Logistics company Mac-Nels Singapore plans to acquire smaller players in the freight forwarding businesses from Southeast Asia, India and the Middle East, with an initial investment of US$3 million, reports the Singapore Business Times.
As a niche services provider, Mac-Nels offers less-than-container-load (LCL) transport as a master-co-loader, taking freight bookings to form fully-packed containers.
CEO Nicholas Er told the news agency that despite margins being low for the LCL business this niche segment accounts for 85 per cent of the firm's turnover. Its other services include door-to-door forwarding and customs clearances.
Mr Er also revealed that his company constantly faces stiff competition from bigger players, with the company's revenue from the late 1990s until 2004 plummeting 40 per cent, compared with the 45 per cent sales growth recorded from the 1970s until the mid-1990s.
This was also partly due to a change in strategy to focus on "a few highly-selected MNC customers and more SME customers as opposed to having a bigger base of MNC clientele", he said.
Mr Er said the smaller contracts with these customers are more than offset by having a larger client pool, creating risk diversification, particularly as the company has built up an extensive network of Singapore affiliates with their own regional business associates.
He also noted that in spite of a broader push within the industry to seek consolidation by either acquiring or forming joint ventures with partners overseas, Mac-Nels has so far turned down three takeover offers.
"Since our direct competitors are public-listed or franchise-based, we will prefer to aspire to be the top privately-funded and family-owned NVOCC company as our niche branding. Customers will tend to see more value in service and rates in such a company; as even I am doing hands-on operations and sales," he said.
Mr Er sees trade from China and India to Europe, Australia, New Zealand, Intra-Asia, Middle-East will remain strong, and furthermore Mac-Nels will be immune to any economic slowdown in the US.
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