Globe Express Services – the global supply chain leader
Globe Express Services isa full-service, global logistics services provider, combining its core products of Air Freight, Ocean Freight and Logistics services to deliver globally integrated, tailor-made end-to-end solutions. Established in 1974, the GES offers expertise in creative warehouse design, distribution, supply chain execution and material handling solutions for leading retail, wholesale, and consumer product manufacturing companies.
While gauge services are a core offering of the company’s Project Logistics and Management portfolio, Globe Express Services draws on in-depth industry know-how and customized IT systems, to manage the requirements of its customers’ supply chains. The company’s consultancy service also covers selection and implementation of supply chain execution software, including comprehensive systems for warehouse, asset, transportation, yard and labor management.
GES operates a global network with over 60 corporate offices with total market presence in over 100 countries via global agents. It offers a robust, well-rounded suite of logistics services to companies doing business in Asia, Europe, the Middle East, North America, Latin America and around the world.We spoke to the company’s Chief Commercial Officer, Poonam Datta on an array of topics.
Excerpts from the interview:
Globe Express Services is one of the world’s leading providers of supply chain solutions, combining core products of air freight, ocean freight and logistics services to deliver globally integrated, tailor-made end-to-end solutions. How do you play to plan to diversify the logistics business in a volatile industry like this?
Biggest challenge the forwarders are facing is to keepthe customers happy who get hit every day with promises of better rates and service from all sorts of outfits. For forwarders, it is important to stay proactive with clients else they would slip and slide away.
GES recently had a meeting of Global C ¬Level Executives in Dubai on business strategies for 2016, where the brain pool discussed the company’s strategy for 2016 in line with prevailing trends in logistics industry along with reforms and projects to be implemented in the short term. The meeting enabled GES to develop a business plan based on market demand to serve regional and international customers in line with global standards.
As trade routes become more competitive and as freight rates fall, the industry’s traditional bargaining power with its shippers will be challenged. One important strategy to counter this challenge is to use balance sheet strength to acquire niche players in important trade routes and geographies, especially in emerging markets. Another key to growth and profitability will be the ability to analyze customers’ needs and then respond quickly with differentiated and advanced logistics solutions. That will require better IT tools to improve internal process efficiency and to generate analyses that result in deeper understanding of customers’ industries and business processes.
The idea is to be a one ¬stop ¬shop for our customers and capitalize on cross segment opportunities. GES has recently opened offices in India, Turkey and looking to open few more in the emerging markets like Africa and others. We also plan to exert control over the most profitable trade lanes: Europe to Asia, for example, or North America to both South America and Asia.
Some of the key areas we’ve focused to get ahead of the market are explained below:
a) We have learnt that time to market is critical in our industry and we need to have the flexibility to respond with speed and agility to our customers’ need for convenience. We’re continuously establishing new ocean freight links to growth geographies such as Africa, India & Australia.
b) Industry knowledge is growing in importance as customers extend their supply chains in response to globalization. We at GES are looking to build a sales team that has deep industry knowledge and has a good handle on the verticals they’re responsible for. We’re looking to continuously strengthen our ability to collaborate and better align ourselves with customers’ operations, processes, industry know¬how and technology.
c) We’ve started leveraging our customer facing technologies to empower our customers, offering them end-to-end visibility across the entire supply chain. Important to ongoing success will be the ability to develop more “intelligent” services, more dynamic planning and increased alignment with customers’ operations and processes.
A controlling presence in key growth markets and the flexibility to respond swiftly and innovatively to customers’ evolving needs distinguish the high performers in freight forwarding and contract logistics. In the future, deep expertise in customers’ industries and in the discipline of cost control will be more critical than ever.
Recently, GES announced the deployment of WiseTech Global’s Cargo Wise One software across 56 offices worldwide. How is this expected to integrate end-to-end logistic solutions across the globe?
Cargo Wise One is a highly integrated and comprehensive end-to-end logistics solutions that forms an integral link in the global logistics industry. It is an operating system that streamlines processes, integrates business with customers and partners, and improves communication with the supply chain. Its single platform technology will ensure increased productivity, better integration, and enhanced profitability once the implementation is complete. We’re already beginning to see tremendous benefits in terms of visibility and connectivity.
It’s a broad solution that offers unique advantages to a variety of customers depending on their specific workflows. With GES’s broad product offering, they will have a comprehensive module for every touch point along the supply chain they manage. Additionally, with Cargo Wise One’s single file platform solution, Globe Express expect to boost to their productivity gains across all the countries where they operate.
