Head of CEVA Logistics outlines ambitious three-year expansion strategy

The CEO of global freight forwarder CEVA Logistics today announced an ambitious three-year expansion plan with goals of significantly growing its presence among consumer retail businesses, doubling its contract logistics business in China, and becoming one of the world's top five ocean freight forwarders.

Dutch-based CEVA currently ranks 15th in the world among global ocean forwarders, a far cry from its ranking of 35th when it was formed in 2007 from the combination of logistics companies EGL Inc. and TNT Logistics. Still John Pattullo, the company's CEO, said the company needs to boost its standing in the seafreight business to be considered a major player in the international logistics market.

"We can't claim to be a top forwarding company without a major presence in ocean," he said. Pattullo spoke in Philadelphia at the Council of Supply Chain Management Professionals' annual global conference.

CEVA's two forerunner companies were strong players in air and land commerce with little exposure to the ocean industry, which comprises virtually all of world trade by tonnage.

Pattullo said CEVA plans to expand organically rather than through acquisition. Since 2007, the company has made only four acquisitions totaling no more than 100 million euros, he said.

Pattullo said CEVA will focus more on capturing potential customers that are entering new markets and that lack a partner, rather than taking market share from rival companies' existing accounts.

CEVA's push into the consumer retail segment is driven by what Pattullo said is the company's acute underrepresentation in that space. Outsourcing accounts for about 35 percent of the logistics activity of consumer retail companies, defined as consumer packaged goods firms, department stores, and grocery chains. "CEVA has much less than that," Pattullo said.

In China, the company is looking to doubling its annual revenue (or turnover) by expanding its contract logistics offerings, according to Pattullo. CEVA's current annual revenue in the country is about one billion euros.

Pattullo estimated that CEVA controls, on average, 5 percent of the logistics spend of its top 100 customers. Over the next three years, Pattullo said he wants CEVA to control up to 8 percent of its typical large customer's spending on logistics services.

Looking at current overall economic conditions, Pattullo said he expects no meaningful bump in peak-shipping season activity. However, he described CEVA customers as having a "remarkably relaxed" attitude toward the global macroeconomic environment. "It's not a scenario of growth," he said. "It's a scenario of steady, modest progress."

Pattullo said his customers are mostly concerned about the increasingly untenable sovereign debt loads occurring across southern Europe. In contrast, the view of non-U.S. business to the U.S. economic situation is far more sanguine, he said. CEVA's European, Asian, and Latin American customers are not seeing any imminent crisis in the United States that would dramatically affect consumer and business demand and spending, according to Pattullo.