After a difficult period in 2016, when Hellmann Worldwide Logistics’ UK operation faced an uncertain future, the business has since been restructured, refinanced and had a new management team installed.

The results speak for themselves, and despite making a £1.5m pre-tax loss on UK turnover down 5% to £80m in 2020, this was a substantial reduction on previous years and the business was profitable in Q4 2020 and Q1 2021.

Hellmann UK MD Markus Fellmann, pictured, tells MT that Q1 2021 was “a great result”.

“The last four months were excellent for us,” he says. “Like many of our peers we invested quite a bit in Brexit which benefits us today greatly so that was the right decision. All the hard work we put in last year with the restructuring and the investment into pre-Brexit is now paying off.”

Hellmann was founded 150 years ago in Germany and is now a global multimodal logistics provider with revenue of €2.5bn (£2.1bn). Unsurprisingly it was hit hard by the collapse in world trade of non-essential goods in 2020, a year the group management called “challenging”. But despite a small drop in volumes it won several new customers and grew both revenue and margins by increasing efficiency.

"2020 was a stress test for Hellmann, but we achieved our goal of generating profitable growth despite the massive challenges,” says Reiner Heiken, CEO of Hellmann Worldwide. “The crisis did not slow us down, but rather highlighted our strengths: our flexibility, but also the enormous commitment and motivation of all employees. In the current financial year, we want to deliver on the goals of our growth strategy and gain market share in all products."

Fellmann adds: “Our UK-business is very diverse and road freight is an important pillar and always has been. We are also participating in ocean freight, air freight and contract logistics.

“We are one of the few out there covering all of the different modes. We are strong in verticals globally and regionally.”

These vertical markets include also pharma, perishables, automotive, consumer goods and fashion, some of which have done better than others since the pandemic struck.

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In the UK in 2020, road freight generated £17.4m and contract logistics £5.8m of the £80m turnover.

Hellmann UK operates its own vehicles out of eight sites. Additional Hellmann branded vehicles that are a familiar sight on UK roads are servicing European Hellmann sites to and from the UK, carrying imports and exports. “Our vehicles are mainly for local deliveries,” says Fellmann. “That is where we are a little different from the typical Pallet-Track member. We are the experts on international freight but we also take care of local pickup and deliveries.”

In 2014 Pallet-Track launched its European service in partnership with Hellmann UK to give the pallet network access to a multimodal European network across 56 countries and provide Hellmann with foothold in UK pallet distribution.

Hellmann’s UK sites have 200,000 sq ft of warehousing which is a mix of pallet storage and ecommerce pick and pack facilities.

Brexit ready

The preparatory work done in 2019 to get ready for Brexit on 31 January 2020 stood Hellmann in good stead and while there were some delays across the Channel Fellmann says the wheels never stopped turning.

“We did not have trucks standing still and we did not stop services from any origin or to any destination,” he says. “We decided early on that we pre-clear border crossings and that proved to be a good decision. We never had our local depots so stuffed up that we had to shut down operations.

“The whole industry had to go through a steep learning curve but we were well prepared. Now five months into it regular importers and exporters together with their shippers have found a rhythm and the exception rate has flattened out with only a few exceptions.”

The start of the Covid pandemic in February 2020 has since masked most Brexit effects as traffic flows have been affected across many product areas as production in the Far East was forced to shut down.

“On road we saw a drop in volumes in the first quarter of 2021 but that drop was very much market-aligned,” says Fellmann. “Over the last couple of months we are inching back towards pre-Brexit volumes. We have never been that active in road freight e-commerce transport, and though we have some customers who are very successful online it has never been a large part of our road portfolio.”

Fasion retail

Fashion retail has been badly affected by lockdown and while a lot of this volume has shifted online Fellmann says this has not made up for the closure of stores. But perishables and pharma have boomed and more than made up for this decline and that is what made Q1 2021 a “strong four months for us”.

Volumes entering the UK are affected by global freight patterns and what product is coming out of the Far East will go to where prices are highest, which at the moment is the US rather than Europe.

“On ocean freight rates, Asia to the US is still more favorable than into Europe,” says Fellmann. “We have seen huge increases into Europe but the US is still more attractive so a lot of carriers are allocating the empty boxes and their ships into that trade. We have many customers who would love to ship more and we are helping to find solutions such as air freight for high value items and rail container services.”

While the market for global multimodal freight services is naturally limited Hellmann UK does have many customers who want that end-to-end service.

“We have customers who want us to pick up in China and deliver in Crawley,” says Fellmann. “We take care of the trucking both end, customs clearance, the international leg and then where it ends up in our contract logistics facilities we take care of the B2B or B2C delivery.

“But some customers may only use us for the air freight leg or the local delivery. The trend we are seeing is that our customers are looking for integral logistics instead of using several partners. But we are flexible and we are happy to do one mode or from A to Z.”

Freight imbalance

The UK imports £80bn more goods from the EU than it exports, so finding loads to carry back to the continent is always a challenge.

“We do a good job matching loads as we have a tight network with our European partners,” says Fellmann. “We are all on the same transport management system and share information on when vehicles are becoming available. Even so some vehicles do have go back partially loaded.”

A key part in Hellmann’s improved performance has been its investment in IT systems in the last few years. Rather than relying on third party software it has a large inhouse IT department that has done much of the work to integrate the business.

“For years now we have been connected with our entire global infrastructure with one system including for the most part our European road partners,” says Fellmann. “We are stepping up and I think we are at the forefront in that respect.”

Looking ahead to the rest of 2021 Fellmann foresees more challenges ahead. “There will be industry challenges for certain groups of products and from our daily discussions with our customers there is a lot of optimism out there,” he says. “In general the consensus is that Brexit has not slowed them down. We are looking forward to rest of 2021.

“I’m a big fan of the high street and I believe a lot of volume will come back into stores. It may not reach pre-Covid levels but I hope retail business will fully bounce back.”