Global vision

Dubai-based GAC is rapidly expanding its logistics operations, both in terms of geography and service offerings, in order to better support its existing clients and to make more use of its facilities.

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By  Neil Denslow Published  May 2, 2005

|~||~||~|Gulf Agency Company (GAC) has come a long way since it was established nearly 50 years ago by a group of Swedish shipping specialists in Kuwait. The Dubai-based company has now grown into a global network of shipping agencies, as well as branching out into logistics and freight forwarding. The logistics arm is now active in over 50 countries, and GAC is planning for yet more expansion both in terms of geography and its service offerings. “GAC Logistics now covers half the world,” says Bill Hill, GAC’s group vice president for logistics services. “The other half of the world clearly has room for developments; however, within the half where we are already operating, there are still tremendous opportunities, and we cannot lose focus on the prospects on our existing doorsteps, while looking for openings in areas where we do not yet operate.” The areas that GAC Logistics operate in at present are focused on the Middle East, Asia, Africa and parts of Europe. However, the company is looking to expand its operations, particularly its 3PL activities, into new areas by leveraging on the wider group’s existing facilities and by growing in line with its customers’ businesses. Presently, GAC’s logistics clients include global giants, such as Johnson & Johnson, 3M, ChevronTexaco and Sara Lee. Most recently, this expansion strategy has seen the company launch a 3PL operation in Stockholm, where it already had a presence, in order to support an existing client that was moving into the Swedish market. “Some clients, although not all, like to work with the same company across several regions, because they know the quality of service they get, the systems that they have and the people they deal with,” says Hill. “This then forces us to open up in areas that may have appeared difficult; however, the customer support… makes it a little bit easier.” “In fact, it is a very good organic way to grow the business, as we already have established relationships with established clients and established products, even though it is a new a market for us,” he adds. How GAC is aiming to do more for its existing clients was also shown by the launch of its marine logistics operations 18 months ago. This service, which manages the entire supply chain for ship spares and marine parts, was primarily aimed at ship owners that were already being supported by GAC’s shipping agencies. “Marine logistics was a new product on the market, technologically driven over the internet, and using existing customers on our shipping client database,” comments Hill. “The service can save them money, so adding value to our existing customers, while at the same time creating a new product for GAC.”||**|||~||~||~|Although the company’s main focus is on making more use of its existing facilities, GAC is also expanding its geographical reach by opening new offices. This is particularly true in South America, where new facilities in Brazil, Peru and Chile have beefed up its regional operations. The company is also expanding through acquisitions. Earlier this year, for instance, it bought one of its US shipping agency partners, Rice Unruh Reynolds, and it also has plan for further purchases to support its global expansion plans. “We have a strategic plan that includes some geographical expansion into selected markets, and that will be through acquisitions,” confirms Hill. Despite these worldwide developments, GAC is still investing in its home market: the Middle East. The company recently started operations in a new Jebel Ali distribution centre, which touts 16,000 pallet positions. This new facility raises GAC’s total capacity in the free zone to 70,000 pallet positions; however, even though the paint has barely dried on the new DC, the company is already drawing up plans for another facility in Jafza. “The market here is still growing, and one has to be prepared to invest,” says Hill. Elsewhere in the region, GAC is eyeing 3PL opportunities in Saudi Arabia and Kuwait, and also expanding its trucking operations in Qatar and on a wider basis through a new regional trucking unit. Again, the strategy is to leverage on the company’s existing volumes and client base in the region to turn the trucking unit into a profitable operation. “We already have a lot of Middle East customers but they are not using us today [for trucking], as the service does not yet exist to the standards that we will implement,” says Hill. “We are therefore looking to our existing clients — and to our competitors’ clients — to launch this business with.” However, although other companies in the region are looking at launching trucking services to Europe, GAC has ruled this out. The company made this decision because shipping services are becoming increasingly fast, just 11 days to the UK, for instance, which is not much longer than a road service would take. “Even if a truck is faster than that [11 days], the cost will be substantially higher, and if you are going to pay that you might as well take it by air,” says Hill. “Therefore, I do not believe there is a market of any volume for trucking from Europe to the Gulf today.” In general though, the company’s plans are to get bigger and bigger, which will then enable it to offer a better and cheaper level of service. GAC’s consolidated global freight purchasing unit in Bangkok provides a clear example of this has it already generated saving for the company and its clients. “More is not always better, but sometimes you can offer more for less. This is one of the reasons we have expanded from a regional to global company, which has not finished by any means,” says Hill.||**||

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