Danish logistics big underneath strain to hurry world’s largest IT integration
Danish logistics big DSV is underneath strain to hurry by way of a colossal IT integration so its sprawling international pc techniques can compete with synthetic intelligence (AI)-driven operators which have despatched shockwaves by way of the trade.
The strain was already on DSV after its €14.3bn (DKK 106.7bn) takeover of Germany’s DB Schenker made it the world’s largest third-party logistics agency final yr. The deal lumped it with a heavy monetary burden attributable to overly complicated freight and IT operations spanning 90 international locations, and the big debt it raised to pay for it.
The freight market has in the meantime slumped. DSV is speeding to combine Schenker’s international operations at “unprecedented velocity”, to simplify its IT techniques, reduce its operational value burden, and to clear a means for it to automate the labour-intensive processes operating its €33bn enterprise.
That was even earlier than an AI scare gripped inventory market traders in February and logistics share costs dived. Revelations concerning the potential for AI to remodel the labour-intensive logistics sector by automating human jobs emerged as DSV was touring shareholders with a 2025 monetary report. CEO Jens Lund celebrated roughly doubling DSV’s head-count by welcoming 85,000 Schenker staff in 90 international locations.
The scare was attributed to a declare that the “antiquated, labour-intensive” logistics trade may reduce labour and related IT prices fourfold by changing the pc techniques that assist employees run its freight and warehousing networks with AI techniques that handle all of it intelligently.
It got here from a $16m US-Indian AI logistics startup known as Algorithm Holdings (Algo), that emerged shortly, signing coveted logistics offers with large manufacturers, beginning a pilot with Coca-Cola, launching within the US, and saying plans for international growth. It additionally cited a research that claimed to point out how its AI had multiplied productiveness in its buyer’s logistics by automating jobs.
Its claims got here with a thesis that whereas AI was reworking logistics administration from a “labour-intensive, handbook course of” to a “extremely automated, intelligence-led” system, incumbent freight corporations have been doing little greater than digitising outdated workflows. It mentioned they’re utilizing AI to automate operations just one course of at a time, when their complete enterprise mannequin wanted wholesale re-engineering. This had not come out of nowhere. Algo emerged when Indian software program developer SemiCab, whose logistics AI had been made a part of an Indo-government scheme to construct a nationwide, clever freight transport community, was acquired by US traders, launched to the US market, and proven a method to international growth.
Fightback
Market watchers known as the response paranoia when share costs plummeted on the information of Algo’s claims. However, by March, with its share value tumbling, DSV executives have been impelled to return out and defend its IT integration plans, promising traders it was certainly growing AI to automate labour-intensive enterprise processes, however stating repeatedly that it may reveal no extra about its AI plans till 12 Might, in its annual technique transient with shareholders.
Its story was successfully the identical because it instructed shareholders in February: DSV plans to do nice issues with AI, however to get there, it should first end one of many largest IT integrations in company historical past, consolidating a posh mish mash of IT techniques to create a stable basis upon which AI automations might be constructed. Therefore, it was speeding to get the mixing finished, not solely to get its enterprise – bloated by the merger – in good monetary form, however to make significant AI automation doable.
That was the reply DSV CEO Jens Lund gave when, even earlier than Algo emerged, monetary analysts have been urgent DSV over the revelation that US street freight dealer CH Robinson had used a “fleet” of AI brokers, constructed by a staff of 450 software program engineers, to extend productiveness 40%, reduce a tenth of personnel, and push gross income up 1 / 4. DSV’s productiveness was in the meantime flagging. Lund promised that AI automation can be the following stage of its IT consolidation, and it will reduce DSV’s value of operations “on the dimensions of billions” of Danish krona. DSV’s share value rose at the same time as he spoke.
Lund’s confidence in DSV’s technique was undaunted. The measure of success in AI automation was not productiveness if it required funding so nice that it value profitability, he instructed analysts, in reply to CH Robinson’s success. And 1000’s of IT brokers would every convey solely incremental features to logistics. DSV was aiming to construct AI on the enterprise scale. That required a stable basis of information and IT techniques, which it’s constructing by consolidating the IT system throughout the globe following the merger.
He pledged wholesale transformation. DSV would make cost-savings by centralising international operations into automated AI techniques. DSV had created “a hardline organisation” to do that.
