Logistics alliance ushering in new era of co-opetition?

In one of the first signs in SA of a true alliance between two previously competitive logistics operations, Barloworld Logistics has formed a partnership with LBH Africa. “We term this a ‘smart partnership’,” Kate Stubbs, Barloworld’s marketing and communications manager, told FTW. “Part of our strategy is – if you want to offer a comprehensive solution to your customers – you need to link up with other parties in the supply chain.” And, in this case, the two companies are linking up their specialities in the movement of dry bulk commodities into and out of southern Africa. In this, LBH is offering its expertise in bulk movement at SA ports and the accompanying international forwarding formalities, with Barloworld bringing along its complete logistics, transport and technology package on the southern African landside supplychain leg. “Between the two of us,” Stubbs added, “we can therefore offer a whole solution in dry bulk movement. Co-ordinating our skills, we get the shipment to the right place at the right time and at the right price to all the points along the local and international supply chain.” This is a logistics industry example of a growing trend – where competitors are collaborating, not competing. It is a form of the alliances that shipping lines and airlines are keen on, where tying together services gives the added muscle of the integrated entity to each of the partners. It’s also what supply chain fundis preach all the time – when competitors collaborate it reduces logistics costs, something that is good for the country. As Keith Horn of logistics major, Savino Del Bene SA, told FTW in a recent story: “Sharing knowledge, information and skills makes us a stronger industry, to everyone’s mutual benefit.” He pointed out that in a changing environment SA logistics companies did not have the strength to meet customers’ rapidly evolving and highly demanding needs. “But this can be achieved through industry integration and collaboration,” he added. A similar sentiment was also expressed by Steve Ford, CE of Barloworld Logistics. Talking about his company’s tie up with LBH, he said: “The combination of our specialist skills and in-depth practical knowledge enables us to customise, optimise and enhance dry bulk commodity logistical processes – and, in so doing, reduce operational costs, improve service and increase reliability.” And this “co-operate, not compete” concept is certainly very much part of the thinking of lots of others in the SA logistics industry. “It’s all about volume,” said Anthony Dawe, MD of Bidfreight. “Anything that can make the supply chain shorter or increase the volumes has to be a good thing. He also pointed out that SA logistics businesses were, in essence, pretty small entities in global terms. “Any form of merger makes for a larger, integrated entity,” he added. Referring to the Barloworld/LBH partnership, Dawe said: “It’s not unusual in this country, but usually in the form of mergers and takeovers. And there have been lots of them in recent years. “This is just a merger in everything but name.” Stubbs did not disagree with this last statement. Questioned by FTW about it being a possible precursor to an equity merger, she suggested that this smart partnership might possibly lead to a joint-venture being formed at some future stage. There’s general consensus that there are great opportunities in this co-operate not compete principle – what the Americans call ‘co-opetition’.