Financial setback and management disputes have meant two difficult years for Broekman Logistics. Calm has been restored, however, says CEO Rik Pek. Since taking up his role in 2021, Pek has re-established order by strengthening the profile of the logistics service provider and focusing on the company’s distinctive qualities in the (niche) sectors in which it operates. “We have become stronger and more resilient to changes in the market.”
By Diane Essenburg and Bas Dijkhuizen
Original article via Logistiek.nl: Rust is weer terug bij Broekman Logistics na harde keuzes (logistiek.nl)
It’s no secret that 2020 and 2021 were tumultuous times for logistics service provider Broekman Logistics. Facing challenges related to the pandemic and a restructuring of the warehousing division, the company found itself in the red in both years. The period was also marked by conflict, with CEO Raymond Riemen being dismissed by Broekman’s German majority shareholder. Over the past year, however, the current number 18 in the Top 100 of logistics service providers in the Netherlands has been steered into calmer waters – despite various pitfalls along the way – under the leadership of CEO Rik Pek (41).
Pek, who had worked under Riemen for many years and succeeded him in early 2021, prefers to look forward and not waste too many words on taking over from his prominent predecessor. “Someone had to pick up the gauntlet and I was asked if I wanted to be that person. They were turbulent times and for me it was mainly a matter of finding solutions. In doing so we had to make some difficult choices. Looking back over the past year, our decisions panned out well and ensured that we have only grown stronger as a company.”
Fine chemicals and machinery
The first success of Pek was refining the strategy based on the goal to further strengthen the Rotterdam company’s position in the warehousing and distribution market in Europe and India, where the company has been operating for years. The focus of the logistics service provider is mainly on the markets for special, packaged (fine) chemicals, construction and agricultural machinery, and heavy industrial equipment for the breakbulk industry and warehousing. Within these warehouse and terminal activities, Broekman focuses on international expedition and Value Added Logistics such as production, assembly and the processing of spare parts.
The biggest ‘casualty’ of the change of course over the past year was the Rotterdam company’s decision to end its bulk chemical activities as part of the VLS group in the port of Antwerp. The takeover of this bulk chemical company in late 2018 – the largest in Broekman’s history – had failed to have the desired result. The bulk chemicals branch has since been sold to Belgian company Van Moer Logistics. Pek is pragmatic looking back on this issue and refuses to dub it a failure.
“Within VLS we were supplying chemicals to clients for further processing while our focus is actually on delivering end products to end users. The closer you are to end users as a logistics service provider, the more production, assembly and other value added services you can provide – at least, when it comes to machinery. The same applies to the repackaging and mixing of chemicals. I don’t consider the takeover a failure because there were specific circumstances which we anticipated correctly by selling the company to Van Moer, which is actually specialised in bulk chemicals. The activities couldn’t supply sufficient added value for us in the chain compared to, say, packaged fine chemicals such as coatings, cosmetics and cleaning products.”
Growth in freight forwarding
Broekman has been successful over the past two years with its international freight forwarding activities, continues Pek. “We had the highest turnover with this division, but that was also due to the extremely high sea freight prices, which allowed us to achieve a positive result with our forwarding activities in China, Poland, the Czech Republic, Belgium and the Netherlands. Our seventeen offices in India also contributed.” With container prices now falling Pek says we’ll have to wait and see how the market will develop. “If it normalises, we’ll have to find new ways of resolving our clients’ challenges in the logistics chain.”
Trend: China Plus One strategy
The CEO believes there is major potential for Broekman in India. “We have enjoyed considerable growth there in recent years. We now see that many companies who used to buy their products in China have been shifting their trade flows on the Asian continent to other countries, the so-called China Plus One strategy. This strategy is the result of the current unstable situation in China. Due to COVID and other geopolitical tensions, shipping companies don’t want to depend on just one flow within their supply chain. They want to have two, which has resulted, for example in Apple shifting a large part of its iPhone production from China to India. Apple is market leader and we expect other companies to follow suit. With our strong position in India we aim to support companies and ensure that – once production is underway – products make it to consumers. The fact that this development is happening now is due to the supply chain disruptions of the past two years and we are reaping the rewards as a logistics provider.”
New distribution centre in Weert
In the Netherlands, Broekman is having its best results in the two warehousing and distribution divisions in the fine chemicals and machinery sectors. The company has some 220,000 square metres of warehouse space in Rotterdam and Limburg (divided between Venlo, Born and Weert). In the latter location, the logistics service provider is taking into use a new distribution centre this month, which will accommodate the full final assembly of excavators from Japanese brand Kubota.
“The market rightly sees us as a specialist in the field of machinery and fine chemicals,” adds Pek. “This is confirmed by the new clients we have welcomed, such as Liebherr, and the growth over the last 15 years with Kubota. We are realising significant expansion for Kubota with a new warehouse in Weert which will come into use in May. The spare parts logistics for Liebherr are currently being realised in our warehouse in Born.”
