A Q&A with Tuscor Lloyds
Deputy Editor of Lloyds Loading List - Isabel Lesto interviewed Tuscor Lloyds about how it plans to approach the challenges facing the sector in the new year.
Which markets will provide growth potential in the months to come?
The Middle East and North Africa both look very exciting especially the Energy Sector. Now that the political situation appears to be calming down we are anticipating invigorated regional markets and some bounce back over the next 12 months. Libya especially is seeing strong growth since the fall of the regime.
We are seeing increasing activity in Brazil right now as infrastructure and development gathers pace for the World Cup and Olympics. We expect the market there to grow further over the next 2 years. We are seeing a great deal of project cargo to Brazil, especially from the continent.
Have customers changed the way they choose service providers?
The market is becoming cost driven – more than ever. Our customers move very high value cargo and they used to demand service before price. The demand for service is still there but the customers seem to be going out to the market and tendering jobs more nowadays. The problem with this approach is that they may drift towards inexperienced suppliers who look like they’re cheaper but the shipper will find costs increasing through the job.
Where are customers cutting costs and how does this affect the way you operate?
There seems to be a desire for shippers to deal directly with the shipping lines at the moment. The perception is that they will save some money by ‘cutting out the middle man’ but often this leads to headaches and mistakes. We are constantly improving our service offering, as this is the primary draw for our customers and one that the shipping lines can’t compete with.
We do find ourselves being squeezed on price because others claim to offer the same service for less. Customers find they are hit by surprise costs and this is where unscrupulous operators are making their money. Much of our cargo is time sensitive so another common trick is to offer earlier sailings to win the job, and then once the cargo is safely in hand the customer finds the vessel is delayed. We have maintained our high standards and always tell the truth. You try and educate the customer – as the saying goes: if something is too good to be true, it usually is.
Is the industry facing any equipment constraints?
Apart from the usual seasonal problems with haulage and road coverage, there seems to be a shortage of special equipment in the UK and Europe right now. Most shipping lines are claiming they will not be able to find equipment until the New Year. Furthermore the depots are struggling to find time and space to handle loading jobs. Fortunately our supplier contacts are well placed. They are finding equipment and space for our customers. Long standing relationships based on trust is the key to getting things done. Ours is still a people business.
What’s the situation at the moment with availability of charter vessels and lease costs?
In contrast there seems to be ample space and availability in port and on conventional vessels at the moment. Our chartering desk has been able to secure some very interesting cargos lately. There is certainly some good capacity available, especially short sea and inter-European trades. Cargo handling in port and on board vessel stevedoring is also easy to organize right now.
What changes in the shipping industry have most affected your business this year?
There appears to be more forwarders and shipping lines who claim they know how to ship heavy and abnormal project cargoes. They are attracted to the market because margins are better than their native container-based businesses. Many of these companies actually lack the expertise or ability to do a good job. Their service levels are poor and they make frequent and costly mistakes.
Some customers have been seduced by their promises, probably by pushy sales staff and heavy marketing campaigns. Almost all these customers returned with grim stories of big problems on relatively simple projects. Experience and integrity are important in todays’ market. We primarily sell knowledge to our customers. They use us as a ‘safe pair of hands’ for jobs which are rarely straightforward such as complicated multi-modal and cross trade movements.
What political changes have most affected your business this year?
Due to the global economic crisis, we feel there is over capacity and pent-up demand at the moment in the heavy lift market. Many exporters seem to be waiting for something bad to happen but we have thrived in this challenging environment. Our reputation as a reliable partner has allowed us to retain our key accounts and instil greater loyalty in our customer base.
Many companies are being squeezed by lack of cargo and falling revenues. Operators must be financially secure and able to handle problems if they occur. Too many shippers go purely on rate and fail to understand the implications of corporate failure and how close some firms are to going out of business.
What do you see as the single biggest challenge for your sector in the year to come?
The economic environment continues to challenge everyone in the freight industry. I think we will see many of the weaker firms falling by the wayside. The ones who remain will be all the stronger for it. Thankfully at Tuscor Lloyds we are seeing an increase in profit year on year. Not many in the industry can say that right now and this is down to the hard work and determination of our staff.
What was your growth strategy this year and how will you approach the next 12 months?
Our business model works well, but it is based on knowledge. We are gaining expertise by making a point of training the right people in house to think like us. The aim is to expand our project management staff numbers further. The more people we have who know how to handle project cargo intelligently, the better placed we will be to secure an even larger market share.
North Africa is really taking off for us right now and we’re looking at expanding our market share in the region. Much of the work is oil and gas industry related and as this sector is our specialty, we are finding a great deal of business out there. We are also expanding our offer in Brazil. We are working with some fantastic people over there and we’ve got some very big plans for our South American offer next year.
