New five-year plan for DSV Mexico's Solutions business 02 October 2017

Before the acquisition of UTi in 2016, DSV's Solutions business in Mexico was non-existent. Today, 11 of the country’s 15 warehouses are multi-user facilities and all of 85.0% of the turnover is generated by VMI solutions for customers. This unusually high percentage of total Solutions business is linked to the fact that Mexico has a higher share of major manufacturing companies, not least in the high-tech and automotive industries, and these companies use hundreds of suppliers, who cannot justify running a warehouse in close proximity to the end-user.

At the same time, just-in-time delivery to factories requires a complex IT set-up and especially well-educated and highly motivated employees, and it would not be profitable to establish these as individual suppliers.

The customers are usually suppliers from Asia, Europe or the US, which means they do not own their own warehouse, because their volume of goods is not big enough.

Once DSV has established the physical infrastructure for just-in-time delivery to customers, typically in the high-tech and automotive industries, the rest of the storage facility is filled up with additional smaller customers who can make use of the existing infrastructure. This has been the recipe for growth so far, and it is also one of the building blocks for growth going forward.

This October, Solutions will open the doors of its first warehouse in the capital. This brand-new warehouse in Mexico City will initially house Danish company Chr. Hansen Holding A/S (manufacturer of ingredients for the food industry). The agreement came about via a joint tender with its Air & Sea colleagues, which at the same time landed air transports from, among other places, Denmark to Mexico. The tender was submitted by DSV Mexico and the negotiations comprised a total solution of both transport and storage.

Concurrent with these comprehensive plans for growth which are intended to double the existing turnover and profit margin over a five-year period ambitious cost-cutting targets have also been set.

Costs must be reduced by 3.5% each year, which will be achieved by focusing on ongoing improvements, smooth implementation of new customers, and fast and efficient pricing for the submission of tenders. A specific employee will be dedicated to each individual cost-cutting area, and the group will be led by a Logistics Manager who is responsible for achieving the targets using DSV's continuous improvement principles.