A tough year ahead for groupage market

Just 12 months after the
takeover by US-based
Vanguard Logistics
Services (VLS), FTW
quizzed marketing director
Raymond Cutts on just
what this has meant for the
company.
And he said that he
was able to report an
exceptionally strong year.
“Our customers
experienced an expanded,
seamless and single-point
access to trade lanes
worldwide – and our numbers
were up all round.”
But, with a tough year
ahead for the economy in
general, what does that mean
for the groupage market?
Will it also be under the
screws?
“It is going to be tough as
usual,” said Cutts. “Importers
want to drive down their
costs. And the first area
they look at is the freight
component.
“The irony is that if you
analyse the total supply
chain, freight costs are
usually one of the lowest
input costs.”
So, what are some of the
biggest challenges – rates
being undercut, capacity
issues, infrastructure
issues, competition, border
inefficiency if you are an
over-border
operator?
All that is
just “business
as usual” as
far as Cutts is
concerned. “We
will always
have challenges
that we need to
overcome.”
However,
there’s a
general
understanding
that groupage
operators tend to score in
an economically depressed
environment so that
importers can avoid holding
vast inventory. Was the
uptick in business in 2016
related to this?
That’s definitely one of
those ‘it depends’ answers,
according to
Cutts. “For
example, it
depends on
the trade
lanes in
question and
the going
freight rate
with the
carriers,” he
said.
“Current
freight
levels lend
themselves
to lower breakpoints, so
groupage operators are
not getting the base loads
we used to and have to
ensure that we maximise
our utilisation. In addition
multinationals are also
occupying that space and
doing their own consols.”
But competition is the name
of the game. “Customers need
to manage their supply chains
in the most cost-effective way
possible,” said Cutts. VLS
has the product offering to
provide tailored solutions to
assist freight forwarders in
managing supply chains for
their customers.”
In terms of future growth,
the company’s Africa
ambitions are still very much
in focus.
“We’re still progressing
on that front,” said Cutts,
“but it has been a year of
consolidation in SA because of
the integration into the VLS
network.”
INSERT AND CAPTION
The irony is that if
you analyse the total
supply chain, freight
costs are usually one
of the lowest input
costs.
– Raymond Cutts