In 2014, CEVA Logistics, one of the leading supply chain companies took the decision to rebuild its management team, focus on major business lines and adopt a local operating model. Namrata More speaks to CEO Xavier Urbain to learn how well this strategy is working for the company.
CEVA entered 2015 with an executive management team of seasoned industry leaders and a go-to-market strategy based upon business lines in freight management for air and ocean, and contract logistics to enhance customer value. “We have a very strong sales pipeline, so we are getting closer and closer to the customers. At the same time we have people who are dedicated to focusing on either products – air or ocean, and our strategy is now reflected in our results,” said Xavier Urbain, CEO, CEVA Logistics.
The new approach contributed to CEVA’s strong performance in the first quarter this year as revenue of US$1,776 million was up 4.6 percent in constant currency and down 4.8 percent as reported. Adjusted EBITDA was up 18.6 percent year-over-year, and up 23.3 percent in constant currency. Commenting further on the contributing factors towards this growth, Urbain added: “It is top-line improvement. We saw volume improvement on air and ocean freight. Air freight volume growing 5.2 percent and ocean freight up 5.0 percent year-over-year. It is better but not an achievement because we expect to achieve much more. Which is why the focus on top-line improvement, cost-margin improvement, productivity improvement will never stop.” Earlier CEVA’s air freight focus was more on developing transpacific tradelanes, but that is now changing. “The legacy of the company starting from US, which is the most dynamic market in the world, was more air freight oriented. Which is why, first we focused on air cargo in order to develop transpacific tradelane. But now we are focusing on transatlantic tradelane. And now we are driving very strongly ocean freight on the same way.” Air and ocean indeed are the two drivers for CEVA’s strategy with independent teams working simultaneously at a global level. “So we can see some big improvements now and much more will come for this year.” Urbain also admitted that the recent US West Coast port strikes was an additional accelerator to its air freight growth. “If you look at our numbers, we are growing,” But he also cautioned that the same kind of growth may not happen again this year.
CEVA recently launched an independent global healthcare sector – previously a sub-sector of consumer and retail – to leverage the company’s significant presence in this market, with revenues of more than US$300 million annually. “Healthcare contributes to our contract logistics from volume perspective. That’s where our expertise is as we stand and ocean is a good portfolio we have for healthcare.”
Going ahead, productivity improvements remain a key focus for the company. A Competence Center for Ground Transport has been launched to drive volume growth, increase productivity and reduce cost per mile. Processes in freight management have also been streamlined and show improved productivity per employee. “We created global competence centre for ground transport, in order to manage best practices and get process improvement as well. Our strategy of putting the accountability into place where it belongs to is paying off,” said Urbain.