This month we are chatting with Jake Bowcock of One Global Logistics, a business development executive. With freight importers and exporters are currently facing issues never before seen, we discuss the top three challenges faced by all in the freight industry.
Astute Insights Show Notes
Morning! In today’s guest on the podcast, we have Jake Bowcock from One Global Logistics who is a business development executive. Welcome to the podcast, Jake.
Thank you very much. Thanks for having me.
That’s all right. I wanted to bring you on here today because obviously freight importers, exporters are having a lot of issues at the moment. There’s challenges. It’s a real focal point for anyone that is in that industry. So, I thought we’d get you on, talk about maybe the top three challenges that you are seeing and yeah, sort of unpack why they’re happening, and maybe give us a bit of insight into how business owners can try and best manage it for themselves. So, I might start if you wanted to kind of introduce yourself and how you went on your sort of freight journey and ended up at One Global.
Yeah, absolutely. Yeah, you’re right. There’s a lot of challenges going on in the industry at the moment. I started at a project management degree at uni, and then when that degree was pulled out, we basically had to make a decision on which degree to swap to. I ended up choosing logistics and supply chain management. And yeah, I really enjoyed the challenges that were behind it. At the time there was not a lot of people looking at doing it either. I think that was a big point of why I jumped into it. I went and did basically an apprenticeship or an internship up in Brisbane for two years, working with a German-based multinational up there. And then obviously, I was doing the commute from the Gold Coast up into Brisbane.
And then, I was given the opportunity to come down here and work with a bit more of a boutique style freight forwarder. A bit less corporate, which I enjoy on certain levels. And yeah, I jumped at it. So yeah, I’ve been working with One Global for two years now. Yeah, it’s been very challenging. It’s probably the toughest time the industry’s seen in… It’s probably since the Spanish Flu, to be honest with you, with all of the issues that are around. But yeah, keeps us on our toes and as long as you can adapt, you survive.
Yeah. Good one. You said that it’s a boutique firm, but you do a lot. It’s not just sort of the freight forwarding. Do you want to give us a rundown on the services that you offer, and then what’s sort of your niche or what area do you most enjoy, I guess?
Yes, absolutely. Yeah, we probably like to look at ourselves as kind of in the middle. We’re definitely not a small forwarder, but we’re definitely not the likes of a 40 office worldwide multinational either. But yeah, correct. We can offer all the services that the multinationals do. Go from start to finish with a… pick up in any origin country, do an export clearance, then put it onto either a boat or onto the plane and look after the freight side of it.
Once it gets here, we can do obviously the customs clearance and file delivery. We do warehousing, we do 3PLs. We can do reviews of your current supply chain from start to finish. Also we deal with the insurance side of it as well. So yeah definitely, although we’re not the multinationals like those big guys, we like to stand up next to them. And yeah, we definitely like to compete with them, for sure.
Yeah, awesome. So, let’s jump into it with our issues or the challenges at the moment. So, I guess the biggest pushback from people that are importing at the moment is the cost. It’s gone through the roof. Has it doubled? Is it more than double at the moment? Where is it kind of sitting?
Yeah, definitely. Obviously, it all depends on the trade lanes. So, the origin, the destination. But yeah, absolutely, we are seeing unprecedented rates at the moment and they were unprecedented 50% ago and they’ll continue to grow. So, we’re having issues with space, we’re having issues with port congestion, and even COVID. COVID has a very large impact on that as well because everything along the supply chain is costing more including the shipping lines, the terminals, trucking. Everything is costing a lot more. So, those charges, they do have a domino effect on the client and then obviously the end consumer. But yes, there’s definitely issues with the freight rates at the moment. There’re at [inaudible 00:04:06]-
Let’s talk about the port congestion then. What causes the port congestions? What’s the start? Or, what is the start of these issues that cause this fallen effect?
Yeah, absolutely. So, the port congestion originally definitely come down due to COVID, for sure. When the major ports in China and obviously the rest of the world, they all started to have massive outbreaks on these terminals, and they would shut those terminals and shut those ports. Obviously, you have boats that are waiting to be unloaded. You have boats waiting to be loaded and go out. And again, there’s a domino effect. So, everything that was shut down, because of that the process had to be flipped on its head. And we haven’t recovered from that. We still haven’t recovered from that since the start of COVID.
