Network Shipping's Third-Party Cargo Program Delivers Robust Returns
The wholly-owned ocean logistics arm of fruit producer Fresh Del Monte has launched a brand makeover, including a revamped online presence, as it continues to organically grow its third-party freight services in close partnership with liner agency Inchcape.
Coral Gables, Florida-based Network Shipping (NWS) has launched a brand-new, efficient, and easy-to-use web presence that streamlines customer bookings and trade-lane info. It has also invested in marketing, a new visual identity, and improved its service functions with digital technology to support human interactions.
Part of the rebranding involved renaming its four ‘smart’ routes to and from Guatemala, Costa Rica, Ecuador, Peru, and the US after endangered marine species, including the Hammerhead Shark, the Manatee, Bottlenose Dolphin, and Leatherback Turtle. “We try not to get in the way of sea life and wanted to raise awareness around vulnerable creatures that are under threat. This includes the global shark-fin trade in the case of hammerheads, pollution, climate change, and marine plastic trash like discarded fishing nets,” said NWS Senior Vice President Shipping Operations Helmuth Lutty.
“It’s an unusual profile and distinguishes us from the liner pack, along with our focus on service excellence, integrated ocean and inland solutions, flexibility for last-minute changes, route optimization consultancy, reefer expertise, and real people at the end of the phone – basically everything central to our boutique philosophy,” he adds.
New ships, new goals
NWS deploys its new fleet of six fully cellular reefer box ships on the four routes, delivered between late 2020 and early 2021. All are of 13,000 TEU with 634 reefer plugs. They replaced traditional reefers mirroring the worldwide trend to containerize key reefer trades. “The ships enable us to offer reefer space, FAK dry cargo, and project cargo. Being identical, they also provide unmatched flexibility, as we can switch them around without compromising schedules. But the constant challenge is to maximize utilization, which in turn improves product transport costs for Del Monte, our mother company and largest customer,” says Lutty.
Three of the Del Monte sister ships providing the service (Network Shipping)
Business model reset
NWS knew at the outset that its existing business model would not work. “We needed network coverage as soon as possible to leverage the new ships’ capability, but our own funnel and manpower were too narrow. While we are a lean organization with agile decision making, we needed the support of an experienced partner to materialize our growth and revenue goals,” says NWS Head of Commercial Francis McCawley Foster.
Exhaustive due diligence
So began the search for a third-party agency with a solid networking track record, international coverage, and the necessary compliance expertise. They appointed Inchcape in early 2021 following a tough vetting process. “A winning culture, trustworthiness, and an approach that doesn’t cast the customer as the enemy were also key criteria. Very few agencies were willing to do what we wanted, but Inchcape was aggressive and reflected our own ambitions. That gave us the green light,” says Lutty.
Results speak for themselves
The collaboration has exceeded expectations. In 2019, revenue from NWS’ third-party program was $20m, and $13m in 2020. “We hit the ground running and 2021 turned out to be a record year both in revenue and moves. From the May 1st start date, we finished on 36,000 TEU in volume and exceeded our revenue goal of $42m. We set up new agencies in the US, Guatemala, Costa Rica, and this year, in Peru. Inchcape is also involved in our southbound Ecuador business. We achieved this together based on willingness, openness, and finding synergies,” says Mc Cawley.
He stresses the remarkable success in filling the vessels. “Growing 200 percent in a short space of time ups the chances of making mistakes as transactions multiply. We’ve managed to pull it off with the right team, the right solutions, and professional delivery.”
Building the brand
NWS’ value proposition is to provide the best solutions with a human touch. “As a hybrid shipping line/cargo owner, we feel and understand the same market pain points as customers. We didn’t want to follow a ‘one size fits all’ model, but one where each and every customer is equally important no matter their size,” says Mc Cawley. “We can’t tailor transit times, but what we do offer is transparency, rapport, and reliability.”
Lutty adds that NWS’ close to 100 percent on-time arrival record is unique at a time when third-party carrier services are in a shambles. “The fact that the big lines are well under the reliability average of 75 percent across shipping generally has been a big opportunity for us, and we’re filling the gap.”
Customers are showing their appreciation, with NWS scoring top marks in service delivery evaluations. “For example, last year we moved 890 boxes for logistics company UCC, and almost 200 units already this year. We now rank as their Number One service provider in North America, which is great motivation. It proves that doing this from scratch was the best scenario allowing us to innovate and make corrections early on,” says Lutty. “We’ve made a big dent in the market and generated a lot of interest. Even competing fruit producers are now shipping product with us.”
The road ahead
The big goal this year is to achieve revenue growth of 50 percent on 2021, rising to $100m within five years. “This will require a huge effort from the sales team, both northbound and southbound. We’ve already moved over 300 boxes in only eight weeks since the Peru route began, for example. All credit to our team, who are now even more engaged and hungry to increase business,” says Lutty.
NWS also aims to become more proactive as a logistics partner in cold-chain solutions, for example cold storage at ports and cross-docking. “Logistics becomes much more visible when things go wrong, as the pandemic clearly showed. Customers are crying out for a reliable partner, and we want to build extended products enabling better end-to-end solutions. A keystone for us is doing this as an asset owner,” Mc Cawley concludes.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.