There's Wind In The Sails
By Carly Fields
Freight transportation services provider C.H. Robinson is no stranger to the usual project cargo-hungry sectors of upstream oil and gas and mining. But the hottest sector for the Fortune 500 company’s project logistics department at the moment is power generation – particularly wind energy.
In an exclusive interview with Breakbulk magazine, Frank Guzman, senior director of project logistics at the company, says: “For the next three years, we are expecting an increase in freight spend in that sector due to the safe harbor law benefits, so we’re adding resources in our wind space and ensuring we have the right team.”
Under the safe harbor clause, wind projects in the U.S. are allowed Production Tax Credits if a minimum of 5 percent of the project’s total capital cost was incurred before Jan. 1, 2017 and the project is placed into service before Dec. 31 of the fourth calendar year after which construction began.
But while wind-related business is expected to boom, there are capacity concerns for shifting wind components when it comes to haulage. Not only are units increasing in size, challenging truckers and forwarders, the number of skilled drivers is not increasing commensurately.
“That’s going to be a major challenge and so we’re going to really rely on our strategic carrier relationships to secure capacity to make sure that we meet our customers’ demands and construction schedules,” Guzman said.
Staffing can be an issue in-house as well, especially with more millennials moving into international trade. Guzman is learning how to manage this demographic.
“They are getting the job done, but they’re very tech-focused,” he says. “It’s all about texting and sending an email, and they are learning that there are situations when you have to call the customer.”
What’s important, he adds, is establishing a rapport and creating that sense of being a trusted advisor. It’s also about making that connection so that trust can be established for the next project on the pipeline.
“I’m for human interaction, face-to-face and calling the customer when there’s a problem, instead of focusing on email,” he says. The solution is all down to training, explaining that it is OK to send an email, but noting that that email will likely need to be followed up with a call.
On the flipside, Guzman underscores the energy that millennials bring to the business of project logistics. “They see things differently, they come up with creative ideas,” he said.
To capitalize on this, C.H. Robinson hosts an innovation program, whereby people send in their ideas to be voted on by the company’s corporate leadership team.
“We’ve had some great, wild ideas out of the box – thinking that actually has turned into policy internally,” he said. But, in the project logistics space, it is still about spreadsheets and having human interactions.
“We have a very robust online tool for cargo tracking and our customers love it, but at the end of the day, it’s still about human interaction,” Guzman said.
The company’s propriety software, Navisphere, analyzes behavior and uses analytic metrics to measure inefficiencies and gaps in its customers’ supply chains.
“That’s really the trend right now,” Guzman says. “When our customers ask how they are going to make money at US$50 per barrel oil, we come in and say: ‘Let us analyze your data. How did you spend? Where are you operating? Who are the carriers that you’re working with?’ We’re not trying to replace carriers, we’re just trying to qualify them, put them in the right space and allocate the right resources.”
He claims that the savings are impactful, with one customer saving in excess of 20 percent over 18 months of operation after a C.H. Robinson audit explained how to cover exposed inefficiencies and gaps.
Generally, Guzman is expecting an uptick in the project cargo sector next year, but there are pockets that may fare less well.
“We keep a close eye on customers’ industries,” he says. “As marketplaces and economies shift, we ensure we are putting the right focus and effort into any particular industry.”
Once deriving much of its business from the oil and gas sector, C.H. Robinson has focused on diversifying away from upstream dependence. Guzman sees this diversification to a broader cargo base as a positive, bringing with it new cargo types outside of the spaces in which it has traditionally worked.
However, the company’s surface transportation division continues to help oil and gas companies improve their supply chains in the upstream space. “Technology’s a big thing when it comes to oil and gas right now,” Guzman said.
Additionally, the group as a whole has invested in the food and beverage industry, allowing the project logistics department to get involved in turnkey projects such as large-scale production facilities.
“We get to participate in those deal teams – that’s one of the luxuries we have in being part of such a vast company like C.H. Robinson,” Guzman said. While the project cargo logistics department might now be servicing a different sector, Guzman points out that it is still handling “high, wide and heavy” cargoes.
C.H. Robinson is a non-asset-based company, relying on its people, processes and technology to secure business. However, Guzman has noted competitors investing in project logistics assets – a trend, he said, that cannot be ignored.
“We have competitors that are operating vessels. We have competitors that are operating heavy-duty railcars. We have competitors that own their own self-propelled modular trailers, or SPMTs. We have competitors that are really investing in their engineering. So, at C.H. Robinson we really have to have an answer to that trend.”
Guzman points out while an asset-based company has to put those assets to work, meaning that its cash is tied to them, a non-asset-based approach allows C.H. Robinson to “stay nimble” so that it can focus on managing its carrier base, rather than having to be dependent on certain assets.
Carly Fields has reported on the shipping industry for the past 18 years, covering bunkers and broking and much in between.
Photo credit: C.H. Robinson
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