Sushant Malik, regional director of Freight Systems, discusses the importance of remaining dynamic to survive in the competitive Middle East logistics industry.
The Dubai-based company Freight Systems (FSL) has recently appointed a new regional director for the Middle East and Africa, Sushant Malik.
His background working as sales director for KLM has made him increasingly aware of the intense competition within the Middle East's logistics and aviation industry.
With this in mind, Malik is keen to build on the achievements of former regional director, Warren Jacob who initiated Freight Systems' specialisation in exhibition and fine art logistics.
Whilst the company has an impressive portfolio ranging from ocean, sea and land freight through to outbound and contract logistics, it is keen to expand its expertise in niche markets to differentiate its brand from competitors in the region.
Since overtaking Freight Systems in December, Malik has expanded the company's global presence with its entry into Europe. The company now has offices in two of the main air and ocean hubs, Frankfurt and Hamburg. "Germany is one of the largest export bases in the world, so we can't go wrong there," boasts Malik.
Freight Systems is also targeting the fashion industry with new operations in Lille, France. "Lille is a huge base for outbound logistics. The big deals are made in Europe for a Zara or a Mango, for example, so we need to gain control in that market," he adds.
By opening offices in strategic places worldwide, we have positioned ourselves to ride that wave as well, and then profits remain in the group, which is important."
Nonetheless, its not all plain sailing across the water, as the market in Europe has its own challenges. "It can be difficult to start out in Europe as it's a huge mature market. However, we have been there just over a year now and things seems to be working pretty well at this moment in time," confirms Malik.
The focus for the Middle East is not fashion logistics though; instead Malik is keen to set his sights on fine art and exhibition logistics. The transition into niche markets is becoming increasingly essential for logistics companies due to the rising living costs and emerging competition in the region.
You have to keep your core business going, but equally you have got to have some off shoots on the side to give you some more revenue just to survive. And that is where fine art and exhibition logistics comes in, because they are untouched at the moment," emphasises Malik.
Freight Systems' specialised exhibition service is called Micelog, which offers complete end-to-end exhibition solutions. "There are so many exhibitions taking place in Dubai now, so this avenue is definitely something we want to explore," announces Malik.
Aside from the main handling of logistics (setting up, dismantling and transporting the equipment), Freight Systems provides clients with a value added service.
We offer destination business services whereby we personally escort the exhibitors around Dubai, arrange visas and transportation for them, and generally make them feel at home," says Malik.
It is amazing how thwarted people's perception of the Middle East is. People can be completely clueless. And I don't blame them," he continues.
To dispel this feeling of intimidation, Freight Systems works hard to place people in their comfort zone. "This personalised approach is something that we have over our competitors, it is totally different. This industry is not just about moving freight, there is a lot more to it than that," explains Malik.
Exhibition logistics is still in its infancy at the moment, however it will be a large focus for Freight Systems in the coming year.
But its fine art logistics that puts a large smile on Malik's face. "Warren first initiated the deal with international auctioneer Christie's a couple of years ago, so I won't take all the credit for it. But I am building on this vertical as I see the vast potential in it.
Since its first big contract with Christie's, Freight Systems has gained momentum in the market and is looking to secure many more big deals. "Dubai is becoming a big, big art hub, which says a lot for the region. So we really want to expand and grow with the local art scene," enthuses Malik.
The company has three temperature controlled warehouses in Jebel Ali, which are around 6000 square feet. "We are looking to double this figure, however we need permission from various authorities in Jebel Ali regarding environment and health restrictions, but hopefully we will end up with 12,000 square feet. This will be split into four different personalised chambers," he continues.
There is a danger that the trend for art emerging in Dubai will be cut short if the region does not react to the boom. "There are a lot of people in Dubai who own art but cannot find storage. There are not many people who offer expertise in this field, so we are aggressively targeting that.
Nonetheless, the reception in Dubai towards the art world is gradually changing. Dubai Customs has been forced to become more receptive to imported art with the recent Art Dubai exhibition.
Freight Systems' involvement in the annual event has reinforced its presence as a Middle Eastern handling specialist in the art world, whilst underpining the care required for such an exclusive industry.
I have seen paintings that are two feet by three feet and the tag to them are a few million dollars, the prices are mind boggling," says Malik.
It is a different world and you really have to be on top of things. You have to know what you are doing. Art logistics is a different ball game, not just any old person can just go and pick it up. It does not work that way."
There are numerous obstacles that confront companies each and every day. "Some of the paintings are so colossal that they do not even fit in trucks," complains Malik. "The planning and organisation in transporting these precious artefacts is certainly not for the faint hearted.
When Malik was asked if he would like to be involved in the transportation of art for the forthcoming Guggenheim museum in Abu Dhabi, he sternly shook his head.
"At this time, to get involved in a project like the Guggenheim really is not possible," he states. "I want to keep my feet firmly on the ground and handle what I can. You can't afford to bite off more than you can chew in this business. It is a very close knit industry and if you have an opportunity and you mess it up you are out.
There is zero scope for error in the art world, since companies are often handling very rare pieces of art that are irreplaceable. With 30% to 35% of Freight Systems' international turnover coming from the Middle East, Malik cannot allow the ball to drop.
They will not give you a second chance because there is so much at stake," comments Malik. "I think you have got to know what you are good at handling and if you branch out too far, you can end up spreading yourself too thin.
Although Malik vigourously wants to penetrate niche logistics, he remains cautious. Currently the company is outsourcing its exhibition logistics division until it gains greater understanding of how the market is going to evolve in the region. Freight Systems' track record in the art industry, however, helps to give the company an upper hand in increasingly demanding markets like Dubai.
"There are a lot of things happening in Dubai and operating costs are very high. Therefore you have got to constantly innovate and be ahead if you want to survive," warns Malik. "If you just sit back with no concerns then you are dead in the next couple of years.
Discussions on minimum wages and the rivalry in recruitment from the subcontinent have added further pressure on logistics companies in the Middle East. "We have to keep innovating and thinking out of the box to try and manage our profitability.
My boss wants numbers and I can give him all the stories in the world, but at the end of the day, the numbers have to be better.
Malik hopes that targeting niche markets will increase volume in his warehouse and result in healthier profits. "I will see how the year ends up, since I may or may not have a job depending on how Freight Systems performs in 2008," jokes the new regional director.
But with his passion for innovation, Malik looks set to succeed. Although niche logistics can be risky, the existing expertise in exhibition and fine art handling will hopefully secure Freight Systems as a leading company for many years. "You win some and you lose some. We just hope we win more than we lose.
Name of Company: Freight Systems
Facility: Jebel Ali headquarters
Existing Offices: Dubai, Kuwait, Saudi Arabia, Bahrain, Pakistan, India, China, Canada, France and Germany
Divisions: Airfreight, ocean freight, land freight, outbound logistics, contract logistics, interim (international removals division), sea-air, lubricants, projects and heavy lift forwarding, nautical (ship spares management), autotranz (auto spares management), micelog (exhibition logistics), fine arts and wear on arrival (fashion logistics)
Clients: Christie's, Sanya, G-Hanz (amongst others)
Forklift Models: Bendi, Crown, Caterpillar
Racking: Mecalux (purchased through Alshaya Trading Company)
Technology: Web-based logistics software, Frescon, designed by Freight Systems. Developed for purchase order tracking and management with realtime updates.