Hellman Worldwide
Best in Class

HELLMANN WORLDWIDE LOGISTICS GLOBAL BEST IN CLASS

Findings from the Institute’s ‘Collaboration Between Container Logistics Stakeholders led to the accreditation of Hellmann Worldwide Logistics as the world’s “Best in Class” logistics service provider.The main reason for the accreditation was Hellmann’s commitment to building relationships with customers, partners and employees throughout the world.
This is the approach the institute has been trying to encourage in the industry for several years now. But if Hellmann Worldwide appears to embody all the the right qualities, CEO Jost Hellmann insists that it’s more than a coincidence, more than a fad, more than a company latching onto the latest industry buzz phrase.

He points to his company’s logo, two geese flying in tandem. Geese, he explains, are born to be loyal. Quoting the writer and wildlife expert, Lawrence Durrell, he claims that these creatures take this concept so far that if one weakens or falls ill and is unable to continue its flight, its partner will break the journey with it. They will go through the tough times together, creatively and innovatively seeking new feeding grounds and supporting each other unceasingly.

“My father designed this logo in the 1960s,” he continues, pausing to explain that he is part of the fourth generation of the Hellmann dynasty to lead the family firm. “He adapted our family crest, inspired by an old German saying that you could translate as, ‘Try to find somebody with whom you can shoot for the skies’. It’s a reference to finding the right husband or wife, of course, but my father decided he wanted to bring it into the business too.”

Hellmann is still a family business, although, if you include the employees of all the partner companies in which it has a percentage ownership, it now has more than 20,000 employees. The CEO admits that maintaining strong relationships with all of these employees, as well as with a growing number of global companies, is becoming more difficult, but it’s clearly a challenge he enjoys.

He travels regularly to visit key clients in person and has made it clear to them that they can call him direct at any time and rely on him to take care of any particular issue they want to raise. This human contact is of great importance to him. All companies aim to conduct their business in this way, he suggests, but he believes firmly that everyone in his company tries to live this out.

And in this, being a family company is a benefit. “We have the luxury of being able to build long-term relationships,” Mr Hellmann observes.

“What I realise in the present climate is that, with big companies that are quarterly-driven, results-driven, you have a huge turnover of people and relationships are being destroyed.”

The unbroken line of four generations of Hellmanns at the head of the company offers the stability required to build long-term relationships; proof comes in the shape of customers who have been working with the company for more than 20 years.

Since the current CEO came into the business (in 1981), though, there has been a significant change, one that has made the task of building and maintaining these relationships more difficult. To continue to grow Hellmann Worldwide, he has had to turn it into a truly global company.

He started that same year by opening a Hong Kong office (the first outside Germany). As an aside, he mentions that the first person he recruited there, Lucia Fung-Ha, is still with the company and now runs the seafreight operation in that part of the world. Today, the business stretches across 341 cities in 134 countries.

The long-term relationships Mr Hellmann has sought to build include those with partner companies such as airlines and shipping lines. He argues that, if the much-quoted aim of achieving a win-win situation is to become a reality, long-term relationships are the only option.

“The market for shipping lines is down at the moment,” he explains, “and if our relationships with them were short-term, we would be trying to take advantage while times are tough, demanding lower prices.”

Insisting on today’s, or this week’s, or this month’s best price, without regard to what happens after that, is not the Hellmann way.

“Shipping lines have traditionally liked to do everything themselves,” the chief executive says, “controlling the relationship with the cargo-owner, the customer. With the invention of the container, that began to change. Now freight-forwarders can control, if not 100 per cent, certainly 80 per cent of that relationship. A big change is going on in the market.”

While he says only time will tell if the freight-forwarders overpower the influence of the shipping lines, or if the ocean carriers can regain the upper hand, he also hints at a third possible outcome. Partnerships — based on strong relationships —might prevail.

Mr Hellman continues: “I think the shipping lines now realise that working with the forwarders could have advantages for them. We want to grow, and if we grow, they grow. Also, we want to keep the yields up, and that’s good news for them too.”