Unhealthy status
“It’s very exhausting to drive these adjustments in 90 international locations and create a worldwide organisation for that,” Lund instructed traders. “Many individuals are reluctant to make these form of adjustments, however that is the one means you possibly can capitalise on the know-how.”
It’s already doing this to automate customs administration for cross-border shipments, the place bureaucratic processes hold 5,000 DSV employees filling in varieties. The method can be centralised globally, automated, after which offered as a service again to nation groups coping with border processes in its numerous divisions.
DSV was in the meantime speeding to finish the IT integration so it may apply AI automation to all labour-intensive areas of its enterprise. That concerned quickly consolidating enterprise software program techniques into single functions in every of its enterprise divisions, it mentioned in its 2025 report. It was merging all knowledge right into a single platform upon which the functions would run. Clients can be served by a single portal and their techniques can be built-in to its personal by way of a single middleware layer for each API and EDI interfaces, with all operating on a consolidated IT infrastructure.
Having appointed nation administration to do operational and IT integration throughout the globe after the merger, it started executing it one nation at a time, every following an integration cookbook it has developed after doing practically 20 mergers in some 40 years.
The cookbook features a 32-stage IT integration plan that has change into a part of the merger story it tells. Its progress technique was to do mergers and acquisitions, in keeping with its 2025 report. Its simplified, single knowledge, software program software and IT infrastructure was not solely mandatory for achievement, however a prerequisite for enterprise re-engineering, and for AI automation. Its disciplined, systemic IT integration plan was essential to make that occur.
Its tenets made speedy execution doable: central governance, clear accountability and phased execution; managed by groups required to keep up enterprise continuity and safeguard buyer relationships.
It’s a high-stakes technique in logistics, the place stay operations are depending on techniques, mentioned Mark Davis, vice-president of Egremont Group, a enterprise transformation consultancy. The status that giant IT integrations have for going fallacious in any sector is justified, he mentioned.
“Clean integrations stay the exception slightly than the rule,” added Davis.
Even well-run integrations contain tough trade-offs. However DSV’s integration of €1.5bn Swiss air and sea freight forwarder Panalpina in 2019 was an exemplar: executed methodically, with operational continuity protected earlier than any IT platform consolidation was pushed by way of. Comparable warning accounted for Microsoft’s success integrating LinkedIn, he mentioned. Early consolidation was resisted. Some operational independence was maintained. Selections adopted enterprise wants.
“Weaker integrations try and consolidate techniques with out readability, underestimate knowledge complexity and permit parallel environments to persist,” mentioned Davis. “Most failures may be traced again to selections being made in isolation from how the enterprise really works.”
Monitor report
Panalpina had been in the course of shifting its international IT techniques onto SAP when DSV took over. DSV moved the Swiss operator onto its in-house logistics techniques as an alternative. It’s doing the identical with Schenker, however progress has been sophisticated, in keeping with its 2025 report.
Its consolidation of Schenker’s contact logistics enterprise has been set again 5 years. It has been pressured to run two enterprise techniques in parallel in its air and sea division. Solely its street freight division is shifting shortly to a single system. It reckons a single knowledge layer is making it viable to run parallel enterprise techniques whereas it really works on unifying them.
The mixing has in the meantime dragged income right into a trough, Lund admitted in February. DSV is speeding to finish the mixing to revive funds which have been undermined by the scale of the deal and what DSV portrays because the comparatively worse state of Schenker’s funds, and to repay debt it used to purchase the German agency.
The freight market, in the meantime, is struggling a longstanding downturn that, as Stax Consulting put it lately, has made mergers doubtless as corporations change into distressed. DSV’s personal pre-merger enterprise had been mounting prices for half a decade as much as the Schenker deal that doubled its dimension final yr, one analyst mentioned in February.
By yr finish, it expects to have spent €1.5bn integrating the mixed enterprise, for the sake of €1.2bn in everlasting value financial savings. DSV is relying on the AI automation it does after it completes the IT integration subsequent yr to appropriate the autumn in pre-tax income that preceded it and, Lund admitted in February, revive flagging productiveness.
AI-driven competitors, excessive debt, low revenue and a flat market are usually not the one issues forcing DSV to quickly conduct one of many world’s largest IT integrations, its 2025 report mentioned. Below strain of accelerating cyber safety threats, it’s making an attempt to consolidate its pc techniques as quickly as doable, as a result of it believes their complexity makes them susceptible. Warfare has made provide chains extra of a goal.
DSV mentioned the reply to all of those issues is simplification.
