ForwardersÆ ænew normalÆ
If you think liner carriers are having a difficult time these days just ask a freight forwarder or non-vessel-operating common carrier about how it's going for them and you're sure to get an earful.
Large or small, these ocean freight transportation intermediaries are struggling to meet their shippers' international transportation needs with the liner carrier industry in turmoil. They're faced with:
' Filling service gaps caused by financially strapped liner carriers.
' Fluctuating rates versus formal agreements.
' Barrage of 'rate restoration' announcements from carriers.
' Carriers pulling capacity and canceling vessel strings with little notice.
' Bill of lading mistakes from carriers.
Steven Leff, head of the ocean freight division at International Logistic Service in the Chicago area, said he was recently told that to obtain outbound capacity from New York to Shanghai he would have to wait at least three weeks to obtain a booking.
'There's no reason to hear there's no space,' he said. 'This is an intentional crunch.'
General rate increases are also cutting deep into the forwarders and NVOs' profit margins.
'In today's environment, it is the low rate,' said Peter Gruettner, president of Extra Logistics, based in Lakewood, Calif. 'Thus as rates increase, sometimes you need to focus on reduced margins to remain competitive.'
'Around here, we call it the 'new normal' for our industry,' said Thomas Keene, vice president of sales for North America at Philadelphia-based BDP International. 'We'll never go back to the way it was before the first quarter of 2008.'
However, Keene said that being non-asset based still has its many advantages, even in this down market. 'We're very flexible in our ability to shift resources to wherever they're needed,' he said. ' Chris Gillis
Reaching outside the box
More large freight forwarders and non-vessel-operating common carriers are reaching outside the container trades for a piece of the outsized and heavy-lift transportation logistics market.
Managing any project shipment can be a massive undertaking wrought with risk, but done right can pay handsome returns for forwarders and NVOs.
Amsterdam-based Geodis Wilson in late October announced the opening of the U.S. headquarters for its Industrial Projects Division in Houston, the country's primary port for global shippers of generators, turbines, large pipe volumes for oil and gas, and mining and construction plants.
Philippe Sommers, the division's senior vice president, estimates there are about 10 forwarders with the ability to truly offer global project cargo services. 'That's still a small number for the market potential in the United States,' he told American Shipper in an interview.
'This is just the tip of the iceberg ' If you want to get into the top five you have to step things up and that's what we are doing here with the Houston launch,' he said in a statement.
To support its Houston operation, Geodis Wilson has about 40 staff and a 65,000-square-foot warehouse to provide packing, both temporary and long-term storage, and two acres of outside area for marshalling project equipment. A mobile packaging team is also available to travel with the freight to the docks when necessary.
Geodis Wilson sees further development in project cargo activity, which has been strengthened within the company by its acquisitions of TNT Freight Management and Rohde & Liesenfeld. Revenues have increased to 400 million euros (about $590 million) during the past three years. The company also plans to increase its Houston staff to 80 by the end of 2010, and will open offices in Abu Dhabi in the United Arab Emirates; Dammam, Saudi Arabia; and Brazil's Rio de Janeiro. Offices in Algeria and Libya have already joined the network.
Philadelphia-based BDP International has similarly grown its presence in this market by establishing BDP Project Logistics, based in Singapore. This year the company opened offices in Abu Dhabi for covering the Middle East, and Mexico City, Mexico, to expand its presence in Latin America.
Not to be undermined by the big players, a number of small and mid-sized forwarders have come together in recent years as part of the Project Professionals Group (PPG), a project cargo-focused forwarder network.
PPG raised its flag at the highly attended annual American Wind Energy Association conference in Chicago in early May. 'PPG members have logistics operations offices in key locations around the world that are well placed to work together to optimize the design of transport solutions for the renewable energy industry to meet current and future requirements,' said Kevin Stephens, PPG general manager, in a statement at the time. ' Chris Gillis
DGX expands footprint
Dependable Global Express continues to expand its world footprint in the freight forwarding and non-vessel-operating common carrier industry.
In late October, the company announced the acquisition of certain operations from C&H Freight, an NVO that specializes in the Central and South American trades. DGX specifically took over C&H's weekly and bi-weekly consolidations from the U.S. West Coast to Central and South America, a network of agents in Latin America and the company's good will. Terms of the deal were not disclosed.
'We have been exploring for some time the acquisition of a consolidator who specializes in the Latin American market to round out our international logistics services,' said Brad Dechter, president of DGX, DHX-Dependable Hawaiian Express, and DAX-Dependable AirCargo Express.
Dechter said C&H will be folded into DGX, the international ocean freight arm within the Dependable Cos. Mat Silver, founder of C&H Freight, will be in charge of the new Latin American trade lane, while Antonio Bellido, C&H's former director of sales and marketing, will manage the transition, as well as grow the business. C&H's smaller air cargo operation will be absorbed in DAX, Dechter said.
Southern California-based DGX has traditionally been a strong player in Asian freight markets with about a dozen offices in place throughout the region. In 2008, the company opened offices full-service offices in Jakarta, Indonesia, and the Philippine city of Manila.
In July, DGX opened a facility in Amman, Jordan, to provide logistics services to corporate, government and military customers in the Middle East. ' Chris Gillis