Niels Smedegaard has taken over the control of the biggest ro-ro operator in northern Europe, DFDS, aiming at taking action to make the business even more effective.
Niels Smedegaard, 44, managed to raise a few eyebrows when he took over the top job at DFDS. Coming from the financial side of the airline catering industry into the heart of Danish shipping is a tough act, where respect for a 140-year tradition is mixed with a passionate desire to bring changes to the shipping mentality.
“You don’t have to be born in shipping to realise things go in cycles,” says Niels Smedegaard. Since January 1 he has been the managing director and CEO of DFDS (Det Forenede Dampskibs-Selskap) in Copenhagen, a company that has seen enormous growth in the past few years after numerous acquisitions.
His predecessor Ole Frie retired after 46 years in the business, helping to build DFDS up to the giant it is today – the biggest ro-ro operator in northern Europe, with many subsidiaries in everything from stevedoring to passenger ferries across the continent. The company made a record operating profit of EUR 151 million in 2006, but the board is seeking even better returns.
Big shoes to fill
Mr Smedegaard has big shoes to fill, but isn’t timid about initiating change. In his first interview after taking over he said, “Just because we are 140-year-old company, we do not have to behave like a 140-year-old person.” Some people were not too happy with that statement.
“I have a lot of respect for tradition and core values,” he says to DNV Forum. “You can feel the history around you here. We have some very good values. Still, we can be more innovative. In shipping we don’t have to think ‘There’s only one way, our way.’ We can learn a lot from other industries.”
He says his background from various industries, focusing on logistics, is a solid base for his new job. In the airline catering industry, he experienced highs and lows. As CFO of the Gate Gourmet Group, based in Zurich, Switzerland, he saw the company’s turnover triple in five years.
9/11 changed everything
“Everything we touched became a success,” says Mr Smedegaard. He became CEO of e-gatematrix, based in Atlanta, USA Then 9/11 happened.
“Things turned upside down overnight. It was goodbye to 12,000 people. It was a long cycle, and it taught us how to organise, to think, to be creative, and to think outside of the box. We looked at solutions in the automotive industry and asked ourselves, ‘How can we apply that here’? We did. And finally we managed to turn things around.”
He started his tenure at DFDS three months before Ole Frie retired, and spent the time doing research, getting to know the company and the industry. He delved into the situation – finding for example bottlenecks in terms of capacity and relatively old tonnage in a few areas.
“I interviewed people in the company.
I also talked to customers, competitors, partners and suppliers.” The result is the ‘Go Forward Plan’ which is in full swing now.
As part of the plan, the two independent groups, Tor Line (freight) and DFDS Seaways (passenger) are moving closer together.
Breaking down the silos
“They have been two separate silos. Now we’re breaking down the silos,” says Mr Smedegaard. “There will be more transparency, and a new structure.”
“We’ve come through a difficult phase in 2000-2001 and we’ve found our feet again. We’re going to be active in consolidation – where it makes sense, of course. We’re going to be aggressive – when there’s an opportunity, we would like to be at the table. But things are getting expensive these days if you want to buy a company.”
“We’ll look at the options,” he says, and mentions a foray into the Mediterranean as a possibility. “But there are no plans currently,” he says.
No black clouds in the horizon
“We will continue to be a growing business. I don’t think we can see the same growth as last year. There are no big black clouds in the horizon. Still, we are going to be careful and prudent in what we are doing, in terms of adding tonnage.”
The last of six vessels from Flensburg has just been delivered, and four Chinese vessels are due to be delivered from 2008-2009. “That will take us some of the way.”
Mr Smedegaard says this spring will see a new tonnage strategy session. A DFDS team will look at future requirements, asking what the next generation of tonnage will look like.
“We’ll have to talk to our customers, and look at industry trends,” he says emphasising that it’s important to look at the whole logistics chain as the company goes forward with structural changes. “We can’t do it in isolation. We need to talk to the surrounding world.”
According to Mr Smedegaard, it’s always important to remember, “you don’t necessarily hold the keys to the eternal truth.”
Text: Kaia Means
Date: 07 June 2007