Interview with Johan Vermeiren of GAC

Posted by Greg

April 17, 2008

Logistics Manager Magazine, April 2008

If you charted the changes in the shipping and logistics industry, you’d likely end up with a graph full of dramatic spikes and deep valleys. In a business where great changes happen on a year-to-year or even month-to-month basis, staying afloat is a task that has seen many established companies succumb to forces beyond their control.

But a fine example of a company who has ridden out the storm time and time again is GAC. An early photo of the company’s humble beginnings in Kuwait contrasts greatly with the global shipping group as it exists today: a grainy black and white photo of a tiny shop house on a dusty street with the words “Gulf Agency Co” above the door. As it moves full steam ahead into the 21^st century, LM sat down with Johan Vermeiren, GAC Thailand’s Managing Director, to talk about the company’s changing value structure, employee training program, new logo and even his favorite beer.

Vermeiren, who is Belgian, left his native country 14 years ago to follow the only career he’s ever known. “I spent a few years in Denmark and Sweden and then five long years in Ukraine. At the end of my contract, I was offered the choice of more time in Ukraine, or a stint in Russia, but was also offered an opportunity to come to Thailand. Needless to say, it was a decision I made in about three seconds.”

Vermeiren thrives on the challenges that the industry throws up on a daily basis, saying “someone told me of a Winston Churchill quote recently that went ‘a pessimist sees the difficulty in every opportunity, while an optimist sees the opportunity in every difficulty.’ I like this statement, because I enjoy the challenges that I deal with. Not so much the difficulties,” he laughs, “but I’m certainly not against change.” To echo that statement, he talks about how the industry has changed in recent years and what GAC is doing to meet the challenge head-on.

“The biggest change I’ve seen is that the business is becoming more and more of a commodity. Anyone can move something from A to B, but the challenge is adding value to that process through service, information and integration. The industry in general has grown enormously, but has suffered from a lack of service and renewal; it’s stale. Many of the biggest companies are focusing on volume and getting product moved, but at GAC, we’ve decided to go in a slightly different direction.

“We’re working on a five-year plan, but we’re not communists,” he laughs. “Our previous five-year plan was called ‘Vision X - Global Reach’, of which the key drivers were going global and growing in terms of volume and office locations, as well as getting our brand out there. But as of January 1^st 2008, our plan is called ‘Vision Y - Global Values’, which is a very big shift. It’s no longer about getting bigger or expanding at any cost, but about doing the things that are best for ourselves, our customers, our colleagues and our company.”

This may sound a bit naïve - even dangerous - in the cutthroat logistics industry, where everyone is pushing for bigger ships, faster planes, taller cranes and a greater global footprint, but GAC is on solid ground. Drawing from over 50 years of experience and its respected brand name, the company is well-positioned to blaze a new path.

“GAC has three main areas: shipping, which is focused on ship owners and port activity; marine, which is focused on oil and gas and related support services; and logistics, which is essentially just moving things around,” says Vermeiren. “Our old vision was focused entirely on growing each unit, but with ‘Vision Y’, it’s more about integrating the three, consolidating our services and giving our customers more value for money.”

By streamlining service and approaching new and existing client requests with energy and creativity, Vermeiren and his team believe that they’ll be uniquely positioned to offer something that can’t be found elsewhere. “We want to focus on smaller industries - not the Nike’s or the McDonald’s of the market - and work to service them perfectly, to offer unique solutions for a specific market and for specific customers.”

A good example is the oil and gas industry, where GAC sees an opportunity to combine its services and offer a leaner, more efficient working style. GAC has equipment yards in Songkhla and Satahip where they manage the large machinery used in drilling, while GAC IT systems are used to mange customer inventory both on- and offshore. Further to this, they are working to streamline associated freight from Houston, Korea, Norway and London into Thailand, in effect adding door-to-door service. “What we’re essentially offering is added value from an IT point of view, as well as an understanding of our customer from a business point of view,” says Vermeiren. “Our growth will come from consolidating the services we have and growing better, not faster.”