They are in need of some good news — most shipping lines had a tough first half of 2006; trade flows mean lots of containers are returning from Europe or North America empty, which is “unfruitful and bad news for the whole logistics industry”, according to Jost Hellmann. He’s sure they will recover, though.

Building better relationships might help them to do so more quickly. This openness to strong relationships can even provide a possible answer to the logistics service providers’ perennial problem of low margins.
There is no easy solution to this situation, Mr Hellmann warns, but he is convinced that if you have a “close, trustful, long-term relationship” with your customer — and keep it going, helping them in good times and in bad, continuing to support them, even if another shipper comes along and, temporarily, offers you a better rate — you stand a better chance of commanding a good margin.

At the same time, shippers that are growing their businesses rapidly will often be willing to pay more: they realise that they can only be successful on a global, long-term basis if they partner with a service provider that can genuinely manage their supply chain throughout the world.

Is this an argument in support of bulking up, making logistics service providers bigger? Certainly not. As Mr Hellmann has already said, the bigger you become, the more difficult it is for you to maintain the necessary personal touch.

“I don’t believe in size,” he explains. “Even big customers are unhappy with all the merger-and-acquisition activity that has been going on in our space. If he has to deal with a company of 350,000 employees, it’s very difficult for the customer to get the feeling he’s important. Every three months, he will perhaps receive a visit from a regional sales manager who will move on after a year or two anyway.”

Many shippers, he argues, are willing to sacrifice something on price to work with a slightly smaller logistics service provider with whom they can have a personal relationship. For him, this is why there are still 500 or 600 forwarders in Hong Kong, and 300 in Germany, not 25. Some customers need a hands-on approach, a tailor-made solution.

He continues: “It’s impossible for the really big guys to provide that. Our customers need individual attention, day in, day out. I don’t ever want customers’ calls to our offices to go through to voicemail. If we ever got to that, we’d have become one of the big guys, the people who don’t care.”

If his company is able to offer both a global presence and a personal touch, it’s because of the network of partners it has been able to establish. Many of the companies with which it has entered into partnership around the world share one important characteristic with Hellmann Worldwide — they are family businesses. This, again, is no coincidence.

Before the reunification of Germany in 1990, Hellmann was part of logistics set-up in the west that seems to have been ahead of its time: based on strong relationships, with prototypes of back-hauling and cross-docking becoming standard practice. The country was small enough for there to be only one big haulier in each of the major cities.

Those in the north, such as Hellmann, who dominated the scene in Osnabrück and Hamburg, partnered with their counterparts — big players, but still family companies — in Bremen, Hannover, Stuttgart, Frankfurt, Munich and so on. It worked, so Mr Hellmann decided to try to replicate the model globally.

Family businesses, he reasoned, would be likely to have retained, and want to maintain, family values. In Asia, there are plenty of people who are family-oriented and, he believes, this quality is still widely present in European business, even if that continent is “losing it a little” and should work hard to regain its commitment to traditional values, in his opinion.

Finding family-run logistics service providers in different parts of the world was, therefore, the easy part. Convincing them to become part of a worldwide network of family companies in this space was harder.

“It’s complicated,” Mr Hellmann explains. “Some said they would work with us in certain places, but not in, say, Australia or the US because they already had a partner there or a big contract that they did not want to share. I also insisted that their partnership with us had to be exclusive. A lot of family businesses didn’t like being told what to do.”

In many cases, though, logistics operators saw immediately that they would have much to gain from such a move. Some only worked in trucking and recognised that this was a chance for them to move into shipping and air freight too. In some territories, no partner was available, so Mr Hellmann chose to acquire a company in the markets concerned (if the price was right), or, as in the case of the US, open an office of his own.

Expanding in this way was critical to his company’s success, he says now. Customers need a global network along which they can move their raw materials, their components and their finished products. “You need the operations network and the IT network,” he insists. “Only companies with a global network have a future.”

