Why German logistics company DB Schenker is upbeat about Brazil

Supply chain management and logistics solutions firm DB Schenker, which belongs to German rail company Deutsche Bahn (DB), bets heavily on digitization and efficiency opportunities in Brazil.

As part of its this bet, DB Schenker offers integration of transport and global trade processes, a new software system and increased digitization for services in verticals where it has a local footprint.

DB Schenker operates in the air, sea and road transport segments, and offers solutions for industry and global projects. The main verticals served are specialized companies in the oil and gas, automotive, energy and healthcare sectors, among others.

After rumors about plans to sell the unit, DB Schenker generated a record operating profit of 1.8bn euros (US$2bn) in 2022, helping to push the DB Group operating result to 1.3bn euros and back into the black.

In this interview, DB Schenker Brazil CEO Luís Marques talks about logistics bottlenecks, digitization and expansions to more states.

BNamericas: How relevant is Brazil for DB Schenker?

Marques: Very, I would say. And more and more. In Brazil, we have been operating for 50 years with six branches, three in the south and three in the southeast. That is, in all states from Rio de Janeiro to the south.

We are evaluating the possibility of increasing our geographic presence. At the moment they are just projects, there is nothing to announce, but Schenker is obviously looking at Minas Gerais with some interest, as well as at the northeast. We have clients in the northeast and many ask us for certain functions from there.

We don't open numbers. But Brazil, along with Australia, is the largest market in the hemisphere for Schenker.

We are a global logistics operator, present in over 180 countries, with around 76,000 workers. Last year, we completed 150 years, and this clearly demonstrates our ability to adjust over time, update and digitize ourselves.

In the Americas we are in Canada, the US, Mexico, Panama, Guatemala, Peru, Chile, Argentina and Brazil.

In the Americas region, Brazil is only behind Canada and the US and it is one of the countries where we offer our entire global product portfolio.

BNamericas: When you refer to expansions in Brazil, do you mean commercial or operational structures?

Marques: Our operations are centralized where they happen, where they are needed, with personnel at airports, for example.

At first, we are talking about expanding our commercial arms, but as soon as there is a need to go further in the locations, we can open operations.

BNamericas: What role does digitization play? And which digital tools do your customers most require at the moment?

Marques: Today, most demand is coming from companies wanting to integrate their systems with ours, for more fluid control of their operations. They also demand digital platforms that allow a 100% digital experience without any human intervention.

In part because of that, we have developed platforms, Connect 4 Air and Connect 4 Ocean, which allow for this 100% digital integration for quotation, reservation, trade tracking and invoice receipt.

Another bet we are making in Brazil, and this one is just for Brazil, is the upgrade of our customs process clearance management system. 

We know that Brazil's Federal Revenue Service wants to simplify this process, especially for imports. So by the end of the year we intend to change our management software for this customs clearance.

BNamericas: Who developed this new software?

Marques: It is developed in Brazil, by a local partner.

It will essentially make it possible to follow the simplification of the customs process at the Federal Revenue Service, in addition to generating extra possibilities for integration with our customers.

We are just starting this implementation. But ultimately we expect to reduce the customs processing time by a few days and improve productivity by around 20%.

BNamericas: Is DB Schenker using advanced artificial intelligence solutions in the logistics chain?

Marques: For the time being, this is not yet an issue in Brazil. 

But at the Schenker Lab, the company's technology laboratory in Germany, we are evaluating what kind of more advanced AI processes, such as ChatGPT, we can incorporate into our processes. 

But this is still incipient. We need to assess how AI with natural language will impact companies, not just a logistics operator. Because it will. If internet was a new industrial revolution, I think the real revolution is yet to come, with AI. To what extent, we still don't know.

BNamericas: What sets the company apart from its competitors?

Marques: We are global. We are a global operator offering the complete service through a single company, up to customs clearance. Brazil is not an easy country for a foreign company to operate in. So Schenker often works as a consultant, plus with a one-stop-shop experience for customers.

They can do everything, seamlessly, with us, with no need to add and manage other providers in the supply chain, even though that's also possible and many do operate that way.

BNamericas: Can you name some of these local clients?

Marques: I prefer not to single out one or the other. But if you think, for example, of all the German multinationals ... they are our customers.

Generally speaking, our main clients in Brazil are multinational companies. In the country, we have several thousand active clients, but one of our objectives is to increase the market share of local customers.

BNamericas: And will that be possible this year? What are the prospects for 2023?

Marques: The last two years, with the supply chain disruptions caused by the COVID pandemic, have greatly intensified some processes. As such, some needs that were present in the last two years are no longer present.

In other words, the industry trend is toward the normalization of logistical flows and this is also true for Brazil. In any case, we have not felt this normalization in the country, in the sense of cooling demand. The demand, at least in the case of Schenker, remains very high.

All in all, we are very satisfied with the performance in the first months of the year.