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APL Logistics: Learn & Adapt

Connectivity and integration drive globalisation, especially in modern supply chain management. But, even the most advanced business model must adapt to local conditions, as regional heritage and cultural capital are key to sustainable growth.

In modern-day transport, performance is not only measured in total freight volume or adherence to schedule, but also in soft data – such as the ability to manage a far-flung supply chain and understand a specific marketplace. Spanning continents, currencies and customs, Singapore-based APL Logistics is one such multi-talent.

On a global scale, APL Logistics is more of a supply chain organisation than a classic transport business. It is present on all continents and will generate a turnover of US$1.4 billion in 2011 (€1,08 billion). It is owned by NOL, the largest shipping and logistics company listed on the Singapore Exchange.

Locally, however, the company has learned to adapt. Take Vietnam, which has been touted as a ‘hot market’ by investors around the globe. Home to an under-developed  road transport industry, the country is one of the company’s most important markets in South East Asia, generating an annual turnover of more than US$30 million – despite a whole set of challenges facing the local transport industry.

How did a multi-national corporation succeed in an emerging market that is characterised by a sharp contrast between rapidly growing freight volume and slow infrastructure development?

In APL Logistics’ case, the key to success is glocalisation. The idea of glocalisation is to create a healthy balance between economies of scale and local knowledge, causing a sense of belonging and togetherness in a fast forward world. “You can’t just launch a local operation according to Western standards and hope for the best,” says APL Logistics’ Anthony Tay, who has accompanied APL Logistics foray into Vietnam.

According to Tay, provenance and heritage have given the brand an edge and its people a sense of pride. “Our Vietnamese operation began in 1995, so we can draw on a certain continuity that has helped us create a strong brand here in Vietnam,” she says.

That local expertise is vital to the success of APL Logistics, even when marketing its services on a global level. “Our international clientele is looking for a trusted logistics company to manage their goods overseas, and that trust can only be build when you have a strong foothold in the local market. With our presence in Asia and especially in Vietnam, we were able to tap that local know-how from day one.”

However, there has been a whole set of challenges to overcome. “The obstacles we have to overcome in Vietnam are similar to those you encounter all across Asia – mainly concerning areas like customs and infrastructure. The Vietnam branch, however, soon proved flexible enough to deal with these issues on a day-to-day basis and became well known for its consistency, reliability and capable services.”

According to Tay, finding that balance early on was mainly driven by APL Logistics’ local staff, “who are not only diligent, but also resourceful, and eager to continually improve the business.”

Since 1995, Vietnam’s customer relation department and operational services have set the benchmark for the rest of APL Logistics’ Asian arm, also because APL Logistics committed to contribute to Vietnam’s economic development in general. “We as an international company have a responsibility to contribute to the change of the local logistics landscape by sharing our experience to hasten and enhance that development.”

But, while APL Logistics’ Vietnam division has kept growing, the country’s overall development is lagging. Vietnam’s commercial road transport market is still very fragmented, with many local companies and joint ventures operating in specific provinces only. A “pan Vietnam” service is still unheard of. Here’s where APL Logistics found a niche – providing reliable transport equipment and complete coverage by international standards.

“In Vietnam, transport equipment is usually more than ten years old, and technology and security are still very limited,” says Tay, knowing that 2014 will see a major change when the World Trade Organisation (WTO) will allow 100 per cent foreign-owned companies to enter the market.

“The local business landscape will change significantly when the new investment flows in, but I believe we are one step ahead of that development,” he explains. “Our local clientele are adapting to international standards already, demanding high-end services and security that will save them money along the entire supply chain.”

As a foreign company, APL Logistics is not allowed to operate its own fleet as yet, meaning it has to use selected local sub-contractors who provide up to 1200 pieces of equipment. Key commodities moved are apparel, footwear, and raw materials, hence curtain-sided semi-trailer represent the bulk of the fleet.

While APL Logistics cannot purchase transport equipment itself, it has defined a set of strict rules that apply to the local fleet. “We place high value on efficiency, scheduled maintenance, cleanliness, brand consistency, safety and security,” says Tay.

As a result, it is no surprise that APL Logistics has become an ‘employer of choice’ in Vietnam, attracting the lion share of university graduates and young professionals who seek on-going training and a strong international focus. “Never underestimate the value of local knowledge,” says Tay. “We are now in the position to recruit the best among local talents and retain them, which is a real competitive advantage in an up-and-coming place like Vietnam.”

In that sense, APL Logistics’ Vietnam business is different to other companies in the global marketplace , as it does fear going the extra mile to endow the brand with a “human touch” and create brand affinity.

“We want to develop something that lasts,” says Tay. To him, ‘glocalisation’ does not only mean adapting products or services to the expectations of a local market, but actively becoming part of the local community and understanding the varying cultural codes used in every country.

One sign of that commitment is that APL Logistics is currently growing its Vietnam footprint by opening two distribution centres in the north and south of Vietnam. “Although 2012 has been muted, our inbound logistics and distribution services have seen a 40 per cent year-over-year growth, so it is time to physically adapt to that increase,” says Tay.

That local investment in a time of global uncertainty is a sign that APL Logistics has understood that conducting business internationally is as much of a defensive play as an offensive play. “Acting ‘glocal’ can help you survive in a time of crisis as local know-how becomes a valuable asset. That’s why APL Logistics works closely with its partners and government agencies to bring new value and improve supply chain efficiency for its customers and the country. It’s an investment in the future of the overall business.”

On the other hand, APL Logistics’ global background is helpful to stabilise the business as a whole as it enables the organisation to absorb market fluctuations that may occur on a local level.  In that sense, glocalisation is a simple, yet intelligent concept, says Tay. “It’s quite simple, really. You capitalise on the corporation’s international potential but still invest locally to meet the consumers' specific needs. That’s how we create value for our customers.”

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