Freight forwarding business thrives on Chinese imports
If you ever get a chance to have lunch with Marc Bibeau, grab it. As president of Overseas Express Consolidators, Bibeau helps importers get their textiles, aerospace parts and retail goods into Canada from overseas markets. So when he talks about floods in Bangladesh, the valuation of the Yuan, or problems in Vancouver's port, he knows whereof he speaks.
"We move freight around the world, 24-seven, " said Bibeau while picking at a seafood salad over lunch at Dorval's Forest and Stream Club. "We have to know the details of local operations. Our clients our counting on us to keep our eyes and ears open for potential problems that could slow deliveries."
Transportation is a lingo-filled industry. Its professionals use terms like "third party logistics provider," "freight forwarding" and "cross functional integration," to describe the services provided by middle-men like OEC, who link up clients with shipping lines, air and land carriers.
Bibeau prefers the term "international freight forwarder," to describe his company. About 80 per cent of OEC's business is import-related, mostly from Asia. The balance is exports.
"Our challenge is to use our global network of alliances with various carriers to provide an inexpensive, integrated, custom tailored transportation program," Bibeau said, in perfect jargon.
When Bibeau got into the international freight forwarding business close to 20 years ago, many businesses had internal transportation departments to book traffic, track shipments and to fill in the follow up paperwork. But increased competition has forced even large companies to outsource non-core operations. Transportation departments were prime candidates because of the specialized knowledge needed to run them.
"To an outsider booking a shipment sounds easy. But we do a lot more than that," Bibeau said. "We have a multi-million dollar computer system that lets customers know where their orders are at all times. And we also provide back-up if anything goes wrong."
For example in recent months Vancouver's port has been plagued by huge backlogs, due to a shortage in rail capacity to move containers out of the terminal. One of Bibeau's clients, Authentic Team Apparel, which holds the Canadian license for Puma footwear products, was particularly hard hit.
"Our customers are mostly retailers who work on highly sophisticated delivery schedules. They don't have much patience for excuses," Jim MacPhee, the company's CFO said. "Fortunately OEC had some good contacts. They were able to get merchandise to our distribution centers and we were out of a big jam."
According MacPhee, one of Bibeau's strengths has been the fact that despite OEC's rapid annual growth, --which has averaged 20 per cent over an extended period and should hit $100 million in billings this year,-- the company still acts like a small business.
"They are very service oriented and are more creative than the bigger foreign-owned players," MacPhee said.
Increased import activity from Asia, and especially China,--where OEC has several offices -- have been huge revenue drivers. Traffic at Vancouver's port, - where most Asian shipments to Canada pass through,-- has quadrupled from 400,000 containers in 1995 to 1.5 million last year. And the total is expected triple between now and 2020.
According to Gordon Houston, president of the Vancouver Port Authority, --which is currently in the midst of the of a $1 billion multi-year expansion, --any business that is tied into Asian traffic will do well in years ahead, particularly freight forwarders.
"They play a huge role, especially in grouping together smaller companies that can't fill a single container on their own." Houston said.
Bibeau's brother Wayne, who heads the ocean imports division also works at OEC, as does his son Landon, who is currently doing an apprenticeship at one of the company's Chinese partners, while preparing for his MBA studies this fall.
But OEC's recent success has been a double-edged sword. The company is becoming an increasingly significant player on the Canadian scene, and as a result, it's getting harder to grab significant chunks of new market share. Still Bibeau shrugs off questions about whether he might offer ancillary services such as customs brokerage in the future, to spike his revenue numbers.
"It's hard enough to do one thing right and be the best at it," Bibeau said. "So for the time being we'll concentrate on freight forwarding. We'll see about the rest of that stuff later on."
Sidebar: Bibeau's management strategy
o Focus on providing international freight forwarding services,
particularly for importers. Avoid non-core areas such as customs
Photo caption: According to Marc Bibeau, increased trade and the outsourcing of freight departments by large companies have contributed to OEC's long-term growth, which has averaged more than 20 per cent for the past five years.
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|© 2004 Peter Diekmeyer Communications Inc.|