Q&A with CEVA Logistics outgoing CEO Marv Schlanger

With the pending retirement of global third-party logistics (3PL) services provider CEVA Logistics CEO Marv Schlanger coming in January, Logistics Management Group News Editor Jeff Berman got another opportunity to speak with Schlanger before he resumes his position as non-executive Chairman of the Board at CEVA. Schlanger offered up his insights and perspectives on where CEVA is as a company since he took the helm as CEO in October 2012. A transcript of the conversation follows below.

Logistics Management (LM): In the third quarter, CEVA showed continued gains and improvements on various fronts. What specifically went well?
Marv Schlanger: The first thing would be the CEO transition plan.

LM: How so?
Schlanger: We are very fortunate to have been able to recruit a senior executive (Xavier Urbain, a former executive at Kuehne+Nagel, a global 3PL will take over for Schlanger on January 2, 2014) with the experience, background and knowledge Xavier has. He comes with a substantial track record in both contract logistics and freight management.

LM: Let’s shift gears to how CEVA did in the third quarter.
Schlanger: If you look at our quarterly results, we were basically satisfied as they show the actions we have taken have made a difference. The EBITDA matches the third quarter of 2012, which we think is good, and we made a strong recovery in our Contract Logistics business. Our cost reduction program is delivering the results we expect, too, and our working capital performance has been excellent as a source of cash, which is the lifeblood of any company. We continue to acknowledge that we need to do more business on the Freight Management side and are investing in huge resources to grow that business and recent customer wins we have announced speak to that.

LM: With Xavier Urbain coming to CEVA, whom he competed against for a number of years, coupled with contract logistics and freight management experience, what do you think he offers to CEVA going forward, given the forward progress CEVA is making?
Schlanger: He brings a lot of experience for certain and there are things on an organization level at CEVA that will be intuitive to him. He will look at the organizational structure and see if he can augment it with things based on his previous experiences from K+N or elsewhere globally. He will have a more intuitive feel than I did for things like KPIs due to his 30-plus years in the business, whereas I had to spend more time learning that through the analytics and he will bring a lot to the position as he has seen so much of the business already. Another thing he will bring is a Rolodex. We have been doing a good job of filling spots, but there are still more to be filled, and he knows a lot of people and that will help, too.

LM: CEVA’s airfreight volumes are not where you would like them to be, which is a common theme throughout the industry. From when you started as CEO to now, what, if any, major differences or themes have you seen within the airfreight sector? Many of the issues in airfreight have been ongoing for a while.
Schlanger: There are two issues in CEVA’s airfreight business. One is the macro picture in terms of where the industry is going, and the second is how we are doing relative to the industry. From the macro standpoint, I think we all know that there has been a secular shift away from air where shippers preferred not to ship via air and worked very hard to structure their supply chains to other modes and everyone has seen it and complained about it on the carrier and 3PL side. It has been happening for a couple of years. On a company side, we did have a Peak Season this year compared to last year and the year before. It was short so at the end of the day we have to see if that was enough to drive the numbers significantly on an annual basis.

LM: When did the actual Peak Season occur for CEVA?
Schlanger: I think it was a mid October start, which made it later than normal. We put a lot of effort into beefing up our air product team and brought a lot of people on board to strengthen our capability of creating business and servicing our customers.

LM: Heading into the New Year, would it be fair to say that any type of improvement at least in the next quarter or two will be modestly incremental based on the stop and go nature of the economy or the slow growth we are seeing?
Schlanger: Things are likely to be the same over the next quarter or two. I am optimistic for the long-term. I am cautiously optimistic that the second half of 2014 heading into 2015 will have continuing growth for the U.S. economy if the government can stay out of the way.

LM: How has the 3PL-shipper relationship evolved in the time you have served as CEO?
Schlanger: Over the last four years, our customers have become more demanding. They are under pressure like everyone else, specifically margin pressure, and want to improve their cost structures and no longer accept just the mere delivery of their goods as adequate. About 90 percent of the time spent with customers, I get a statement that sounds like the following: “your company, CEVA, does a good job in moving goods from A to B, but I need more. I need you to bring innovation to the table and creative ways of helping our customers to reduce my overall supply chain costs.” We like to present innovation to our customers, and we do a lot of that. Communicating that is really a full-time job.