Car carrier and finished vehicle logistics provider Wallenius Wilhelmsen Logistics (WWL), while its shipping revenue and profits have reeled from the drop in car sales and overcapacity of ro-ro tonnage, has achieved more stability and new business for its logistics and land operations, according to CEO Arild Iversen (pictured). To capitalise on this business area, the company is looking to expand operations in high-and-heavy cargo, and will eventually open more vehicle processing centres in Asia.
“On the logistics and land side the reduction in turnover is smaller than the ocean side, and the bottom line has held up better,” Iversen told Automotive Logistics last week during an interview in London.
While Iversen did not disclose specific figures, the Wilh. Wilhelmsen Group of Norway, which jointly owns WWL together with Sweden’s Wallenius Lines, had earlier reported that the Group’s logistics business (across its share in WWL, Glovis and other companies in the US) had seen a revenue drop of $35m in Q1, while operating profit increased by $2m to $20m. The largest portion of profit came from the terminal business. Q2 results, to be released early August, should remain at least stable.
Iversen has also pointed to new logistics business gained unexpectedly as a result of the crisis. Earlier in the year the company benefited when large stocks of cars needed storage, technical work and servicing (sometimes turning car carrier ships into floating parking garages). The success of the scrapping scheme in Germany has also led to new contracts and revenue for the company’s inland distribution and technical services.
The ocean side, meanwhile, has been crippled by the lack of volume in some lanes, particularly from the drop in exports from Japan, as well as used vehicles from the US to Russia. After putting seven, gleaming new ships into service this year into its fleet of around 65 car carriers, Iversen said that the company has put 25% of the fleet into lay up.
“As we own most of our ships we have no choice but lay up,” he said. “Of the five or six vessels that we had on time charter, we kept most of them, as they are ships that we do not have in our fleet and which fill particular needs.”
The ocean business however has seen some relief after the past three months as volumes have not dropped any further. “We’re fairly confident that we have found a bottom now, and that there will be no reason to lay up any other vessels,” Iversen said.
No longer doing everything for everyone
But the logistics services appear to offer the most resilience for the company during the crisis. Iversen, who became CEO in 2007, is keen to emphasise the development of this business as WWL celebrates its 10th birthday in an economic climate that is anything but festive for the automotive and shipping industries. He is confident that WWL has now found its niche, with terminals in the US, Europe and several joint ventures in China and Korea, but he does suggest that in the past the company overreached in its intention to “do everything for the top 10 OEMs globally” – a strategy that has now shifted.
For example, WWL was forced to exit the container business in 2002 as it struggled with a tiny market share – a necessary move, according to Iversen, but sad nonetheless as this was the business area where he “grew up” with Wilhelmsen. The company was also scorched three years ago when its joint ownership of Groupe CAT led to a financial mess, with CAT eventually entering administration in France.
“Maybe we were too far away from what we should have been involved in with CAT, or we had partnership and management issues,” he said.
Terminals for good times and bad
The experience appears to have pushed WWL away from owning truck fleets – although it does manage road transport through subcontractors – and instead to redouble efforts in vehicle processing. The recent opening of its fourth terminal in Europe, at Zeebrugge – where vehicle throughput is down around 50% from last year – could prove to be another financial pitfall for the company, but Iversen is convinced it’s the right move in the long run. “We’re doing this for the next generation,” he said, admitting that the timing could be better. “If we can come even close to breaking even right now [in new terminals], I will be happy.”
The future growth for terminal operations looks to be in Asia. WWL currently operates VPCs in Guangzhou and Tianjin in China, and is starting to enter the Indian market. Though investments will be slowed down, Iversen says that looking ahead to the importance of China and India as export markets, “we will develop more VPCs in Asia.”
The company also has several terminals for high-and-heavy cargo in Australia, and is looking to bring more of the services and technical work it does for passenger cars. , including repairs, inspection and modifications, to this sector. 
While Iversen recognised that trade lanes for shipping vehicles will continue to fracture and change as production shifts, he does not foresee a fundamental change or reduction in the need for deep sea shipping of cars. Iversen believes that car manufacturing will “go back to where it is most efficient”, and that will not always be close to the customer.
“I know some people say that in the future everything will be made locally,” he said. “We don’t believe that because it’s not efficient, and a lot of markets are so small that you cannot produce everything locally. The need for transport will not be reduced.”
WWL opens distribution centre with Kansas City Southern
In other WWL-related news, the company is establishing a vehicle distribution centre (VDC) for Nissan with rail operator Kansas City Southern (KCS) in Houston, Texas. The VDC will distribute vehicles in Texas, Louisiana and Oklahoma from Nissan’s Mexican production in Aguascalientes as well as vehicles shipped from Asia through the port of Lazaro Cardenas, according to KCS spokesperson Doniele Kane.
KCS currently transport Nissan vehicles by rail within Mexico and to the US border at Laredo, Texas, where the vehicles are then interchanged to other railways. “This new facility will allow KCS to increase its business with Nissan and extend its length of haul, as well create a more efficient distribution option for WWL and Nissan,” Kane told Automotive Logistics.
Exact volumes have not been determined and depend upon market conditions. The facility will have parking capacity for 650 cars and KCS expects a turnover of 2-3 days. Investment by KCS is included in the $12.5m spent on the adjacent CenterPoint Intermodal Centre-Houston Metro. Neither WWL nor Nissan will have an ownership interested in the distribution centre.