HELLMANN WORLDWIDE LOGISTICS GLOBAL BEST IN CLASS

Findings from the Institute’s ‘Collaboration Between Container Logistics Stakeholders led to the accreditation of Hellmann Worldwide Logistics as the world’s “Best in Class” logistics service provider.The main reason for the accreditation was Hellmann’s commitment to building relationships with customers, partners and employees throughout the world.
This is the approach the institute has been trying to encourage in the industry for several years now. But if Hellmann Worldwide appears to embody all the the right qualities, CEO Jost Hellmann insists that it’s more than a coincidence, more than a fad, more than a company latching onto the latest industry buzz phrase.

He points to his company’s logo, two geese flying in tandem. Geese, he explains, are born to be loyal. Quoting the writer and wildlife expert, Lawrence Durrell, he claims that these creatures take this concept so far that if one weakens or falls ill and is unable to continue its flight, its partner will break the journey with it. They will go through the tough times together, creatively and innovatively seeking new feeding grounds and supporting each other unceasingly.

“My father designed this logo in the 1960s,” he continues, pausing to explain that he is part of the fourth generation of the Hellmann dynasty to lead the family firm. “He adapted our family crest, inspired by an old German saying that you could translate as, ‘Try to find somebody with whom you can shoot for the skies’. It’s a reference to finding the right husband or wife, of course, but my father decided he wanted to bring it into the business too.”

Hellmann is still a family business, although, if you include the employees of all the partner companies in which it has a percentage ownership, it now has more than 20,000 employees. The CEO admits that maintaining strong relationships with all of these employees, as well as with a growing number of global companies, is becoming more difficult, but it’s clearly a challenge he enjoys.

He travels regularly to visit key clients in person and has made it clear to them that they can call him direct at any time and rely on him to take care of any particular issue they want to raise. This human contact is of great importance to him. All companies aim to conduct their business in this way, he suggests, but he believes firmly that everyone in his company tries to live this out.

And in this, being a family company is a benefit. “We have the luxury of being able to build long-term relationships,” Mr Hellmann observes.

“What I realise in the present climate is that, with big companies that are quarterly-driven, results-driven, you have a huge turnover of people and relationships are being destroyed.”

The unbroken line of four generations of Hellmanns at the head of the company offers the stability required to build long-term relationships; proof comes in the shape of customers who have been working with the company for more than 20 years.

Since the current CEO came into the business (in 1981), though, there has been a significant change, one that has made the task of building and maintaining these relationships more difficult. To continue to grow Hellmann Worldwide, he has had to turn it into a truly global company.

He started that same year by opening a Hong Kong office (the first outside Germany). As an aside, he mentions that the first person he recruited there, Lucia Fung-Ha, is still with the company and now runs the seafreight operation in that part of the world. Today, the business stretches across 341 cities in 134 countries.

The long-term relationships Mr Hellmann has sought to build include those with partner companies such as airlines and shipping lines. He argues that, if the much-quoted aim of achieving a win-win situation is to become a reality, long-term relationships are the only option.

“The market for shipping lines is down at the moment,” he explains, “and if our relationships with them were short-term, we would be trying to take advantage while times are tough, demanding lower prices.”

Insisting on today’s, or this week’s, or this month’s best price, without regard to what happens after that, is not the Hellmann way.

“Shipping lines have traditionally liked to do everything themselves,” the chief executive says, “controlling the relationship with the cargo-owner, the customer. With the invention of the container, that began to change. Now freight-forwarders can control, if not 100 per cent, certainly 80 per cent of that relationship. A big change is going on in the market.”

While he says only time will tell if the freight-forwarders overpower the influence of the shipping lines, or if the ocean carriers can regain the upper hand, he also hints at a third possible outcome. Partnerships — based on strong relationships —might prevail.

Mr Hellman continues: “I think the shipping lines now realise that working with the forwarders could have advantages for them. We want to grow, and if we grow, they grow. Also, we want to keep the yields up, and that’s good news for them too.”

