However, Peter Ulber, chief executive of Kuehne & Nagel for North West Europe, is clear that the deal was still a good one for the company. He points out K&N would like to have bought the business at the time that Platinum Equity bought it but, at that point, K&N was busy integrating its US acquisition, USCO Logistics, into the group.
“When we bought ACR it was in better shape. it was well managed and profitable with an impressive customer portfolio.”
Ulber points out that there was almost no overlap between the two businesses which has simplified the integration process. In the main, it was back office functions that needed to be integrated and, after five months, that process is virtually complete. K&N is now structured into 10 regions – five in Europe and five internationally. All ACR’s senior management have new roles within the organisation. Xavier Urban formerly ACR chief executive, now heads the Southern Europe region while Glen Lindfield, formerly head of ACR in the UK, is now head of contract logistics for North West Europe.
The group’s first quarter results showed sales up 41.7 per cent to £1.9bn and the operating profit up by 68.7 per cent to £87.5m. The acquisition of ACR Logistics meant sales in contract logistics nearly tripled compared with the previous year. Productivity increases as well as ongoing standardisation and centralisation of IT systems contributed to improved margins in this business.
But Ulber is clear that the takeover was never just about economies of scale. “All our customers see that it would make sense to have an end-to-end supply chain under one management – in principle at least.
“That is where the industry is going and where value can be created,” he says, pointing out that when it comes to the basic costs of operations, warehousing, transport and so on, here are not many opportunities to differentiate yourself.
“You are working with small differentiators,” he says, “but if you can optimise an end-to-end supply chain, there are double-digit savings to be made.”
However, he points out, many customers are not structured in such a way that they could take advantage of such a solution. IT is critical to providing end-to-end visibility of the supply chain and K&N started work on technology to do this some eight years ago. Since the takeover of ACR, Kuehne & Nagel has been able to report some notable business wins.
Earlier this year, it formed a joint venture with brewer Scottish & Newcastle consolidating the distribution assets of S&N with those of Kuehne & Nagel to create KN Drinks Logistics. Kuehne & Nagel is providing S&N’s primary and secondary distribution activities for 10 years initially.
The joint venture provides a base from which KN Drinks Logistics can develop an industry platform for all drinks suppliers and retailers in the UK.
Kuehne & Nagel has provided S&N with primary distribution and warehouse operations services since 1991. This includes five regional distribution centres at strategic sites across the UK, and employs around 1,000 people. KN Drinks Logistics will absorb existing Kuehne & Nagel contracts with S&N UK and will take over responsibility for secondary distribution activity.
Ulber says: “This is a true win-win deal for all parties and represents a new and compelling offer to pub companies and beverage suppliers throughout the UK.”
Kuehne & Nagel Ireland recently won a contract to manage the global logistics requirements for Organon Ireland, a manufacturer and marketer in the health care industry. The agreement includes road, sea and air ambient/cool chain logistics services.
UPM Raflatac, which supplies pressure-sensitive label stock and radio frequency identification tags and inlays, chose Kuehne & Nagel to manage transport planning across Europe. And Haier IT Europe, a division of a major Chinese consumer electronics company, chose Kuehne & Nagel in the Netherlands to provide end-to-end integrated supply chain services.
Kuehne & Nagel has been in the forefront of developing rail services in the UK. Three years ago it started offering its own container train services from Southampton and Felixstowe and is now running three trains a day.
Ulber sees further growth in this area pointing out that with road congestion, rail services operating at night can be more reliable.
1983 Peter Ulber started work as an intern with Kuehne & Nagel in
Hamburg. The company had a reputation for sending young people out into the world to gain experience, he says, But first he cut his teeth running groupage between Germany and the Netherlands. Later he moved onto sea freight.
1985 He was sent to K&N’s Atlanta office. He stayed in the United States for 12 years.
1997 Ulber moved to Buenos Aires to head Kuehne & Nagel’s Latin American operations. The key task there was to build up the company’s business in the region.
2001 He moved to London to head the UK operations later adding Ireland to his portfolio. Now he is head of Kuehne & Nagel’s North West Europe region which also includes Scandinavia and Finland.