COVID-19: impact on the CFO office in Belgium – transport and logistics

Jun 02, 2020
  • finance
  • automotive
  • Microsoft

The coronavirus pandemic has disrupted businesses around the world on an unprecedented scale. How did delaware customers cope with the immediate challenges during the lockdown, and how do they plan to advance in the months and years to come? We asked their CFOs and documented their stories in a new series of CFO Connect blog posts.

In this double interview, CFOs Peter Tytgadt of Turbo’s Hoet Group and Ed Verbeek of Yusen Logistics Europe discuss the impact of COVID-19 on the transport and logistics sector.

As one of Europe’s major truck distributors, Turbo’s Hoet Group (TH) focuses on sales, maintenance and financing services for trucks and trailers. In addition, they are a leading turbocharger distributor. Yusen Logistics Europe, which is part of the Japanese company Yusen Logistics, offers air and sea freight forwarding, contract logistics, land transport and supply chain solutions. While their businesses differ, both companies are facing the same challenge: the transport sector is an indicator for the economy – when the economy is hit hard, so are transport and logistics companies.

How different countries take different approaches

How did you respond when the economy shut down?

Tytgadt: “When the authorities announced the lockdown in Belgium and France, we decided to close all our sites. We did, however, continue to do urgent and essential repairs behind closed doors in order to safeguard the global supply chain. As a consequence, our dealerships were run with only 25% of the normal number of employees. 440 of our 600 employees were put on temporary unemployment. A few weeks later, our employees in Romania, Russia and some other countries were also obliged to stay at home, with only slight or no governmental compensation.”

Verbeek: “The impact of COVID-19 and compensation benefits offered indeed differ greatly from country to country. Yusen Logistics is active in most European countries and we experience major differences. Yet, the effects vary even more from sector to sector. Some industry verticals where we are active in, like automotive and aerospace, have been severely ravaged while others like healthcare and food are less impacted. That means that some Yusen branches have been hit much harder than others. Nevertheless, a significant number of our 5,700 European workers are temporarily unemployed – with or without unemployment benefits. Office workers have all started working from home. As soon as the economy shut down, we installed a European crisis team to handle the situation and make decisions.”

When a crisis hits, cash is king

What are the key steps a CFO has to take in a crisis like this?

Verbeek: “When a crisis hits, you need cash to survive. Yusen Logistics Europe immediately took measures to safeguard its liquidity going forward. For instance, we identified which key customers are under enormous pressure – those in automotive, for example – and closely monitor their payments and credit risk. Where needed, we get in touch with customers individually to discuss mitigation strategies – of course, without disrupting commercial relationships as much as possible.”

Tytgadt: “Openness and communication is a key attention point for us. TH also sharpened its focus on credit control: we reviewed payment conditions and credit limits and overdues are now followed up very closely. In all this, it is key to speak to your suppliers and customers to discuss how we can get through this difficult period together. We involve the BU managers and site managers in this, as they know our customers best. Moreover, this openness and transparency is just as important in our communication with our employees. We don’t know when they’ll be able to return, so we don’t want to make any promises. We try to be honest and find ways to keep motivating them. After all, we want to keep them on board so that we are ready for the economic revival.” 

Did you take any other measures, like renegotiating loans or postponing investments?

Tytgadt: “TH has always been a very cost-conscious organization, partly due to the low margins inherent to our sector. As such, it was not easy to find ways to cut costs. In line with the support measures decided upon by different governments, I did, however, reschedule the 3,000 leasing contracts we have with different banks and renegotiated payment terms between us and our main suppliers. Some supplier contracts were put on hold, though it is crucial for us to retain continuity in everything we do. In view of the substantial drop in turnover, we’re now trying to reduce our stock as quickly as possible.”

Verbeek: “We proactively got in touch with different banks to check the possibilities for a loan – to make sure we’d know who to turn to if we’d get in really difficult waters. In addition, we managed to get rent holidays: some owners of our warehouses agreed that we could delay rent payments. As for investments: not every investment is automatically put on hold, but we carefully consider every idea and plan. The go-live of Microsoft 365 Dynamics, for example, was slightly delayed but not cancelled: we went live just after the lockdown had eased on 18 May. I’m really happy that we pulled through. The new platform will help us to optimize our finance activities – which will surely benefit us going further. The implementation of SMART BI is on my radar for the near future too.”

Picture: Ed Verbeek, CFO Yusen Logistics Europe

Speaking of BI, the world is turning to simulations and data models to respond to COVID-19. Do you make extensive use of analytics to decide on your path forward?

Verbeek: “Absolutely. We forecasted our cash collections in the first few days of the crisis and worked out different scenarios.” 

Tytgadt: “As 50% of TH is owned by Ackermans & van Haaren (AvH), which is listed on Euronext Brussels, we perform a full month-end close every month. That gives us good insight into the financial evolution of the group. But of course, this crisis required more stress testing than usual. In spite of all the simulations and forecasts, it is still too early to decide on concrete structural measures at this point. Looking at TH, I trust that we will weather this crisis: we are a stable company with healthy financials. Moreover, we have always been a very resilient company. Resilience will be the key ingredient for continued success after COVID-19.”

The new normal

What is your vision of post lockdown: do you anticipate ‘a new normal’? Are you planning to review your current business model and identify new revenue streams?

Verbeek: “Yusen Logistics Europe installed workgroups to discuss the future of our organization, our industry and the economy as a whole. When we look at our industry verticals, we expect a V curve in healthcare and food – these businesses are expected to recover relatively quickly. The outlook for the automotive market, however, is not that good and the prospects for aerospace are even worse. We are indeed thinking about new business models to adapt to that ‘new normal’ and discuss Yusen’s position in the new world. The finance function is closely involved in these discussions.”

Tytgadt: “I do expect – and hope – for some substantial changes. The coronavirus pandemic has taught us all some lessons, I think. Over the past few years, TH has increasingly focused on sustainability, for example, in its infrastructure, processes and products. Yet, business trips were seen as essential. In just a few days, we discovered that video meetings work just as well in most of the cases. That’s just one example of how COVID-19 will change our world – hopefully, for the better.” 

Picture: Peter Tytgadt, CFO Turbo’s Hoet Group

Turbo’s Hoet Group in numbers (2020)

  • Activities: automotive distributor and retailer (trucks, parts, turbochargers and leasing services)
  • Founded: 1974
  • Head office: Hooglede-Gits (Belgium)
  • Employees Europe: 1,500 
  • Active in: 10 countries (Europe)

Yusen Logistics Europe in numbers (2020)

  • Activities: International freight forwarding (air and sea contract logistics and land transport 
  • Founded: 1955 (Yusen Logistics)
  • European HQ: Hoofddorp (the Netherlands)
  • Employees Europe: 5,700 (24,700 worldwide)
  • Active in: 45 countries (19 Europe)

This is the first in a series of interviews on how the COVID-19 pandemic is affecting finance teams in various sectors. Stay tuned for insights on the impact of COVID-19 on manufacturing, nonprofit and professional services! You can also subscribe to our CFO Connect newsletter, with trends and customer stories for the finance community.