Yeah. Have you seen any new businesses emerging from this that are starting to import? Because…
Yeah. I wouldn’t say new businesses. I’ve had a lot of people reach out over the last 12 to 24 months and say, “Hey, I’m really interested in starting import business.” And my recommendation or my advice at the moment is to wait. I would not be jumping in on anything that involves importing at the moment because the cost is just ridiculous. It really is. It’s just ridiculous.
My clients that really saw benefit from COVID, I hate to say but from COVID, was the eCommerce clients, and also a lot of outdoor activity clients, because of the idea… And anything that was basically getting you out of the house. So, your caravans, your surfboards, all of those kind of commodities and kind of those clients, they just saw huge growth. And a lot of them were quite actually worried at the start of COVID, and they’ve actually seen a… I hate to say this, but they’ve benefited from all of this.
Yeah. And I think the businesses that benefited from it up until this point, I think it’s from here on in that we’re going to see the challenges hit those businesses, because supply is getting hard. My husband has a pressure cleaning business, and our supply now… Again, we’re one of the lucky ones that his business during COVID grew, but now we’re starting to see the short supply of products into Australia. So, I think we are going to see this effect at the end when hospitality sort of starts to open up. So, it’s just that pendulum swinging.
Absolutely. Any other guys, even though the infrastructure industry is quite large in Australia, they’re all seeing the issues of the raw materials. There’s no raw materials to make things. You can’t get timber, you can’t get stone, you can’t get glass. And then to add to that, you have the issue of a lack of equipment. You have a lack of containers, and the raw materials that are needed to get those containers made. There’s massive delays on the containers being made.
I was going to talk to you about that because we had that down as a topic is the lack of equipment. So, that starts from containers being held up at ports and needing more containers essentially, isn’t it?
Correct. Yeah, correct. Coming from Australia’s point of view throughout when COVID first started, the terminals in Sydney, they didn’t handle what they probably should have been able to handle, and due to that, there was a lot of empty containers that stayed here. And that has a massive domino effect on the entire industry, because quite a large majority of the shipping lines that would come from China or offer services from China into the main ports of Australia pulled those services because they weren’t getting those containers back.
So, that again affects rates. It affects space, it affects delays. It affects everything because the less services that we have on offer that are coming into Australia, the more you’re going to pay for those premium services that do offer. The lack of equipment is still a major issue. You can drive through Sydney and their empty container yards, they’re stacked to the brim. There’s containers just sitting out on the outskirts. It’s still a major issue.
So, what’s the issue with getting them back? Or, just that we’re not-
The biggest issue is the port congestion here as well. So, the containers are coming in, we’re taking quite a while to get them unpacked, and we’re taking a while to get them de-hired or returned to those empty container yards. And due to that, there is obviously a lot less going back to China than there was pre-COVID. So, the Australian trade is still booming and wants to bring in all this cargo from China, but it’s not the same going back.
So, it is slowly getting better. That’s probably one thing of the industry that actually is starting to see a bit more of an advantage. But yeah, it’s still a major issue and still definitely coming out of China. You don’t say no to a container anymore. There’s definitely a lot of under the table payments and things being happening over there with shipping lines so we can get a container. But, it’s something you have to do.
Yeah. Well, wasn’t it recently that Japan shut down for two weeks or 10 days or something like that?
Yeah. So, it’s not just Japan. It’s all over the place. A lot of different countries have been completely ravaged by COVID. India is probably the first that I think of been ravaged. They were a very strong economy, and we had a lot of cargo coming out of India. We had a lot of clients that were bringing cargo out of India, and that’s really struggling now. Really struggling. The biggest thing obviously is when… China, it’s a monster.
When it comes to economy and when it comes to international freight, they don’t shut down for anything, and when their terminals started to be shut, that was when you see… If a Shanghai terminal shuts for three days, the flow on effect for that can last a month. The port congestion, the delays, the boats that just sit in Shanghai and wait to be loaded. Yeah, it’s devastating. It is devastating for the industry, for sure.
