The CEO of Cargotec has provided key insight into the company’s decision to undertake a strategic evaluation of Navis with a potential sale of the software business.
Following Cargotec’s announcement it would “evaluate strategic alternatives” for Navis, Mika Vehvilainen said in a company video on YouTube that no decision has been made yet “but it is quite clear that many of the future growth opportunities are further beyond current core business in Cargotec”. As a result of this, he said, Cargotec will evaluate if it is the right owner to pursue Navis strategies in the future.
On the 6 February, the company revealed its plans when it said: “Cargotec will review alternative development paths, including new ownership structures and a potential sale of Navis software business.”
Cargotec strategy unaffected
Mr Vehvilainen said Cargotec strategy would be unaffected. It plans to pursue the development of sustainable smart products, alongside system intelligence.
“System level software opportunities like container port automation are actually increasing and our growth in software the last few years is coming primarily outside Navis, from for example automation software. I do think that we have great opportunities to pursue transforming our industry even without Navis.”
Mr Vehvilainen said that the competitive advantages of Cargotec would be the same without Navis.
He pointed out that the majority of automation cases are in brownfield sites so they already have an existing TOS system, very often a Navis TOS system, “but the opportunities to offer the fully integrated package, that we have seen, has actually fairly limited opportunities today”.
“So very much you compete on the benefits of the actual competitiveness of the automation system and related equipment,” he added.
Navis and the TOS system isn’t a competitive advantage, he confirmed. Navis often needs to work independently and in most cases customers make an independent decision on the TOS and a separate decision on the automation system.
Commenting on the Biarri Rail acquisition, he said “it is a good example of the new opportunities that Navis needs to pursue”.
The evaluation of Navis is due to be complete by summer 2020.