Some of the end-to-end visibility benefits that we are beginning to realize are:
• ¬ Integrated sailing schedules and space allocations, bookings and bills of lading, container control and detention, accounting, and automated data exchange provide the functionality, visibility and automation we need to manage seamless shipments
• ¬ Supports multiple principals and handles all import, export, transshipment and domestic requirements for all types of shipments and cargo shipments
• ¬ Integrate with multiple organizations including customs, port authorities, depots, terminals, domestic transport providers, customers, principals and agents, so every aspect of your operation is on the same page
• ¬ Multi¬currency accounting capabilities to estimate and manage expenses and revenue by port, process supplier invoices and provide full vessel reconciliation and voyage disbursements
Tell us more about your collaborations with other companies and entities. Any new JV you have signed in 2016?
Nothing has been confirmed on this as we are still exploring various opportunities.
Your forte has been Asia, Europe, the Middle East, North America and Latin America over the years. How much of importance do the Americas hold in your portfolio?
We are headquartered in the U.S in Charlotte, NC and have a very strong team based here. We strengthened our sales and procurement team in Charlotte and have included sales individuals with specific industry knowledge. We’ve grown in Asia and Europe at a tremendous rate, but weare beginning to focus on the Americas market at the moment. Wehave bolstered our presence in Los Angeles by diversifying our book of business and a huge growth year on year. We recently opened a new GES location in Houston to solidify our presence in the Oil & Energy industry.
How much of your business is focused on the Middle Eastern markets? What are your future plans of expansion in this region?
We have strong roots here in the region and witnessed the exponential growth of the supply chain and logistics industry first hand and developed some amazing contacts in the industry that has helped boost our business tremendously. The proximity to some of the emerging markets like India and Africa has also helped us keep a close watch on the trends and capitalize on potential business opportunities.
How does the multi modal air / sea freight business work for you. Does Ocean freight business work for you better especially due to relatively low costs?
The multi¬modal freight business is a very exciting world. In times of high demand and space constraints, we see a shift towards high-end options to move freight, and it is in these times that our ability to offer seamless and integrated multi¬modal solutions serves our clients best. However, in times like today, when shippers are looking to minimize costs, a combination of low fuel costs and high capacity makes ocean freight a more interesting solution. As I said earlier, we model ourselves constantly on what our client needs, and when our client needs low-cost ocean freight more than multi¬modal sea/air or air/sea options, we leverage our relationships and carrier contracts to provide them exactly that.
So yes, we seem to be handling more of Ocean freight today than multi¬modal freight, but we have sufficient volumes in the sea/air and air/sea categories to not be worried today. Tomorrow, when the economic factors so demand, and our clients need us to handle more multi¬modal shipments, we will be ready for them too.
Elaborate on your air freight business. How much of cargo did you carry in 2015 and your projections for the current year?
Air freight business is one of our top priorities and our focus for growth this year. Pharmaceuticals, Cosmetics and Perfumes, Textiles and Garments, Floriculture, and Automotive and automotive parts all constitute important verticals for growth in air¬ freight. We’re very focused on ramping up volumes by leveraging our relationships with the shippers and consignees on one hand, while boosting our capabilities in the growth areas like Middle East, Africa, China, Turkey, and India, which are quickly emerging as one of the fastest growing air¬freight markets.
When you took over as the Chief Commercial Officer, GES, exactly a year ago, you had spoken about the need to drive more growth within the company’s existing market while looking to expand in fresh territories. How much of this has been achieved, you feel?
Last year has been a challenging year for our industry, and yet while the industry has been rife with reports of consolidation and acquisitions, we have continued to grow. We have opened up new offices in two of our focus areas already namely India and Turkey, and have been able to align our teams to our vision for the future. We have invested in identifying talent and potential within our teams and in developing skillsets as well as inducting specialists and experts in respective regions.
Operationally, we have sharpened our procurement by consolidating our volumes with our core partners and agreeing on joint growth initiatives with them. This has helped us streamline our processes and also create a conducive environment for mutual growth.
We’ve been focusing on some housekeeping this year and we’re confident that we’ll realize the benefits of these changes very soon. We want to do it right the first time.
What are your growth strategies for the years to come, especially in a current difficult global situation like this?
People are the greatest asset in the freight forwarding world, so freight forwarders need to invest in their people to start seeing the returns.A good product person can still compete with the mega forwarders by relationships and by value add services like reporting, tracking and tracing, which are some of the carriers’ weaknesses. There’s a big push on being more efficient with the Operating systems, but we’ve witnessed some of the biggest debacles with companies like UTi and DHL. Key is for forwarders to connect shippers, airlines, truckers and customs to cut down multiple data entry and move information faster and smoother.
They say information is power, so having the information faster only makes you more powerful than your competition. The logistics software and toolkit helps small to medium type companies to be more competitive and compete with large companies because of its automated processes that helps reduce errors, improve margins and efficiency. Apart from this, forwarders need to find new and better ways to make the customers’ life better and standing out from the competition.
What are your predictions for the freight forwarding industry for 2016?
