22 Juni 2016

[220616.EN.BIZ] ECU Worldwide Has Come a Long Way in 29 Years To Become A Top NVOCC

IN recent times, much of ECU Worldwide expansion has been due to organic growth and acquisition. This has been achieved at a time when the entire logistics sector was facing great difficulties worldwide.

During this period, the company increased its product offerings and upgraded its IT though innovation. While vitally important, ECU Worldwide really credits its rise to the top to a deliberate focus on customer service.

This is what emerges after an interview with its Asia-Pacific CEO, Uday Shetty, as he detailed the activities and development of his recently re-branded company, which last year moved 250,000 TEU and looks to a 14 per cent year-on-year increase in 2016 within the Asia-Pacific Region.

ECU Worldwide started in 1987 as ECU- LINE in Antwerp, but it was acquired in 2006 by Allcargo Logistics Ltd, India's biggest private sector logistics provider. "It was first named in an effort to associate itself with the EU," said Mr Shetty.

In May, 2016 the company rebranded as ECU Worldwide, bringing its 300+ offices in over 160 countries under a single name. The quest is to unite it global elements is now expressed in the slogan "Geography Simplified".

The word "Line" was dropped in the re-branding. When conceived 30 years ago, the term emphasized the firm's commitment to regular shipments of LCL (less than container load) cargo, then known as "consol" for consolidated. But then, these terms were little known at the time.

"We have close to 190 owned offices now," said Mr Shetty. "The reason we do not call the others as agents because they are really partners. We have been working with them for 10 or 15 years."

This results in corporate bonding, he said. "Culturally, and from a business perspective they have integrated with us. We know how their business is done, we know the people. We just change the shareholding - not the way things are done."

Such takeovers are part of the company's recent growth. "But acquisition is not simply adding to our number," he said.

Starting up one's own office challenges competitors while taking over a partner's business is less of a threat, he said.

When one buys out a partner, his total business, rather than that portion, which is contracted to ECU, now accrues to the central treasury, which impacts greatly on overall growth numbers.

"Organic growth ranks pretty high too. We have opened our own companies. Malaysia office was inaugurated in 2014, we expanded further in Indonesia and now we have five offices. China too has been big on our priority list. Over the last 5 years we opened 20 offices in Asia-Pacific,?he said.

"Our main segment of business is LCL trade lane. Our main strength is the number of daily connections and the number of sailings per week," he said.

"There is a general expectation that we have a basic service once a week, and to all destinations once a fortnight. We have a global vision and invest in that because we know we can go in with X investment to get Y return."

In acquisition mode, ECU Worldwide discusses the prospect with the target firm, most often a long-time partner with whom the group is on friendly terms.

"In most of the cases, the existing teams remain with us. The incentive for them is that we open up the other part of the world for them to do more business because they are part of the company."

Examples of China and US operations came to mind. "When we acquired a company three years ago in US, we didn't have our own presence in the USA. We were represented by an agent."

Up to that point ECU Worldwide's strength was in rest of the world excluding USA. "We were just managing, and were not aggressively buoyant in other countries."

"The same happened in 2010 in China," he said. "We were not that aggressive on China. We acquired a company in China and that investment opened the market. So in the last three years, yes, the market may be going slower, but we have grown faster than the market."

That, Mr Shetty said, these investments ECU made in China and the US helped them to tap the potential of these bigger markets.

"It's just not an acquisition, but the growth and the additional volume that came with it. And the benefit is not only for that one company. Since it's a network company, all of the rest of the companies benefit too," he said.

He said today's challenge was meeting customer expectations. "When you go to the customer, they normally want one-stop solution. You have to offer air freight, freight load, packing, distribution, first mile, last mile..."

As for the rebranding and energising, the company's intention is to expand services, into IPI (inland point intermodal), D2D (door-to-door) delivery, DDU (delivered duty unpaid), DDP (delivered duty paid). These, he said, were now accepted practices in the common market.

"It is the same concept we have seen growing in Europe as well in trucking services. The same thing in China as well," he said, again illustrating ECU Worldwide's transfers of techniques acquired in one region of the world and applied to another.

Then there are disruptive technologies and disruptive companies to deal with. "It is already here in a small way, but there are many more, which may not immediately pose a threat, but will," he said.

As to current freight rate volatility, he said: "If our suppliers are not in a healthy financial condition, they will compromise on service and something will go wrong, and that would affect our customers".

"It's not just us, but the whole industry. What's good for the industry - and for us - is that rate level should be maintained at a certain level. Fluctuation is unavoidable. The advantage for us is that the intra-Asia rates are pretty stable."

Source : HKSG.

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