Yeah, it’s crazy. So, it is sort of coming down to Covid. Is that lessening now? It’s still pretty rife overseas, isn’t it? It’s-
Yeah. It’s a funny conversation to have, because obviously, everyone’s caught the excuse of, “It’s due to COVID.” So, I think people don’t like hearing that COVID is still causing issues. But yeah, absolutely. Obviously, China is still having huge outbreaks. Just last week we had another terminal that completely closed, because they have one or two cases and they’re closing terminals, whereas that never happened even when the Spanish Flu is around. China stayed open no matter what. So yeah, definitely COVID is pretty rife. You’ve still got your Indonesia, your Malaysia, your Vietnam. As I said, India, they’re all still very heavily affected. So, I think over here we do forget that, that there is still a fairly big impact from this virus, for sure.
And we import a lot. Australia imports a lot of its products. We’re not overly self sufficient as a whole ecosystem, are we?
Yeah, exactly right. Even a lot of the products that we’re buying that are Australian-made come from imported goods. Yeah, we’re massive. The relationship between China and Australia from the import perspective is very important to our economy. And don’t get me wrong, it’s important to their economy as well.
Yeah. What are people’s options? I don’t know whether they’ve got many alternatives available to them, but what are their options for getting their freight any quicker? But then also, what is the best way for business owners that do import to make sure they’re not getting ripped off or that their forwarder isn’t missing opportunities to get them onto a container, I guess?
Yeah. So, the market, it’s always been very competitive and has been quite flat in history. Most of the providers, whether you’re a multinational or a boutique forwarder, you can get pretty close with the rates-wise. It’s all about the relationships that you have overseas and with the shipping ones. As a business owner, if I was to put myself in their shoes, you should go to the market. You should go and test what’s out there, get your supply chain reviewed. Just because you’ve been with someone for 10 years, doesn’t mean that they’ve got the best option for you. And at the end the day, the way things are going, you need to see if there’s other options.
But the number one recommendation that I give to any importer is book early. The early you book, the more power and negotiation you have on getting space and the early you can lock in a rate as well. So, the rates are definitely still increasing biweekly, but you definitely need to get in early. So, if I was importing, I would definitely be allowing my agents at least three weeks in advance of when the cargo will be ready. And if you’re trying to make a booking when the cargo’s ready, you’ll be forced to wait and you’ll be forced to pay a higher rate.
Yeah, okay. Good tips. I read, because a client of ours does Australian-made gifts and sends them overseas, that the news recently is that the US has stopped postage to Australia. What do you think that effect will have on forwarding?
It’s quite early to say. The idea of freight forwarding, it is quite different from that packaging courier idea. So, I don’t think it will have a major effect on large scale importing as such. You don’t know how long that’s going to last. Things like this happen quite often. [Inaudible 00:13:25].
Yeah. And I just thought maybe there might be more people than, say from the US, that do sell to Australia through postage, through their means may also now want to try and get onto container ships or other sort of things. So, an already sort of challenging industry might get a bit more of an overload from this. I don’t know. I mean, they’re probably smaller affected, but it could…
Yeah, absolutely. Everything, every drop in the ocean will affect the industry in some way, for sure. To see the scale of how much that affects is kind of something you have to wait and see. It’s quite still a little bit early. But yeah, definitely, it’s an issue that we have to watch. It’s an issue that as an importer, you have to watch, and again, as an end consumer, you have to watch, because the industry’s [inaudible 00:14:10].
I was going to say that, what do you think for the end consumer come Christmas time? We’re already seeing prices starting to go up for your general products. So, I can imagine that’s just going to-
Absolutely, yeah. I think Christmas is going to be expensive this year, for sure. The inflation that we’re expecting to see is going to be quite substantial, where yeah, I would be buying Christmas presents now, if not last month at the moment. Because by November, by early December, we expect to see rates that are unprecedented on just even your fruit and veg. Everything that involves a truck or a boat or a plane, all of it is going to be very expensive. And when you look at toys, the cost of toys is going to go through the roof. It’s going to be a very scary Christmas for some families, for sure.
Yeah. Well, I think we sort of said those people that weren’t overly affected by COVID I think are now going to get affected by it. And I think it’s very close to hitting the end consumer. I think the price increases are just starting to sort of flow out.
Yeah, absolutely. I think the length of this is on how long this has been going on for as well. So, our clients don’t want to increase their prices for their customers, but you can only do that for so long.
Yeah. You can only suck up that margin for a point in time until you need to update it.
Exactly. Yeah, there’s only so much margin you can absorb before having to pass those costs on. And we’re the same. We’re exactly the same. Our margins remain the same, but our invoices seem a lot bigger. And our clients are the same. If you’re selling a deck to an installer or a builder now, it’s going to start being more. And then, the builder has charge the end customer a higher rate, for sure.