Supporting this theory are a number of case studies focusing on companies that grew too fast and ended up either collapsing, or as a shadow of their former selves (Yahoo! is a good example), something that GAC management is well aware of. “We don’t want to grow too quickly and become unmanageable,” explains Vermeiren. “Let’s do it slower, the conservative Scandinavian way. That’s where we felt uncomfortable with globalization and our previous five-year plan; things were going too fast and we were losing touch with our own company. We still want to be able to touch the things we do, and control exactly how they pan out.”

To prepare for this change in corporate working style, GAC is investing heavily in staff, sales and training. One aspect of this is the innovative GAC Corporate Academy, a specially designed hi-tech program that, according to the GAC website, ‘recognizes that people and organizational learning are fundamental enablers of our business, and global values are what make us unique.’ “Ninety percent of the training is online via webcam, which means you can have class with your GAC coworkers from around the world, but don’t have to travel,” says Vermeiren. “It generally involves a lecture by a specialist, followed by a discussion on that topic where everyone contributes.” An example of the course is an upcoming seminar being given by Singaporean supply chain professionals. “It’s important that everyone at GAC understands that, from a logistics point of view, our service is only 5% of our customers’ needs. It will really demonstrate that there is so much more opportunity for growth in Thailand.”

In terms of sales, GAC isn’t resting on its laurels either. They’ve hired six sales staff in the past month, and aim to have another four next month. “However, it’s not just a blind dash to find new customers, but on identifying new customers who will stay with us for a long time. We look for salespeople that can identify customers who want to move freight, obviously, but who are also interested in our value-added services, such as proper documentation, IT support, integration of warehousing, transport, and all of the other steps involved. We want to offer value, not volume.”

The discussion shifts to the fact that GAC is considered by many to be primarily an ocean carrier, which is incorrect. “Air freight actually makes up the majority of our business in Thailand - 60% by volume, a number that will continue to grow as we develop routes into Europe and the US.” But despite this, GAC will start to pare down its air service. “We currently hold over 40 airway bills, which is a bit too much,” says Vermeiren. “You can’t have a close relationship with 40 carriers - we need to select a few and grow the relationship. Even someone like DHL, who has volume much higher than ours, doesn’t use everyone.”

Vermeiren is asked how GAC gets past the perception that many forwarders will end up skipping to a customer who offers a better rate. “Three words: communication, communication, communication. Involve them in the sales activities, and base your relationship on trust and sharing of information. If you’re doing that, the carrier will say ‘they’re not going to screw us’. If you keep talking to them and try to understand their problems, you’ll have a successful relationship. You can’t carry out CRM (Customer Relationship Management) once a year - you do it every day.”

To echo this, he tells a story that involved a new GAC staff member, who was hesitant to make a rather large move into a new industry. “She called up one of our biggest customers and told them her situation, asking them what she should do. They told her that working for us was the best move she could make,” Vermeiren says proudly.

Topping off the changes at GAC is a shiny new logo, reflecting their willingness to adapt to a changing work environment. “Our old logo was becoming a bit outdated. The new one is a bit sleeker, and includes the colors of the Swedish flag, which is where our founding members were from. And seeing how 60% of our business is in the Middle East, the slightly-Arabic design probably wasn’t an accident. It’s a modern, classy combination of things,” he says.

Vermeiren is obviously prepared to stake his reputation to GAC’s success, explaining his feelings on making money versus serving the customer. “The international economy is too focused on money these days - no one cares about the quality of the product you’re making, or what your customer is feeling. People only care about how much money they make and how much the shares are going up, which is sick, I think. A good CEO shouldn’t just be worried about a few anonymous business men in a boardroom.”

And in case you were wondering, Vermeiren’s favorite beer? “XX. It’s the best beer in the world,” he smiles.

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