Online retail isn’t a sector readily associated with freight forwarders. With their retail infrastructures and network, postal services and integrated express carriers have treated this patch as their natural domain.
But midsize forwarders such as Team Worldwide are making a push into the market as new retail outlets create opportunities for overseas buyers. The Winnboro, Texas-based forwarder is handling the logistics for online merchants whose sites are open to consumers outside the United States. Team bundles shipments and moves them to the destination countries, where they are cleared and distributed through a variety of options, from postal services using express operators to Team’s agency partners.
The forwarder’s involvement extends beyond the transportation and logistics segment to order fulfillment and aspects such as providing information on tax issues in receiving countries. This fits with management’s strategic plan to broaden the company’s portfolio.
“We determined years ago that point-to-point air and ocean forwarding, and also point-to-point trucking, is not an area where a midsize forwarder wants to go,” said Bob Imbriani, Team’s vice president of corporate development. “This will always be part of our business, but we see growth opportunities in new service areas.”
The diversification appears to be paying off. “Our month-to-month, year-to-year numbers for the past two years have been going up,” he said. “We are seeing continued growth.”
By some analysts’ accounts, Team shouldn’t be in growth mode but instead fighting a losing battle for survival, because it inhabits the bracket of midsize forwarders declared doomed — too small to compete with the multimillion-dollar, multinational logistics providers, and too large and inflexible to find and cultivate niches the way small forwarders do. Contrary to these predictions, Team and other midsize forwarders have been expanding, particularly in the international arena.
Besides the growing international online shopping segment, Team is cultivating several niche areas. Moving urgently needed replacement parts for aircraft grounded with technical problems is one growth area. Another is trade show traffic, which increasingly is moving to longer-term planning horizons. Rather than taking exhibits and materials back to the client’s home base after a trade show and then out again to the next industry event, it may make more sense to move them to the country where the next trade show will be held and store them for the interval, Imbriani said.
The forwarder increasingly is moving into consulting and 4PL activities, in some cases taking logistics functions from clients in-house. “We would like to see at least a 50-50 split between speciality and point-to-point business. At some point, I think it will be 70-30,” Imbriani said.
Crane Worldwide Logistics started out in 2008 with its focus fully on the energy sector, but this has fallen to slightly more than one-third of its business, according to John Magee, president of the Texas-based forwarder. The company has developed several other verticals, namely the high-tech and telecommunications sector, which accounts for nearly 30 percent of business; industrial, 16 percent; and automotive, 11 percent.
Revenue soared 60 percent last year to $425 million and is on course to exceed $550 million this year, Magee said. Crane’s goal is to grow into a midsize, customer-centric, high-touch provider,” one rung below the small club of multinational logistics behemoths with annual revenue of more than $3 billion, but above midsize companies that typically generate between $100 million and $300 million a year.
“We are very much high touch, high value, high services,” Magee said, adding this means being selective about the business and not wasting time on clientele that looks more for a commoditized services provider or a local hero.
In terms of modal split, Crane is quite balanced. About 40 percent of revenue is in the international air freight sector and about 30 percent each in international ocean freight and surface transportation options.
Imbriani and Magee stress the importance of their respective IT platforms for their companies’ expansion. In both cases, the functionality extends well beyond logistics and basic enterprise management software. Dachser, a $5.9 billion Germany-based forwarder, is rolling out an upgrade of its proprietary software, largely developed in-house. This is integrated with the system of the company’s pan-European trucking arm to give Dachser an advantage over its overseas competitors that want to ship their cargo to Europe.
The forwarder is implementing an aggressive growth plan building up its footprint in a number of Asian markets. As of this summer, the company had 146 branches in 28 countries. By 2017, it wants its network to cover up to 49 countries with 220 offices.
To support its Asian expansion, Dachser has developed its Singapore branch into a regional headquarters. It would be impossible to manage this from Frankfurt, said Thomas Reuter, managing director of Dachser Intercontinental Logistics Air & Sea. “We found we needed to decentralize our structure to strengthen the business possibilities at the regional and local level,” he said.
Dachser also is building its Miami branch into a regional center to manage expansion in Latin America, he said.
Although Team Worldwide has been happy to push into new business fields, it has applied the brakes on its international expansion plans for the past four years, except for a push into Canada and the U.K. with its own branches. Instead, Team has pursued strategic alliances with overseas partners who cover multiple countries, companies that are similar to us in terms of size and dedication to growth,” Imbriani said.
With some closer partners in that loose grouping, the company has established the Team International Global Alliance, whose members are tied into Team’s IT system. TIGA recently expanded into central Europe, allowing Team to offer trucking, warehousing and some light assembly work in the region.
“In the long term, we see Africa as an area of growth,” Imbriani said, but for now there are no plans for an expansion into that continent.
Crane, which started out with three acquisitions, has grown its footprint to 78 proprietary offices and is pursuing organic growth, Magee said. Over the next five years, the plan is to push this up to about 120 branches. The international expansion would be driven largely by customers, he said.
To safeguard capacity and rates, Team is intensifying strategic alliances with a small number of carriers, particularly non-U.S. airlines, because none of the large U.S. carriers operate freighters. “Freighter service or part charters have become a bit more important to us, partly because we are dealing with more unknown shippers,” Imbriani said.
Lufthansa Cargo in 2011 included Dachser in its program for a small number of strategic forwarder partners, which receive preferential access to capacity and rates. The forwarder has reduced its space allocations in line with market developments, but it has made a point of meeting its commitments to its carriers. “For us, continuity and reliability are key elements in our carrier policy,” Reuter said. “If it works, you can also get flexibility from the carriers when you need support.”
Contact Ian Putzger at firstname.lastname@example.org.