Hamburg In the corona crisis, frugality saved the Nagel-Group freight forwarding group from an impending business slump. In the middle of the pandemic, the family company even managed to improve its operating result by 60 percent in 2020. According to its own statements, Europe’s largest food logistics company, with a turnover of two billion euros, had already started to cut jobs the year before. Now he has resigned from subcontractors and canceled truck connections.
CEO Carsten Taucke partially shut down operations due to the lockdowns. He reduced the “cost of materials” reported in the balance sheet, essentially the remuneration of truck subcontractors, by more than twelve percent. “We have dispensed with extra reserves and thereby improved profitability,” explains the manager. This was unavoidable during the pandemic because there were hardly any hotels, restaurants or canteens to be supplied.
In Versmold, Westphalia, where Kurt and Rudolf Nagel founded the transport company in 1935 under the name “Gebr. Nagel” founded, one felt confirmed in the course of restructuring last year, the gross profit increased. Today, however, the prank program is taking its revenge, and company boss Carsten Taucke has been struggling with the consequences for weeks. “We would be happy if we could find more subcontractors,” he says.
“Our transport volumes are currently significantly higher than in the previous year,” reports the CEO. In Germany alone, the tonnage, i.e. the total quantity of goods moved, grew by almost 14 percent in July 2022 compared to the previous year. However, there is no exuberant jubilation from him. “Because the high demand puts a lot of strain on our transport and storage capacities, this messes up the cost structures,” he says. As a result, the adjusted operating result could possibly fall slightly below the previous year’s figure of around 65 million euros.
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The bottlenecks are also causing trouble on the customer side. “It happens that the goods stop at our suppliers,” reports a buyer from a retail group in Cologne. Some of them then have to be destroyed because the guaranteed best-before date can no longer be met for perishable items such as lettuce.
The boom in food delivery, which is causing the delivery problems, is likely to surprise even logistics experts in view of the war in Ukraine and high inflation. According to the Federal Statistical Office, inflation had recently pushed the real sales of supermarkets down by 7.2 percent.
In Versmold, however, you don’t feel any of this, according to their own statements. Nagel supplies around a fifth of all groceries to hotels, restaurants and canteens. Because many of them still had to massively restrict their operations in 2021, their comparable sales in May 2022 soared by an enormous 127 percent compared to the same month last year. More recent data are not yet available.
Nagel expands the business again and invests heavily in IT
The freight forwarder, which mainly operates with refrigerated trucks from 130 of its own refrigerated locations, is massively expanding its own business again. New handling centers in Bochum, Nuremberg, Hamburg and in the Munich and Allgäu region are under construction, as well as in Poland, Denmark and Austria. 150,000 square meters of storage space will be added in the next few months alone.
Nagel also wants to eliminate the bottlenecks with many new trailers, forklifts and delivery connections – in addition to considerable investments in IT. The CEO has had the family shareholders commit to investing between 800 million and one billion euros over the next ten years. Nagel will thus invest far more in the year than the freight forwarder has earned as operating profit in recent years.
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The company must also earn back the funds invested. Taucke created the basis for this with an extensive corporate restructuring. The CEO moved from Imperial Logistics to Versmold at the end of 2018 after the Nagel-Group made an operating loss in 2017.
Taucke sold the moderately profitable national companies in the Netherlands, Belgium, Italy and Great Britain to the French competitor Stef Group. Since then, the companies have effectively divided up the European market. In a cooperation agreement, the two forwarding groups also agreed to take care of the deliveries for the other in their own countries.
For example, despite the sale of the British subsidiary Langdon, Nagel retained the customer Storck (“Merci”, “Werthers”, “nimm2”), for whom the British Isles is one of the strongest foreign markets. Nagel continues to monitor the confectionery manufacturer’s shipments from Versmold’s neighboring town of Halle (Westphalia). However, the delivery orders on the other side of the English Channel are carried out by business partner Stef.
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Taucke also subjected the loss-making group divisions in Eastern Europe (Czech Republic, Slovakia, Hungary) and Northern Europe (Denmark, Norway) to a tough restructuring. “There were locations that were much too large there, and mostly in the wrong place,” he says in retrospect. That has been changed. He also ordered staff cuts. “Today, after Germany, Eastern Europe is the company’s second most profitable market,” says Taucke.
Nagel declares that the renovation is over
The 57-year-old, who lives in Münster, considers the restructuring of the Nagel-Group to be complete. But it shouldn’t stop there. At the end of 2021, the company took over the company B+S Logistik in nearby Borgholzhausen, a service provider for so-called “quick commerce” with an annual turnover of 100 million euros and 1000 employees, for an undisclosed purchase price. In this way, one could expand into a completely new segment in the future: the urgent delivery of groceries to end consumers.
So far, B+S has only picked and shipped online orders from the non-food range, such as gas grills, cooking gloves or smoking boards for the manufacturer Grillfürst. But in the future, Nagel wants to use the new acquisition to send additional groceries to private households. Taucke reports that the first corporate customer has already been found: a company from the dairy industry.
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This is a completely new business model for the Versmold forwarding group. Up to now, Nagel has mainly supplied supermarkets and canteens with large trucks. The group essentially shares this market with its competitors Dacher and Nordfrost.
For the new business, Nagel would have to “use completely different means of transport,” says Taucke, “possibly even design individual city models.”
The fact that the previous renovator is still thinking about a possibly expensive expansion, he explains with successful models in Shanghai or South Korea: “We believe that something will develop here.”
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