Expansion in Venlo
The Venlo distribution centre taken into use by Broekman in 2019 currently focuses exclusively on clients in the fine chemicals sector. Pek: “We are seeing a major demand for special chemicals, the product knowledge and the added value related to hazardous goods and chemicals. At the moment we have more demand than we can handle. We could expand a little in Venlo, but first we will use a warehouse rented elsewhere to cover this peak. Serious consideration is being given to expanding our current distribution centre, and a decision will be made soon.”
If that will still be enough in five years Pek can’t say, looking at the current market situation. After the disruption caused by the pandemic it’s unsurprising that a bullwhip effect is occurring, even in the storage of chemicals. As a consequence, there is enormous demand for extra storage capacity. “How this process will develop is a big unknown, but it’s generally a temporary phenomenon. For us as a logistics service provider, it means having to deal with these changing conditions in a flexible way. Our asset is that we are a specialist in the field of chemicals and, as a proven provider, have a different relationship with clients. We can communicate with them on an equal level and improve their supply chain without them feeling the need to clean us out and prevent us from making any money ourselves.”
Steps in sustainability
According to Pek, the cost aspect is no longer the main priority for clients such as shipping companies. Their focus is increasingly on the field of sustainability and the question as to what logistics service providers like Broekman are doing about it. “Sustainability is an increasingly important theme in logistics. We started focusing on it three years ago with the implementation of the EcoVadis method and we evaluate our efforts in accordance with the internationally recognised Global Reporting Initiative. EcoVadis has put us in the top 11% of performers internationally, which means we leave 89% of logistic services providers behind us. And we are continuing to improve in the field of sustainability: EcoVadis and an independent assessor recently awarded us a 'silver medal' for our sustainability efforts. At our breakbulk terminals we are the first company to use shore power, in close cooperation with the Port of Rotterdam. The roofs of our terminals will be equipped with solar panels during 2023. In addition, all the machinery we use for our offshore activities is electric. We are now easily earning back our investments in these business cases due to the high fuel prices. The aim is to further accelerate our sustainability efforts in the coming years.”
Pek remains realistic, however, and does not expect Broekman to be the number one in sustainability. “We are working hard on the matter, and I really believe we have to contribute, but it is an illusion to say that Broekman and its breakbulk terminals, freight forwarding activities and warehouses will be energy-neutral faster than others. We will do what we can, but we have to be realistic and develop an affordable plan to take these steps. It is becoming a higher priority on our agenda though, and we see that clients also have an ever-greater willingness to invest in sustainability.”
According to Pek, Broekman can still make progress in the field of sustainable procurement. “This doesn’t relate to our own activities in this field as we’ve been working on measuring and reducing our own CO2 footprint for three years and are transparent about the results. The next step is to implement and enforce sustainable procurement when purchasing from our suppliers. The largest companies can already make an impact in the chain. While being realistic that we are not the party that could enforce it throughout the chain, measuring our own CO2 emissions and showing the impact certain choices have on the rest of the chain contributes to the awareness among shipping companies that they have to pay for sustainability. Nonetheless, it isn’t economically feasible for us to go too quickly in this field.”
Attracting new clients in both the fine chemicals and machinery sectors means that Broekman now has some 130 vacancies, mainly in the warehousing and distribution divisions. Filling these functions is a challenge, says Pek, but the company is working hard to be an attractive employer. “Over the past year we have hired more than 150 colleagues in the Netherlands. Internally we have a wide range of education and training programmes, including the young potential academy. We have been reasonably successful in finding people this way in recent years.”
Looking back at the last two years, Pek feels that with the support of his team he has been able to make his mark as CEO on Broekman. “There now is a healthy relationship between our shareholder and the Board. We’ve also been given the space to develop our own strategy and make our own choices. In a role such as this, it is mainly a matter of ‘someone has to do it’. You just have to go for it, and pick up the gauntlet.” Asked whether he would have ended up in this position if he hadn’t been asked, Pek says ‘he might have’. “In my 17 years working at Broekman I’ve made quite a few steps. I’ve done commercial and operational work, freight forwarding, international, and eventually became director of two divisions in Broekman. If the position of CEO comes on your path you should embrace the opportunity.”
Now Broekman is doing well, Pek says new takeovers are being carefully considered. “The space is there and we never really stopped looking in the first place. It is part of our job to see how we can grow autonomously or via acquisitions. We always keep our eyes and ears open and when a takeover candidate comes on our path it will probably be in the field of chemicals or machinery, or involve an expansion of our terminal activities. We don’t necessarily want to be the largest; our goal is to be known as the best in the segments in which we choose to operate.”