Geodis’s Marie-Christine Lombard Sees Global Forces Continuing to Reshape Trade Flows

The company’s scale as the world’s 10th largest freight-forwarder by revenue, according to Armstrong & Associates Inc., exposed Geodis to the forces of global upheaval while providing the business the flexibility to adjust and even expand its growth through acquisitions.  

Ms. Lombard estimates Geodis’s 2022 revenues will be around €13 billion, the equivalent of about $13.8 billion, a 19% increase over 2021’s record year. In the past couple of years, the logistics subsidiary of France’s national rail operator SNCF has acquired contract logistics and final-mile delivery services in Poland, the U.S. and the Asia-Pacific region. On Dec. 19, Geodis said it would acquire Germany-based Trans-o-flex, a delivery company specializing in temperature-controlled transportation of pharmaceuticals.

Ms. Lombard spoke with The Wall Street Journal about the recent challenges that have forced shippers to re-evaluate their supply chains and how that will complicate cargo flows in the coming years. 

WSJ: Geodis and its peers faced challenges this year with a continuation of the global pandemic and a war in Europe. What makes these crises different from previous ones?

MS. LOMBARD: The supply chain used to be quite seamless and fluid. But it’s no longer smooth. It goes up and down. The world order has a huge impact on the supply chain and its stability. 

Before Russia invaded Ukraine, some volumes between China and Europe, especially in high-tech, were going by rail to Duisburg in Germany. And suddenly, because of the war, you cannot cross Russia anymore. Well, then you have to find new routes by ocean and air and land. This type of disruption is where logistics operators like Geodis provide value for customers because we find solutions.

WSJ: You painted a picture of fairly stable supply chains until recently. Do you think stability will return anytime soon? 

MS. LOMBARD: I’m not saying there weren’t ups and downs. When there was a crisis, like the financial crisis in 2008, volumes collapsed. The difference is that the supply chain itself was not disrupted. Now, you are disrupting the supply chain. Why? Because globalization is changing. At some point, every company was going to China to manufacture goods. Now companies are asking themselves, “Should I remain dependent on China?”

This movement started before Covid when developed countries became aware they were too dependent on some other countries and as the U.S. started to increase tariffs on Chinese goods. But it was accelerated by Covid. Companies may have very good suppliers and subcontractors in China, but those suppliers can get an order from the government or the authorities and they will have to shut down their plant. So our clients are saying, “I should probably diversify my supply chain and include other countries in the making of my products or move some assembly plants and be less dependent on China.”

I’m taking China as an example, but it could be some other country. Our clients are moving away from a dependency on one country. So as a logistics company, we have to manage flows coming from different origin points, but still going to the same destination points. So this complexity is here to stay. 

WSJ: Which other parts of the world are you starting to see grow most quickly?

MS. LOMBARD: Companies have made a lot of investments in China so it is very difficult to move. But they are making investments elsewhere in Southeast Asia, India, Poland and Turkey. Mexico is really interesting for North America. They’re not necessarily transforming raw materials there, but they are assembling components into finished products. 

WSJ: When you see supply chains diversifying into other parts of the world, are there challenges with those countries’ infrastructure?

MS. LOMBARD: Yes, I see a lot of complexity and this is why it’s not easy to replace China. The infrastructure in India is terrible. The roads are in disarray. The rail is not working. But it’s not just infrastructure. It’s the workforce, too. And it is telecommunications. It’s really an entire ecosystem that is important.

When you arrive in a country from a port or an airport, you need trucks and drivers. You need to have highways. And in Europe now—but maybe less so in the U.S.—you also have the ecological transition that is adding challenges because people want green trucks, but manufacturers are not yet producing the trucks in sufficient numbers. So the price of that is going up. 

The entire supply chain is being rethought and recalibrated and re-costed. And I can see this lasting for a while. 

WSJ: Geodis has made acquisitions in Europe, Asia and the U.S. in the past couple of years. What is the strategy behind your expansion plans?

MS. LOMBARD: This market is highly fragmented. And with the challenges that we have in this market going forward—which includes becoming green, improving automation in warehouses and being able to manage cargo surges during peak periods—it is very difficult. 

A lot of companies also want their logistics providers to be global and to be able to follow them across many different countries. That requires investment. So the small players need to make up their mind. Do they want to invest or are they going to be purchased? And this is why you see all of this consolidation. And I think it will continue. 

Write to Paul Berger at [email protected]