Navigating Current Macro with Insights from EV Cargo

In this blog, we share our views on current macro and focus areas at EV Cargo to navigate this rapidly changing global environment.

Global Economy and Trade

In terms of macro factors, we expect three “i”s to continue to affect the global economy and global trade: high inflation, interest rates, and instability.?

We expect high inflation, particularly in the US and Western Europe, is a concerning issue that is yet to run its course. Despite hopes of inflation peaking and coming down, this is unlikely to be the case due to low unemployment levels and persistent wage pressure. This is likely to continue to put pressure on global supply chains with rising costs and potential disruptions.

Interest rates, with their rapid increase, are another factor of concern. This can impact payment terms and the financial world, as evidenced by the recent deterioration of some banks in the US. Another factor to consider is the impact of higher interest rates on commercial real estate, which banks and pension funds are very exposed to.

The final macro factor is instability from geopolitical risks to social unrest. This can impact global trade and supply chains, as disruptions in one area can cause ripple effects throughout the world. As such, supply chain practitioners must offer innovation, resilience, and technology to power the global supply chain.

Overall, the year ahead promises to be a challenging time economically. It is important for businesses to remain cautious but optimistic, taking steps to mitigate risks and seize opportunities for growth and expansion.

EV Cargo Business Focus

Guided by EmergeVest Operating System (EVOS), EV Cargo has developed a well-developed corporate strategy. Despite a challenging business environment featured with economic softness, weaker volume levels, and declining sea freight rates, we continue to execute our strategy and build EV Cargo as a great business. Here are our focus areas.

Growing business

The key priorities for the year are focused on growing footprint and capability, developing key strategic markets, increasing volumes, and expanding yields and margins.

Growing footprint and capability

We have the strategy for EV Cargo to have a major presence and capability in all significant logistics markets. We focus on developing know-how in the right parts of the world to provide customers with the expertise they need to navigate the complex global trade environment. We will continue to see EV Cargo expand by organic growth and making acquisitions across Europe, Asia, as well as entering the US.

One of the primary focuses is to grow the European network by acquisition and integration as well as green-field projects. Over the past 12 months, EV Cargo has completed four acquisitions, further strengthening EV Cargo’s European footprint and increasing its European headcount to more than 500 people.

Our expansion plans also extend across Asia, one of the world’s preeminent growth markets. Toward this end, EV Cargo will make substantial progress on expanding its Asia logistics execution platform and in particular China, through a combination of M&A, replacing existing minority JVs in key export markets and opening green-field offices in both China and in multiple markets across Southeast and South Asia as well as a regional control tower in Hong Kong.

Driving organic growth

Management continues to execute comprehensive initiatives to deliver sustained revenue growth and margin expansion in the face of cost pressures and risk factors.?We continue to focus on increasing volumes, strengthening commercial execution, and expanding yields and margins. In terms of volume growth, we aim to focus on trade lane development, especially intra-Asia, and drive the cross-sales program, sales effectiveness, and key account management. Commercial execution is a vital area where we intend to implement more agile pricing strategies to exploit market conditions. To expand margins, we will continue to have tight overhead costs control and drive fixed-cost operating leverage, as well as strengthen air and sea freight procurement, fully exploit volumes, and optimize and right-size the UK truckload road freight network.

Building Excellence

Logistics businesses are primarily service businesses and services provided by the people and the technology. As such, EV Cargo's focus remains on being customer-centric, developing our people skills, and expanding our technology solutions.

Customer-centric end-to-end solution

Our focus remains on delivering exceptional value to our customers. We believe the business will be fine if it helps the customers succeed. EV Cargo’s mission is to manage supply chains for the world’s leading brands and does so governed by its core values of growth, innovation and sustainability. EV Cargo’s commitment to growth involves continuously developing and improving its ability to provide leading supply chain services and excellent service to international brands worldwide. The industry's focus on resilience, agility, and sustainability requires companies to embrace technology and innovate to meet the customers' changing demands. We have been enhancing our O2O and end-to-end logistics capabilities, and building a long-term sustainable platform combining process optimization, digitalization and automation in handling air, ocean, rail, road, and parcel freight to power the global economy.

Developing people skills

We continue to focus on investing in our people strategy. We believe if we are a good employer and we look after our people, they will in turn take good care of and provide excellent service to our customers, which will make us a financially profitable business. EV Cargo is building a world-class team and people culture. with industry-leading retention. EV Cargo employed approximately 3,000 people worldwide, of which 25% are women.?EV Cargo continues to invest in colleague engagement through various training programs and culture initiatives, including ongoing programs designed to support women in their career paths.

Expanding technology solutions

We believe the global freight forwarding and supply chain services industry is in the midst of accelerating change arising from digital transformation.?As part of EV Cargo’s corporate vision to lead this transformation, the company is executing an innovative and comprehensive digital strategy with significant and ongoing investments in people and systems.?EV Cargo continued to invest in the digitalization of its customer proposition and operating model.?ONE EV Cargo is EV Cargo’s proprietary integrated technology stack, underpinning EV Cargo’s global logistics execution platform and acting as a digital hub enabling the secure and sustainable international movement of goods, data and funds.

Conclusion

In conclusion, overall, the year ahead promises to be a challenging time economically. EV Cargo is taking a proactive approach to navigate this rapidly changing business environment. It will continue to focus on growing its footprint and capability in the right parts of the world, developing its people skills and technology to provide exceptional value to the customers regardless of economic conditions.