When China’s economy liberalised, it opened opportunities for private companies to venture into the global sphere of logistics. At the time TIJ Freight Services Limited saw the booming potential of the logistics industry in China and cemented their foundations. TIJ Freight Services, a founding member of New Silk Road Network could forecast the future of logistics and be prepared to leverage the incoming opportunities that the market presented.
In our conversation, we were joined by Even Bao, the President of TIJ Freight Services and Jay Yu, the Business Development Manager of the company. Even and Jay share their experience of growing the company in the Port of Shanghai, which is one of the largest, busiest and highly competitive ports in the world. Moreover, they discuss the nuances of a logistics business, the current situation caused by lack of container and space and finally, the future of logistics database management.
Here is our conversation with this forward-looking, forward-thinking forwarding business…
NSRN: TIJ Freight Services is based in Shanghai, which is one of the largest and the busiest port in the world. Your operations were established more than a decade ago. What has been the journey for your company that is based in such a competitive port?
Jay: Our company was established in 1994, right after the opening up of the Chinese market and economic reforms. After China joined WTO in 2001, the government began giving licenses to forwarding companies to do freight forwarding and trading business. At that point, we were one of the first companies to acquire the license. At the time, many global companies also started setting up offices in China. This allowed us to work with global companies and build our network. So that was the general time frame of our set up.
Even: In 1994, the market was so young that people were not aware of what logistics was, or what was the role of a forwarder. I finished my studies in Beijing and joined the American company SeaLand, which was eventually sold to Maersk. When I was working with SeaLand, when someone asked us what our jobs were, we did not really know what to say (laughs).
For the job, I moved from Beijing to Shanghai. At that time, only government companies or licensed agents were allowed to trade and export with overseas agents. SeaLand was doing very well, and I was learning a lot from this shipping company. I realised that this could be a lucrative career as the markets were opening up, and especially the Shanghai ports. This is what I guessed at that time, I worked for three years and got my license, after which I established the company. Initially, I could only work with the logistics department that were part of the government companies. I could only do exports with them; otherwise, it was illegal.
I could see how much profit there was at the time because the government had massive projects and were doing very well. Up till China’s entrance in WTO, we got half the license and established the company right after. It was a young market then; people understood the process very differently. For example, suppose you receive the container, in that case, the paperwork involved faxing the details to the shipping company. It was straightforward (laughs) and the shipping company gave you a 4.25% commission. This is how TIJ started. We had a considerable booking volume then, we did not have to overthink, because the clients were knocking our doors every day and asking for help.
We started simple and were learning a lot then. The WTO brought in more companies, and there was a tremendous increase in trading. At the time the shipping companies decided that their business was profitable, so they would reduce the booking fee to half, which eventually became zero! How were we to make any margin then? In that period, around 2001 or 2002, we decided that we can’t rely on easy work anymore. We had to look for our own clients, by going overseas, meeting new people, and increased networking. I started travelling all over the world, beginning with the US & Euro market. Our clients needed a strong player in China, and we would be that player. There is a lot of thought we put into what kind of clients that we wanted to make our base with.
Since China is a prominent retailer market, we started to develop this, as we continued to maintain our projects business. So, for us, it was about connecting the supply chain teams, those of ours and our clients. We must understand what they require and organise the supply chain for them and help them solve each part of the problem. I honestly prefer to do business with larger companies, because they allow for a long-term relationship. We like to work with companies in China too. We are not just freight forwarders, but we are looking at the whole logistical system.
In China, we have the mega data as well, whose significance we realised years ago. We are working very closely with Shanghai ports, having meetings with them and looking at cooperations to help clients manage their data.
NSRN: Forwarding is considered as one of the most demanding jobs. Usually, forwarders are juggling multiple tasks at once. What are your roles and responsibilities in the company, and what does your regular day look like?
Jay: Well, the freight forwarding business is very detailed and requires one to multitask. We study and grow our key accounts. We focus on professional and flexible solutions to their problems. Instead of looking at just the business from the general market, we try to focus on our direct clients.
Even: As the president, my job involves balancing everything, including looking after the key clients, getting information from the market and communicating with all the teams and finally make sure that everyone working here is happy!
Ya! Every day is quite busy for us! I usually end up spending quite some time now with the shipping companies due to the lack of space, and then we have to push the clients to give the earliest dates so that we can arrange from our side as possible.
Jay: It’s a lot of troubleshooting all the time, especially this year!
NSRN: Aside from sea freight, TIJ also offers a comprehensive set of services. As an all-round service provider, what would you consider as the core strengths of your business? What are your key markets, and how have you developed in them?
Jay: We provide timely and accurate services to our customers. We update our targets all the time to remain competitive and professional. Depending on our knowledge pool and our upgrading capabilities, we offer unique solutions to our valuable clients. Our core strength is that we can customise our services based on the requirements of each of our client. We try to know the key points and characteristics of our clients, which we use to help them and fulfil their needs.
We make sure we guarantee the safety and the fastest possible delivery of the goods. Recently, we have been focusing on the database business. Since 2016, we have been involved in this field too. We are not selling database to companies, instead, we are looking after the databases of logistics companies by sorting and maintaining them.
NSRN: There has been a lot of frustration recently due to the acute container and space shortage, causing forwarders to take drastic measures in many cases. How has this impacted TIJ’s business? How do you see the situation unfolding and developing in the coming months?
Jay: This is the problem in our industry right now. The pandemic caused the ports to close, in turn delaying shipping during that period. As the holiday season is coming, we are all busy trying to ship products over. However, because of Covid-19, some of the countries are still not entirely functional. For example, India, which is a big market and exporting country, has still not managed to return to full capacity. As of now, China is the most stable country in terms of controlling the pandemic. It’s a little of this and a little of that, that has created this imbalance.
Right now, the situation looks complicated. We think that till the Chinese New Year, it will remain the same. But of course, this problem is not local to just China, it’s happening in Vietnam and other parts of South-East Asia too. This situation is challenging, we have to push our clients to give us the earliest forecast, and using the estimates we make the bookings. Thankfully we have good relationships with the vessels and shipping companies. So when we give them the number, they trust that we can fill it.
As mentioned, we work with databases, which we use to help the client who gives us the focus, by giving them alternate solutions and prioritising their concerns. So we need to maintain the balance on both ends, with our clients and with the shippers. That can be a bit daunting sometimes.
NSRN: With the current trend of instability, what would you suggest should be the measures to take while tackling so much inconsistency and to retain customers in these times?
Even: The unique thing in China is that logistics companies here help each other very regularly. Sometimes we exchange the space internally as per our needs. Chinese companies are usually supporting each other to overcome situations amongst ourselves. This is one of the most significant difference as compared to other countries. It is imperative to support your peers and your industry, especially in times of crisis.