DB Schenker can unload, pack and install a washing machine at your home

DB Schenker wants to listen closely to the needs of its customers. The trends in logistics and warehousing, such as digitalisation, the rise of the environmental values, and the need for individual added value services will challenge the industry to develop its operating models.

Traffic and logistics

As an international player DB Schenker wants to be in the forefront in understanding its customers. Petteri Nurmi, Head of Land Transport Finland, and Katri Kostiainen, Logistics Director are clearly used to considering their industry with a view into the future.

It is no longer enough that trucks stay on the road, planes in the air and ships above the surface and those goods are transported on schedule. Receiving extensive and timely information from the customer – e.g. a supplier or online retailer – and forwarding it to the end customer is increasingly important.

“There must be individual waybills, bar codes in the pallet labels and so on. It’s crucial for the functioning of the logistics chain”, says Petteri Nurmi.

Logistics is management of information

The information volume to be managed in warehousing is enormous compared to the past times. It is no longer just following of the dates.

”We need to be able to provide information on smaller and smaller deviations”, Katri Kostiainen explains.

All that can be referred to as the requirement for transparency.

According to Katri Kostiainen, an old-fashioned image of warehouse work prevails, which hinders recruiting. “Digitalisation has introduced new requirements and management of technology to the work.

“The information must be correct and timely, and it needs to remain safe. Our strength is that we have been using electronic operating models for a long time, and we have our own, carefully developed tools that work all over Europe”, Mr Nurmi says.

Online sales continue to grow

According to Petteri Nurmi, the growth of online sales due to digitalisation shows as increase in the volume of road transports. To maintain its competitiveness, DB Schenker has made it as easy as possible for online retailers to connect to its logistics network. The network of pick-up points is also being developed intensively in Finland.

“By the end of the first quarter of the next year we will have more than one thousand pick-up points in Finland. We have to go to where the consumers want to pick up their packages. The goods are seeking increasingly direct routes.”

In addition to local shops, supermarkets and kiosks, DB Schenker’s pick-up points have been opened in new kinds of locations, such as florist shops, animal food shops or service stations.

The threshold for starting a pick-up point has been made very low using a mobile app developed in Finland.

“It has attracted a fair amount of interest. The companies think that these services support their other business operations”, Mr Nurmi commends.

For recipients, tracking the shipments has been made easy. “We have the eSchenker system with a mobile app which allows them to follow in real time where the goods are.”

Goods flows and sales are separating

As a result of digitalisation, the customers are more and more networked.

“Small online shops with very narrow goods flows seek support from providers in which they can be a part until they are able to stand up on their own”, Katri Kostiainen says.

DB Schenker is starting a new terminal project along the by-pass road in Turku. A preliminary agreement with the City of Turku has already been signed. “Turku is our main terminal for Scandinavian cargo transports for both exports and imports. The proximity of the port and good connections are important to us”, Mr Nurmi says.

Petteri Nurmi, who is in charge of the land transports in Finland, reminds that today the goods flows are often completely separate from sales.

The final recipient of the shipment may not necessarily even know the routes of the goods, unless they specifically want to know.

“Actually it makes no difference from where the goods are shipped, as long as the information is correct; they are the goods of this very client for which the client has set prices on its own website.”

Online shops can operate without any stocks of their own.

“It works as long as you manage the information provided by the client and the goods are shipped to the recipient. That enables a whole new business model.”

Leaner goods flow, broader services

According to Katri Kostiainen, the continuing trend is to make the goods flow leaner. Digitalisation has largely made it possible. “It has become a standard way of thinking in companies. They no longer pump Finland full of goods, but live in the present moment.”

Logistics companies, such as DB Schenker have adapted to the situation. “The stock levels have fallen, which means that we have in turn enhanced the use of warehouse buildings.”

Another long-time trend is added value services – companies do not want to do everything by themselves, and warehousing is not just warehousing anymore.

“Companies are now thinking really thoroughly what the warehousing service provider could do. It may mean anything from waste management to compiling gift and sales packages. That’s a pan-European trend. We are moving towards a model in which contract logistics is the heart of the operations”, Ms Kostiainen describes the changes underway.

A concrete added value logistics service that DB Schenker has been providing for years is the installation work, such as installation of wheel rims and studding for the tyre industry. There would be demand for work that requires more and more precise technical know-how, but the product liability issues prevent providing them.

“The customers would want us to perform specialised work that requires technical know-how, but if we influence the qualities of a product, the role is no longer natural for the logistics industry”, Ms Kostiainen ponders.

The services are expanding in transports as well. On request DB Schenker will provide home delivery of household appliances, including electrical or water connection installations and removal of the old equipment.

“We see this as a thing of the future, but it’s already a significant business”, Petteri Nurmi says.

Environmental values are rising

According to Petteri Nurmi who is in charge of the land transports in Finland, taking the environmental values into account is nowadays standard practice in the logistics industry.

“More and more often the customers ask us how we can report about these issues and whether the environmental aspects guide our strategy. You simply can’t make it with big international customers if those issues are not attended. We are part of that development and include environmental aspects in our decision-making.”

According to Mr Nurmi, DB Schenker’s environmental awareness is also visible in the energy-efficient solutions employed in the terminals and warehouses, such as solar panels, LED lighting and geothermal heat. In transports the company conducts research e.g. on energy-efficiency of platooning. The extra-long HCT truck that drives from the Port of Turku to Vantaa in turn uses recycled diesel fuel, the CO2 emissions of which are 90% lower compared to regular diesel.

Mr Nurmi says that the logistics industry is not yet selling the customers ‘green transports’ as a specific product. “It may well happen in the future, though.”

Text Kalle Kirstilä
Photos Robert Seger