They are in need of some good news — most shipping lines had a tough first half of 2006; trade flows mean lots of containers are returning from Europe or North America empty, which is “unfruitful and bad news for the whole logistics industry”, according to Jost Hellmann. He’s sure they will recover, though.

Building better relationships might help them to do so more quickly. This openness to strong relationships can even provide a possible answer to the logistics service providers’ perennial problem of low margins.
There is no easy solution to this situation, Mr Hellmann warns, but he is convinced that if you have a “close, trustful, long-term relationship” with your customer — and keep it going, helping them in good times and in bad, continuing to support them, even if another shipper comes along and, temporarily, offers you a better rate — you stand a better chance of commanding a good margin.

At the same time, shippers that are growing their businesses rapidly will often be willing to pay more: they realise that they can only be successful on a global, long-term basis if they partner with a service provider that can genuinely manage their supply chain throughout the world.

Is this an argument in support of bulking up, making logistics service providers bigger? Certainly not. As Mr Hellmann has already said, the bigger you become, the more difficult it is for you to maintain the necessary personal touch.

“I don’t believe in size,” he explains. “Even big customers are unhappy with all the merger-and-acquisition activity that has been going on in our space. If he has to deal with a company of 350,000 employees, it’s very difficult for the customer to get the feeling he’s important. Every three months, he will perhaps receive a visit from a regional sales manager who will move on after a year or two anyway.”

Many shippers, he argues, are willing to sacrifice something on price to work with a slightly smaller logistics service provider with whom they can have a personal relationship. For him, this is why there are still 500 or 600 forwarders in Hong Kong, and 300 in Germany, not 25. Some customers need a hands-on approach, a tailor-made solution.

He continues: “It’s impossible for the really big guys to provide that. Our customers need individual attention, day in, day out. I don’t ever want customers’ calls to our offices to go through to voicemail. If we ever got to that, we’d have become one of the big guys, the people who don’t care.”

If his company is able to offer both a global presence and a personal touch, it’s because of the network of partners it has been able to establish. Many of the companies with which it has entered into partnership around the world share one important characteristic with Hellmann Worldwide — they are family businesses. This, again, is no coincidence.

Before the reunification of Germany in 1990, Hellmann was part of logistics set-up in the west that seems to have been ahead of its time: based on strong relationships, with prototypes of back-hauling and cross-docking becoming standard practice. The country was small enough for there to be only one big haulier in each of the major cities.

Those in the north, such as Hellmann, who dominated the scene in Osnabrück and Hamburg, partnered with their counterparts — big players, but still family companies — in Bremen, Hannover, Stuttgart, Frankfurt, Munich and so on. It worked, so Mr Hellmann decided to try to replicate the model globally.

Family businesses, he reasoned, would be likely to have retained, and want to maintain, family values. In Asia, there are plenty of people who are family-oriented and, he believes, this quality is still widely present in European business, even if that continent is “losing it a little” and should work hard to regain its commitment to traditional values, in his opinion.

Finding family-run logistics service providers in different parts of the world was, therefore, the easy part. Convincing them to become part of a worldwide network of family companies in this space was harder.

“It’s complicated,” Mr Hellmann explains. “Some said they would work with us in certain places, but not in, say, Australia or the US because they already had a partner there or a big contract that they did not want to share. I also insisted that their partnership with us had to be exclusive. A lot of family businesses didn’t like being told what to do.”

In many cases, though, logistics operators saw immediately that they would have much to gain from such a move. Some only worked in trucking and recognised that this was a chance for them to move into shipping and air freight too. In some territories, no partner was available, so Mr Hellmann chose to acquire a company in the markets concerned (if the price was right), or, as in the case of the US, open an office of his own.

Expanding in this way was critical to his company’s success, he says now. Customers need a global network along which they can move their raw materials, their components and their finished products. “You need the operations network and the IT network,” he insists. “Only companies with a global network have a future.”