The volatility in the market is causing a lot of disruptions in both the freight industry. The difference between Air & Ocean carriers is that Ocean carriers try and implement GRI, which don’t really stick for too long and on the other hand Airlines stay away from the GRIs, but try and stay flexible instead. Biggest challenge the forwarders are facing is keeping the customers happy who get hit every day with promises of better rates and service for all sorts of outfits. Key is for forwarders to stay proactive with clients or they will slip and slide away. Although the business model for Freight Forwarders is the same, the profitability between companies is pretty diverse. The profitability of these players has no correlation to scale.
Freight Forwarder consolidations is an area we all need to be watchful of. Some of the significant potential mergers are the FedEx and TNT, UTi and DSV, K&N going after CEVA (perhaps a rumor). This means current forwarders need to start strategizing about what they would do if there were more mergers, be aggressive and go after new business in the merger chaos or build moats around the existing business. They’re consolidating service providers and functions, sharing logistics facilities, and centralizing management all in an effort to become more efficient.
Companies like Amazon are getting into the cargo business. Bloomberg Business released a report that detailed a multiyear plan which talked about Amazon competing with UPS, FedEx and Alibaba. The plan called ‘Dragon Boat’ is to form a global network that controls the flow of goods from China and India to customer doorstep in Atlanta, Paris and London. The plan is to bypass brokers that deal with cargo and global transit paperwork. Amazon plans to amass inventory from thousands of merchants around the world consolidate and buy space for reduced rates. Amazon acquired its license to act as a wholesaler for ocean container shipping from FMC on Nov 13, 2015. The ecommerce industry is estimated to grow into a $1 Trillion industry serving 900 Million shoppers according to a report by Accenture and AliResearch (Alibaba’s research arm). Three years after Amazon proposed its grand vision for a global logistics business, there are signs the plan is nearing fruition. Last month, a San Francisco logistics company called Flexport posted a blog noting that Amazon’s Chinese subsidiary registered in the U.S. as a Non¬Vessel Operating Common Carrier, enabling it to provide ocean freight services to other companies in the $350 billion ocean freight industry. And in December, Amazon was said to be considering leasing 20 Boeing Co. 767 freighter jets to control more of its delivery and cost, according to a person familiar with the plans.
Considering all the above factors, the Freight Forwarders would have to work harder to maintain their revenue. Manufacturing and retailing are moving back to regionalized supply chains after years of globalization, which means shrinking business. If Freight Forwarders don’t evolve quickly they will become obsolete in no time.
Air Freight Industry Intelligence
The International Air Transport Association suggested that first quarter 2016 was a buyer’s market and warned of another tough year ahead in its March 2016 airfreight market analysis, which reported a 2 percent, year¬ over¬year; drop in worldwide cargo volume, measured in FTKS. While compared to the same period last year, the freight capacity grew by 6.9% making it more difficult for the already struggling yields.
Based on the statistics released by IATA earlier this year, we’re seeing some correlation with the GES numbers. North America and Asia Pacific showed significant year ¬on¬ year drop in cargo volumes for the second consecutive month in March 2016, which was due to the artificial spike in Air freight as a result of the U.S. West Coast port disruptions during Q1 2015. Our North American business saw demand drop by 1.8 percent in March and 3.8 percent for the first quarter while the Asian business, in turn, saw volumes drop by 5.2 percent in March, and 5.6 percent for the year. Europe and the Middle East are two regions where we’ve seen a growth of 1.3 percent, and 2.4 percent respectively. Airfreight volumes have continued to fall in Latin American for the GES business, with demand down 5.9 percent in March 2016. We’ve seen INTRA¬South America routes faring comparatively worse than long-haul flights between South America and Europe.
Of the approximately $1 trillion spent annually on worldwide transportation, air cargo’s share is less than 4 percent internationally. Shippers these days try and minimize air shipments and ship more Ocean to minimize costs, but need of the hour for the freight forwarders is to come up with new and creative marketing and sales plan to convince shippers to ship air and assure the customers that in this fast paced economy, moving goods by air is the most productive and rewarding method of shipping, depending on the nature of the business.
Finding new business is a big challenge in the air freight industry, which means convincing shippers who have been shipping via Ocean for a long time, to readjust their transportation budgets and sell it to the upper management why it’s in their best interest. The forwarders have been soliciting business from the existing customers; in other words, stealing customers from other forwarders. The forwarders must work with the carrier’s hand in hand and work as a unit rather than adversaries.
Working with government entities like Customs also needs to be the focus for the shipping fraternity. While we definitely need to take all steps to prevent breach of any security, we need to make the flow of goods as smooth as possible with least amount of bureaucracy. Sincere cooperation and trust will only encourage the shippers to ship more air and help us move past the 4% air freight share.
Emerging markets are a particularly bright spot. As labor rates rise in coastal China, we’re seeing many manufacturers shifting production to the country’s inland regions, Asian countries west of China, Africa, and South America, particularly Brazil, where we’ve started focusing our attention.