* Graphic

COPENHAGEN, Oct 4 (Reuters) - Denmark’s DSV, which became the world’s fifth largest freight transportation company by buying up competitors, is considering more large acquisitions to expand in a fragmented market despite weak growth in global trade.

The company’s simple corporate structure and success in turning around loss-making firms has helped to boost its shares by 25 percent this year as it integrates its $1.35 billion acquisition of loss-making, California-based UTi in January.

DSV’s culture is embodied in chief executive Jens Bjorn Andersen, whose straight talking, including blunt statements prioritising profit over workplace diversity or the environment, mark him out in the Nordics.

The UTi deal, DSV’s biggest yet, doubled the number of its employees to 44,000, propelling it into competition with Deutsche Post-controlled DHL Logistics and Swiss-based Kuehne & Nagel. The company’s shares surged 10 percent after UTi deal was announced a year ago and its operating profit rose 16 percent to 3 billion Danish crowns ($450 million) last year.

New acquisitions would only come once DSV has proven the success of the UTi deal, Andersen said in an interview, despite what he described as weekly calls from investment bankers touting potential new assets.

“We’ve come to realise that bigger acquisitions probably suit us better than smaller ones,” Andersen said. “We will go for the big ones, if we can find them and convince the owners.”

Founded by ten truckers in 1976, DSV still only commands about 3 percent of a global market made up largely of small players. Furthermore, a lack of digitalisation in places like Africa and India makes it difficult for large players with sophisticated IT systems to penetrate.

“It’s very difficult to take market share, even though the market is so fragmented,” Andersen said.


With some 20,000 long-haul trucks on the road every day and about 200 warehouses spread across Europe, DSV specializes in complex transportation logistics, handling everything from pallets of turf to resurface a football pitch at short notice to the entire supply-chain for multinational companies.

Andersen’s office overlooks a massive warehouse outside Copenhagen with more than 300 trucks passing by every day.

“We’ve always had a culture of being close to operations, so we don’t forget what we do,” the 50-year-old executive explained. “We like the smell of diesel.”

A survey of fund managers in March by Danish Stock Analysis found Andersen to be the best CEO in Denmark, ahead of Lars Rebien Sorensen of Novo Nordisk, who Harvard Business Review had found to be the world’s best-performing CEO.

Starting as a trainee at age 22, Andersen was appointed CEO just a few weeks before the collapse of Lehman Brothers in 2008, an event that caused freight volumes to fall 25 percent overnight and banks to stop credit lines just as DSV needed to raise $1.2 billion to buy ABX Logistics.

Andersen says he lost trust in the banking system and financed more than half of the UTi deal by selling shares even before the deal had gone through to avoid a situation like in 2008. Leading up to the Brexit vote, DSV minimized its exposure to British pounds to avoid currency risks.

“When I started in this job, people asked me what my 100-day plan was. I didn’t have one,” says Andersen, explaining his main ambition at the time was for no one to find out he had taken over.

“People ask what our corporate DNA is. I have no idea,” he said.


The company owns very little - no ships, no planes, no warehouses, only a small proportion of the trucks it uses daily, not even its own headquarters. Transportation is outsourced to the likes of Maersk Line, Lufthansa and road haulage firms.

But digitalisation and new technology could pose risks to freight-forwarding firms, which organise shipments, with major players in world trade ranging from online retailer Amazon to container shipper Maersk Line eyeing a bigger share of the logistics value-chain for freight.

Contrary to most other large companies, DSV’s management team consists only of the CEO and a chief financial officer. The company remains decentralized, giving lots of freedom to country chiefs to pursue new business opportunities, but also setting clear financial targets.

“Our culture is very profit-centric. We like good old-fashioned budgets and would like every single employee to have a budget for what he needs to achieve. We measure him on that, and people love it, especially if they are successful,” Andersen says.

Being asset-light gives DSV an advantage when the market is falling, competition strengthens and costs are under pressure, says Otto Friedrichsen, equity strategist at Formuepleje.

“But it also means they risk missing out when the market goes up and asset values rise,” he says.

For now, world trade is set to grow this year at the slowest pace since the financial crisis and lag growth of the world economy for the first in 15 years.

“We have great belief in our business model,” Andersen said. “No ships, no airplanes - that is set in stone.”

He played down the idea that technical advances could threaten that model. “We are not a commodity. We make some very advanced and complex logistics solutions for our customers that an app cannot replace.”

Turning DSV into a global player means becoming “a little more boring” since Andersen took over eight years ago when DSV did not even have a legal department. But some things remain the same in a business dominated by white males.

“We have no need to fulfil diversity targets. This is a male-dominated industry. I have gathered the best,” Andersen said.

“Whether you like it or not, I’ve been put here to make money, not to bring down CO2 emissions from our trucks,” he said, while quickly pointing out that the company actually did cut emissions. ($1 = 6.6622 Danish crowns)

Editing by Philippa Fletcher