APL’s Sartini lays out customer strategy
For APL chief executive officer (CEO) Nicolas Sartini, the ‘can-can’ attitude of the Singapore-based carrier’s people is just one advantage that helps the 170-year-old company draw its crowd of customers.
According to the French national, understanding and anticipating client requirements is vital given the existence of some very demanding customers – particularly those in apparel and electronic items, who require speed to ensure goods are sent to market quickly.
“We are moving boxes but what is behind the boxes is customer needs. We need to supply solutions,” he tells Fairplay, stressing the importance of offering a variety of services to the customer and product sides.
According to Sartini, there are currently three groups of actors on the container scene. There are those that fall within the Maersk model of being integrated companies; the second set is the traditional freight forwarders who have the network but are being challenged by digital entrants; and the last is the disrupters: the e-forwarders who have come in with good IT tools but must prove that they can deliver the service and have a network.
The race between the three has started, he says, and for APL “as a traditional shipping company offering door-to-door [solutions], as well as insurance, [we’re] 100% integrated. We are trying to position ourselves with innovative solutions”.
One of these solutions will be its new Eagle Express X (EXX) Service. Being launched just before the peak season starts in July, EXX will offer an 11-day service between China and Los Angeles, California, with containers available for collection from APL’s distribution centre outside the port within 24 hours of a ship’s arrival.
Using this service to focus on a specific niche in the trans-Pacific – where volumes are forecast at about 2,000 teu/week – Sartini hopes he has found a sweet spot between air and ocean freight.
“There has been a huge push on to air freight – it is saturated, so prices are high – and we want to offer a solution that is between ocean and air freight. Take a 40 ft container. You are looking at between USD25,000 and USD40,000 to [move] that volume [by air]. If you look at our price, we will be higher than normal ocean freight but lower than air freight,” he says, adding that the proposed service has been well received, as “customers like this new idea”.
Sartini, who joined the carrier following CMA CGM’s acquisition of Neptune Orient Lines (NOL) in 2015, which saw it become a wholly owned subsidiary of the Marseille-based group, says the APL brand really means something in the United States.
Unlike other container companies that absorb brand identities when acquiring rivals, CMA CGM’s policy is to retain and develop the brands it acquires, which have included shortsea operator MacAndrews, Australia’s ANL, and, more recently, Brazil’s Mercosul.
According to Sartini, CMA CGM CEO Rodolphe Saadé, who started out in the family business as a trainee and later became a line manager who focused on the trans-Pacific, is a great believer in the APL brand and knows its strengths, especially in the US market.
The carrier is strongly associated with the trans-Pacific – in addition to its offering as part of the Ocean Alliance, it has four independent services, including its US-flagged service, EX1 – but the potential of intra-Asia trades is not lost on APL.
“Intra-Asia is a big area for development. Based in Singapore, we are where the action takes place. We have operated in this market for many years and we see several opportunities here,” Sartini says.
“It is a vibrant market but customer requirements are slightly different. In the United States, lots of intermodal support is required. Every second container that we discharge in Los Angeles is going by rail and we need to make the arrangements for this. It is a big piece of what we offer in the United States.
“In Asia, the offer is simpler because it is mostly port to port, so there is less intermodal. You need to offer fast transit times, as well as frequency, because of the short distance and there is a lot of reefer cargo. It is really about service density,” he explains, adding that it is one market in which demand will continue to grow.
Singapore is home to APL’s head office but it has also become CMA CGM’s Asia headquarters after it moved from Hong Kong following the NOL acquisition. Close to 1,000 people work for the CMA CGM group in Asia, with at least half working directly with APL, and Sartini is impressed with the city state’s government’s engagement with maritime and the level of local skill.
“I like the pro-business approach of the Singapore government – they clearly want to push maritime activity – and I love the energy and pragmatism of the people. I call it the ‘can-can’ attitude. When you present a problem to a Singapore team, there is a keen determination to find a solution,” he tells Fairplay.
One such solution being explored is blockchain technology, and APL, having worked with partners that include AB InBev, Accenture, Kuehne + Nagel, has successfully tested its own e-bill of lading.
Joking that paper bills of lading date back to “the Renaissance”, Sartini stresses that a digital solution will be a game changer for the industry and APL, leveraging its strong relationship with the Port of Singapore Authority, is committed to this specific technology, adding that it will be “a big one that will benefit the whole industry”.
“We have conducted a proof of concept and it works. We have been able to move the e-bill of lading from the shipper to the shipping company and back to the shipper, so we know it works. We need to involve banks and other bill-of-lading stakeholders in the second stage as they will be a big part of this movement.”
A graduate of the École des Hautes Études Commerciales business school in Paris, Sartini has spent his entire career in shipping after landing in the navy during his military service. Stationed at Djibouti as a liaison officer and looking “very elegant in my white uniform”, he spent a lot of time in the port. Thereafter, he joined Africa specialist Delmas before a return to France to start his 25-year relationship with CMA CGM.
Sartini’s zeal for the industry is palpable and he has no hesitation in getting his points across. “There is one thing that I must raise,” he tells Fairplay, “It is not a very sexy subject but nonetheless important, and that is the global sulphur cap, which comes into force in 2020. We talk about it in every meeting with customers because our concern is to create awareness.
“It’s a good decision for the environment and one you can only support,” he says. “But it will have huge economic impact on container lines because they will be the ones to take the bunkers and they will have to pay an additional USD200/tonne.
“We will be the ones who foot the bill [APL estimates a price tag of between USD250 million and USD400 million], and we are telling our customers that we cannot absorb this cost. They have to be ready. It is a hard deadline and they have to accept that there will be additional costs.”