CHALLENGING CUSTOMERS

Logistics Insight Asia, 1/5/2008

Today's customers are looking for proactive partners with the expertise to challenge established ways of operating supply chains and to suggest solutions that will increase performance and reduce costs, says TONY HOTINE, Regional Manager, Maersk Logistics. He talks to Bob Gill.

Tony Hotine was recently appointed as Regional Manager, Maersk Logistics Asia-Pacific. Based in Singapore, he is responsible for both the supply chain business, which operates under the Maersk Logistics brand, and the freight forwarding business, which operates under the recently established Damco brand. The company employs some 1000 people in nine countries in theregion.

Educated at Durham and Cambridge universities in the UK, Hotine spent several years in manufacturing management positions in Europe and the US before relocating to Asia in 2001. Immediately prior to joining Maersk he was Senior Vice President for Asia Pacific at DHL Exel Supply Chain.

Q: WHAT MOTIVATED YOU TO JOIN MAERSK LOGISTICS?

A: I perceived Maersk Logistics and Damco as strong brands able to leverage an extensive global network and infrastructure – 200 offices in 90 countries across the world – something which is very important for the business that we are in. And from January this year, this part of the business has been reporting independently (to A. P. Moller-Maersk Group) from the Maersk Line (the container shipping business), which I see as giving us the opportunity to play a bigger role in the industry as a whole.

Q: ANY FIRST IMPRESSIONS?

A: I had generally positive feelings about the company before I joined and these have been more or less confirmed in the relatively short time I've been here. Having already visited several countries in the region, I observe that we have a team with very good capabilities together with a set of strong customer relationships.

Q: HOW IS THE BUSINESS STRUCTURED IN THE REGION?

A: The "Asia Pacific" region actually encompasses nine countries in Southeast Asia and Oceania, namely: Australia, Cambodia, Indonesia, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam. We have a total of 30 offices, some shared between the two brands and others dedicated to either Maersk Logistics or Damco.

A key aspect of the structure is that the two brands are run independently, with each country having a Maersk Logistics manager and a Damco manager. And although there is no longer any day-to-day management relationship with Maersk Line, some shared service functions are in place, like finance and HR. The two brand strategy, I believe, allows us to off er fully integrated solutions to our customers, which is a very strong proposition.

Q: COULD YOU CLARIFY THIS "TWO BRAND STRATEGY"?

A: Maersk Logistics is the supply chain management arm, through which we provide a range of solutions and services to improve the efficiency and effectiveness of customers' supply chains. These include import/export and warehousing and distribution services, and supply chain development solutions such as visibility (Spective), assessment (HealthCheck), and carbon footprint analysis (CarbonCheck). We focus on four key verticals: Retail, Electronics, FMCG, Chemical. Traditionally, most of our customers have also been Maersk Line customers, but increasingly, we will have clients who are not from that channel.

Then we have Damco, the freight forwarding business. As a personalized, flexible and neutral platform, and with access to a global network, it provides a range of services: ocean freight, air freight, inland transportation, customs clearance, and cargo documentation and insurance. The feedback from the market has been very positive since this businesswas launched in mid-2007.

Q: WHAT IS YOUR ASSESSMENT OF THE LOGISTICS MARKET IN THE REGION?

A: In terms of growth, it's been expanding for a number of years and this is something that is set to continue. Although there are some worries over the economy, the business outlook is still pretty positive for the year. In fact, I fi nd that people can be even more open to searching for efficiency improvements in such situations, which presents us with more opportunities to grow our business. In a region diverse as ours, you will inevitably have different countries growing at different rates, but Vietnam is clearly a market that is clearly growing very fast, especially with the WTO accession and as companies look for low cost manufacturing alternatives to China.

Q: ARE CUSTOMER EXPECTATIONS CHANGING?

A: The prerequisite is always going to be the ability to deliver the required service at a competitive price; but beyond that basic criteria, customers are looking for a more proactive, consultative approach: "Tell us what other people are doing, and what is effective, and apply that to my scenario." So the partner that they work must have the expertise to challenge them over how they are currently doing things and come forward with ideas that will deliver improvements.

I also see a desire for leaner, smarter supply chains. Previously, a manufacturer faced with a supply problem and without the time to evaluate the best solution would have likely opted for a quick-fi x, e.g. build a new warehouse in Indonesia. But now, they want to understand how they can become more competitive and efficient, which represents a great opportunity for us, because it's when people are open to challenging norms that they are open to sources of expertise that can help them.

Q: AND YOU FEEL THAT MAERSK HAS THIS EXPERTISE?

A: Yes, and the customers I have visited so far have said that they do see this as a differentiator. With a strong supply chain development team and key-client development managers, we are able to fulfill the role of supply chain advisors to their management teams, and to realize efficiency improvements and supply chain cost savings.

Q: DO YOU PERCEIVE MORE CONCERNS AMONG CUSTOMERS OVER THE ENVIRONMENTAL IMPACTS OF DOING BUSINESS?

A: Sustainability is certainly high on everyone's agenda right now, particularly for companies serving the North America and European markets, and this is only going to increase in importance.

Last October, we introduced CarbonCheck, a consulting service whereby we go in and analyze the carbon footprint of a client's supply chain, as the initial step in an initiative to reduce the amount of carbon emissions being generated.

Quite often, reducing carbon emissions goes hand-in-hand with lowering logistics costs. For example, we did some work with retailer Boots and identified 29 percent savings (over two years) in carbon footprint, which in turn translated to 21 percent savings in total logistics costs.

Q: HOW WOULD YOU DEFINEYOUR LEADERSHIP STYLE?

A: I don't believe in sitting behind a desk and running the business from there. I prefer to get out and about and interface with the people in the offices and warehouses to fi nd out what's going on and what's important. So it's a pretty consultative style: get the input of others and consider different angles in the decision making process. One thing I feel strongly about is that you should treat people fairly; organizational success should not come at the expense of individuals.

If you can align the organization's requirements and goals with people's needs and wants then you can get a win-win and get both positioned for success.

Q: YOUR PLANS FOR THE REST OF YEAR AND GOING FORWARD?

A: It's been very much a fact finding process so far, having just come on board. I have already visited six of the nine countries in our region and will visit the other three – Indonesia, Philippines, Vietnam – soon, and also go over to our head office in Denmark.

Overall, I can say that am thrilled by my new role at Maersk. The industry is growing, Asia is growing, and there are real opportunities to make some game-changing moves over the next few years.

TONY HOTINE

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