DB Schenker taps younger talent amid IPO talks

German logistics company DB Schenker has appointed three new members to its management board, making its key decision makers younger and more international as the group’s parent explores the possibility of spinning off the unit in 2019.

The air, land and sea freight group employs 76,000 people and is one of Europe’s largest logistics companies.

The appointment of the new board members comes just weeks after the head of Deutsche Bahn, the state-owned rail company and Schenker’s parent, said it revived discussions, following a collapse in 2016, on whether to sell a stake in the business next year. Arriva, Deutsche Bahn’s London-based passenger transport business, could also be listed.

Deutsche Bahn has €20bn of debt and needs even more funds to modernise infrastructure and improve the service of its long-distance trains, which have an “unsatisfactory” punctuality rate of just 77 per cent.

The new members appointed to Schenker’s management board are Xavier Garijo, 47, who will oversee contract logistics; Thorsten Meincke, 49, who will lead air and ocean freight; and Christian Drenthen, 52, who will head land transport.

Mr Garijo, who is Spanish, and Mr Drenthen, who is Dutch, are the first non-German members of the management board, the company said. They will each begin on January 1. Mr Meincke will start in the first half of 2019.

Selling stakes in Schenker and Arriva could help raise cash. A listing would also give Schenker the opportunity to raise its own cash from investors, rather than through taxpayers, as the group invests in digital offerings to combat tech groups encroaching into its territory.

“What we cannot afford, by any means, is for someone to come between us and the customer — whoever controls the customer controls what gets sold,” Jochen Thewes, Schenker’s chief executive, told the Financial Times.

Logistics might be the backbone to global capitalism, but it has largely played a hidden role.

With more companies viewing data as the “oil of the 21st century” in the way it is likely to drive the world economy, logistics is in the spotlight.

This has increased competition led by groups such as Amazon offering same-day and even same-hour shipping.

“Traditionally this was an industry where we had a lot of horizontal consolidation,” said Mr Thewes. “We used to buy each other to get market share because it was a scale business to expand the network.”

He added: “We are now seeing more vertical integration — meaning you have the customer pushing into our space . . . Think about the big etailers who are doing their own fulfilment, their own transportation . . . obviously that’s traditionally what we do.”

Such disruption was highlighted when France’s CMA CGM, one of the world’s largest shipping groups, offered to purchase the rest of Switzerland’s Ceva Logistics — a rival to Schenker — at a premium of nearly 50 per cent. The offer valued Ceva at SFr1.6bn ($1.6bn).

Schenker is likely to be valued at up to €10bn, according to industry figures.

Mr Thewes declined to speak about whether Schenker would seek an IPO next year, saying that is a decision for Deutsche Bahn.

But, in essence, Schenker needs to accelerate making investments into digital offerings to avoid being wiped out by increasing competition.

“The question is, are we building digital capabilities faster than they are building logistics capabilities?” he said.

Last year Schenker announced it would invest €25m to build an online platform for freight forwarding and transport. It is now in the process of launching this “suite” of offerings. Germany is the first big market to use the platform for land, air and sea.