Yeah. So, if someone’s looking to do a review on their supply chain, are they best to go to their current forwarder at the moment? Or, to approach a different one to sort of get real feedback on where they’re at?
Yeah. I’m always open with my clients. I love the go to market, get a review. The rates can differ a little bit more than they usually do. You’re best off going to a different freight forwarder and seeing what they can offer you. However, you do have to take into consideration a relationship that you’ve built with your current forwarder. Especially if you go to a large multinational and you’re not a large client, you probably won’t be looked after to the extent that you will with your current forwarder or someone of the same size. Your relationships are everything. We try to treat our clients the same. However, loyalty does [inaudible 00:16:45].
Oh, yeah. And that will come into effect when they’re waiting at port. If you’ve got a good relationship with them, you are going to fight a little bit harder to get that on than-
Absolutely. Freight forwarders will definitely have a focus on certain things. Every freight forwarder will tell you that their focus is customer service, but at the end of the day, the size of you dictates how much customer service you can offer your clients. You are dead right. The level of customer service directly affects how much your customer service manager or your account representative or your business development manager will fight for you to one, get you on board a vessel, and then two, obviously, when it comes through here, they’ll [inaudible 00:17:24].
And that’s being brutally honest. And I think what you’ve just said applies to all businesses. It’s the same for us. Those clients that we have a relationship with and the larger clients we obviously do more for. It does have that fallen effect and definitely building a good relationship is key to that. Are your clients mostly based on the Gold Coast? Do you do a lot of face to face contact with them or have you got them kind of all over?
Myself, yes. So, I run from basically Northern New South Wales up to Toowoomba area. But the company itself, we have offices in Melbourne and Sydney, in Perth. So, it is quite widespread. A lot of the different states focus on certain things as well, because it’s a massive project office where they do high rises and a lot more bigger scale scope of jobs. I haven’t been affected too much in regards to seeing clients. Clients based in Sydney and Melbourne, obviously we haven’t been able to see as much as I’d like, especially new clients that we’ve brought on, that have approached us throughout this Covid period. We may have moved 30, 40 containers for them already, and we haven’t even sat down with them yet.
Yeah, it’s definitely a weird time. We’ve done the same thing. Taken on clients that I’ve spoken to over the phone and emails, but haven’t met. And it’s a weird kind of feeling. I mean, you’re looking after them, but you really don’t have that, I don’t know, true connection, I guess. So…
I think, you really feel how weird it is when you do meet them. I feel like I’ve spoken to you every day for the last 12 months, and now we’re just kind of sitting down for a coffee. But yeah, I think everyone’s feeling it. Everyone. No matter where you go. From a freight forwarder’s point of view, everyone’s feeling the same issues and facing the same challenges. It’s about trust. It is. It’s about trust as much as that’s hard to have. And do your own education, do your own research. Learn about the industry, learn about what’s going on, learn about the issues and the rates increasing. But yeah, talk to your freight forwarder as early as you can about every order, and you should see quite a substantial amount of benefit from that.
Yeah, awesome. Well, thanks for talking to us today. We deal with a lot of clients that import products and we’ve seen the increases and they’ve come to ask us for advice, help, I guess because we do cashflow reporting. And you have helped out a few of our clients, which is why I wanted to get you on. You are brutally honest, so thank you very much. I’m going to finish off with some rapid fire questions. So, I don’t want you to think about them. I want you to answer them straight away. Current book you’re reading?
I’m actually going back to the Harry Potter series.
Oh, nice. Your worst habit?
Biting my nails when I’m nervous.
Okay. Favorite quote?
“Diamonds are formed under extreme pressure.”
Yeah, that is awesome. And the best thing that happened to you during COVID? That can be business or personally.
We bought our first house. So-
That’s got to be number one.
You got to celebrate that. Awesome. And how will you be spending the weekend, Jake? Since, we are on the Gold Coast and the weather’s warming up.
Actually, I have a 10 year reunion for my high school that I have this Saturday, which makes me feel a lot older than I would’ve like to. So yeah, catching up with some guys from school and have a few drinks. Yeah.
That’ll be awesome. No worries. Thanks for taking the time today to chat with us.
Thank you for having me, [Soonah 00:20:48]. Always a pleasure.
No worries. See ya.