By Keith Norbury
As its name implies, Panalpina transcends the rugged Alps of Central Europe. When first adopted in 1954, the name “signified the ‘conquest’ of the Alps by haulage services linking Northern and Southern Europe,” according to the company’s website. Today, Panalpina signifies a global company with operations encompassing six continents, and employing about 15,000 people in 500 offices in 80 countries.
The company has had a presence in Canada since before the Panalpina name was born. The Canadian head office in Toronto opened in 1951, followed in subsequent years by new locations in several other major Canadian cities. “We have the key verticals that we focus on,” said Marc Sawaya, Panalpina Canada’s Senior Vice-President and Area Head of Marketing and Sales. “For Canada, for example, our focus is on the consumer retail side, it’s on the health care side, the fashion side, and the oil and gas side.”
Globally, the company has about ten different verticals, which occupy varying niches from country to country. However, the Panalpina Group’s core businesses are air and ocean freight, supported by value-added services such as logistics, buyers’ consolidation, order management, freight management, “all the way down to the customs brokerage side,” Sawaya said.
In 2011, the Panalpina Group transported 848,000 tons of air freight, 1.31 million TEUs of ocean freight, and had net forwarding revenue of 6.5 billion Swiss francs, which at the end of the year was equivalent to about $7 billion Canadian. The company has grown considerably since its origins in the late 19th century, through a history that is tricky to unravel. In those early days, long before it was Panalpina, it consisted of several companies, said Sandro Hofer, the company’s corporate media relations manager, in an email message.
One of those predecessor companies was Hans im Obersteg & Cie, a freight forwarder with roots dating to 1895. Panalpina’s early history was also closely linked with Rhine shipping until 1935 when the takeover of Hans im Obersteg took place. More takeovers occurred in the 1940s when new companies were also established, “marking the inception of a transatlantic network of branches,” says a history on the Panalpina website.
Rapid growth came in the 1950s as the company opened new branches in Africa, Asia, Australia, Latin America, and North America.
Today, Zurich-based Panalpina, which is publicly traded on the Swiss stock exchange, has five branches in Canada – Toronto, Montreal, Calgary, Winnipeg, and Vancouver – as well as satellite offices in Edmonton, Kitchener, Quebec City and Ottawa. “So basically covering from East to West with the exception of the Maritimes, which is hopefully in future plans,” Sawaya said.
About 405 employees currently work for Panalpina Canada, including workers at its 250,000 square foot warehouse in Toronto and 140,000 square foot warehouse in Montreal. The latter and the property it sits on, are owned by Panalpina, although the company is evaluating whether to retain ownership or sell it “because we are a light-asset or right assets company,” Sawaya said. The company also has a 25,000 square foot warehouse in Winnipeg and “as-needed” facilities in Calgary and Vancouver.
One of Palapina’s specialties in Canada is serving companies in Alberta’s oil patch, including the booming oil sands developments in the Northeast of the province. That includes the transportation of equipment, such as tankers and oil rigs, as well as the parts needed to service and repair the equipment. “And we provide support operations for Panalpina’s network of international oil and gas customers,” Sawaya said. “We have customers, global customers, in oil and gas that we do business with, and they have massive operations also in Alberta.”
As with most companies, Panalpina felt the effects of the global downturn. The Canadian operations scaled back slightly, cutting about 30 employees on the finance side. “Business is getting back on track, although this year with the economy the way it is, the majority of our customers have been flatlined, I would have to say,” Sawaya said. “But on the new business front there’s been good activity.” That has not been because of new markets suddenly emerging in Canada. The new business has been primarily from capturing market share from the company’s competitors. “It’s a struggle to do business nowadays,” Sawaya said. “It’s a very competitive market. Margins are also not the same as they used to be.”
Panalpina was among 14 freight forwarding companies that the European Commission fined a total of 169 million euros this March for anti-competitive behaviour. In Panalpina’s case the fine was 46.5 million euros, a penalty that the company has decided to appeal. Panalpina announced in May that the fine contributed to a 40 million Swiss franc loss for the first quarter of 2012, even though ocean freight volumes for the quarter were 7 per cent higher than in the corresponding quarter in 2011.
Sawaya said the Commission ruling is not having any impact on business in Canada. Meanwhile the strong Canadian dollar is having minimal effect on Palapina’s Canadian business because exports are a small part of its trade. “The focus is more on the import side. So I would say, if anything, a strong Canadian dollar has helped things a little bit,” Sawaya said.
Looking ahead, Panalpina has “set ambitious growth targets for 2014,” CEO Monika Ribar said in February as she announced the appointments of Robert Erni as the new Chief Financial Officer and Ferdinand Kurt as the new regional CEO for the Americas.
Sawaya said those goals include increasing EBITDA (earnings before interest, taxes, depreciation, and amortization) to 20 per cent of revenue from the 14 per cent level in 2011.
And as far as the Canadian operations are concerned, Sawaya said, “Hopefully we can contribute at that level to make sure that the entire group reaches that target.”