Stripped to its fundamental principles, the role of the supply chain is to ensure that the right amount of the right product is in the right place at the right time. Those that are most successful in this field are those that meet the fundamental criteria and do so while extracting the maximum amount value.
In principle it sounds so simple and in practise it ought to be too – but life is rarely so easy. In the context of the last six years, the shipping supply chain has been about survival. Many ship owners were forced to abandon long-term value-driven strategies in favour of quick wins; cash was king and high-debt and low asset value meant that value was hard to come by. The message in many purchasing departments was clear: spend as little as possible.
A shipper's success
The last six months however point to a resurgent shipping market and a bright future for the industry. The accountant Moore Stephens reported in March that shipping confidence levels were at their highest levels since 2008, while the spate of orders indicates a returning liquidity to the market. The signs are good for the industry and that can only be good for purchasing departments: a return to value as a principle, not a matter of survival.
In Holland the signs are good too, and in particular for Neko Ship Supply. The company has just reported its busiest three months since forming in 2002, a fact that is all the more impressive when you consider that it maintained steady growth in the period 2008 to the last quarter of 2013.
Added to that is the opening of operations in the Spanish port of Algeciras at the end of 2013 and an intention to move to larger warehouses (currently 3,500 sqm) to accommodate an increasing demand for the company’s services.
The success, according to Commercial Director Eric Bezemer, is down partly to the team at Neko and partly down to the way it approaches its customers.
‘‘In 2002, we were the new kid on the block,” says Eric. “We had to put a lot of effort into getting our name out. We wanted to be the best and most successful ship chandler in Rotterdam, so we invested a lot in the latest software, we were the first to achieve the AEO certificate, we were also very active in marketing and promotion. We travelled a lot – of course we had to.”
"We have grown since 2002, very fast up to 2008. During the recession years we still managed to maintain the growth, although it wasn’t as steep as in the first six years.
"What we saw – and of course it doesn’t help if our customers are struggling financially or otherwise – was that when some of our customers’ ships were making US $1,000 a day, we still didn’t see any messages from customers that it was ok to raise our prices by a few per cent.
"So, what that means is that whether the times are good or bad for our customers it only has some influence on how successful we are." Recognising that been fundamental to Neko’s continued growth.
Value as standard
Synergy may be a dirty word in business, maligned for its association with new age business talk that has seen phrases such a ‘blue-sky thinking’ and ‘thinking outside the box’ ridiculed out of use.
In practise though, synergy is providing extra value to Neko’s logistics and supply chain operations through the medium of clustering - the practise of consolidating stores and spares in a single warehouse and delivering them on the same truck. The theory behind such services isn’t new, but it is surprisingly uncommon in the shipping supply chain.
"We have always offered this extra service because we see the synergy when we can combine the delivery of provisions and stores with the delivery of owners spares," says Eric. ‘Some owners might opt for having as much stock as possible at the producers, some for having several hubs in the world where they stock some base spares.
"These are usually sent to us by owners because they know a ship is heading to Europe along with all the direct supplies."
To complement this offering, Neko has put in place a system that allows ship owners to monitor all the spares that it has received and that are ready for delivery 24/7.
"Either the buyer or superintendents, can log-in," says Eric. "It’s always transparent and visible."
The added value for the purchaser is tangible. It helps to cut costs on the logistics front, making it very economical to include the spares in the same delivery as the provisions. It’s so far proving popular among the purchasers Neko deals with.
"There’s an increasing demand from purchasers and superintendents for this type of service," Eric adds. "It’s a very competitive business, so we have to look for ways that give added value to purchasers.
"When you try to compete with prices there’s not always much left over, so instead of looking at prices all the time we have started to look at logistics costs with our customers. It’s a slightly different approach, but if you can sit down with your customers and talk about a different format for the service-level agreement then it’s mutually beneficial, after all transport is expensive.
"It eliminates a lot of problems in the supply chain too, such as transhipment. Just imagine the difference between our truck and a Neko truck alongside a ship carrying everything or the ship will receive deliveries in five different batches. For the purchasers it’s not just a cost benefit - it’s a time saver too."
Consolidating everything in Rotterdam is a logical choice for many purchasers too. Because of its location and links, it is easier to justify transport costs to Europe for bigger volumes.
The same system is in place for Neko’s operations in Algeciras. The port is one of the busiest and fastest growing in Europe, so it was only a matter of time before Neko capitalised.
"Offering this service makes it possible for ship owners and ship managers to consolidate more. They can turn to us when it comes to the delivery of provisions and stores but also use our warehousing for sending owners goods to us," says Eric.
"From Rotterdam if the customer is able to consolidate and create enough volume, Rotterdam is a very favourable and competitive port to centralise your purchasing in. And from Rotterdam transport your goods all over Europe.
"Having said that, Algeciras is a long way, so you need a considerable volume justify transport from Rotterdam to Algeciras. That’s why we have decided to set up there.
"On the whole, people are very enthusiastic about clustering; it takes a lot of the worries away from the buyers and superintendents. It helps them to get on with their job and to deliver better value, which is good for the supply chain."