First Person: Jeremy Nixon

Driving change and customer care in the box market

 

There is something serenely cerise about sitting in the reception area of the impressive Singapore headquarters of Ocean Network Express, or ONE as they like to be known, in downtown Straits View.

Whether it is the general décor of the office or the side of an imposing ‘magenta’ steel container that greets you as you enter the voluminous space, or, indeed, on the day that I was there, the 20 or so giant vases of orchids grouped together, as if they were about to be taken off to decorate some corporate function or a wedding. The look and feel was different to anything I had seen before.

And as I walked through the office, with its high desks and breakout areas and snazzy canteen area, all designed with the well-being and enhanced productivity of the staff at heart, I had the feeling that ONE was a shipping company with a difference, a company that was not shy of connecting with the ‘Here and Now’.

“The way I describe it is that we are moving away from being a Japanese company that happens to be international, to an international company that happens to be Japanese-owned,” said Jeremy Nixon, CEO.

And that is important when you consider that most of the global staff are non-Japanese and a lot of ONE’s customers are non-Japanese as well.

“But Japan is still extremely important to us,” he added. “We still have 22 services a week calling there and we still have a very strong Japanese customer base, and will continue to support that base very long-term. As the three stakeholder companies, we have worked with our Japanese customers as they themselves have gone offshore and have internationalised their operations. If you look at the automotive or electronics industries or the trading houses, they have gone from being very Japanese-centric themselves 25 years ago, to being major global brands now.”

So apart from a coming together of the container shipping and some terminal operating assets of K Line, NYK and MOL, what is ONE? Or more precisely, what is the thinking and strategy behind it?

“So essentially you have the three Group companies, fully up and running today as they were previously, but they decided to take the three container shipping divisions and consolidate the assets of those divisions into a new holding company entity and to start a new company. Once we made the decision to do that, the question was how should that company operate, where should it be based and how would it be set up?”

As Mr Nixon explained, there was a wish to set up a new company with a new brand, a new management team and new systems and with a fresh approach to go to market. “But we wanted to bring across two key parts of the DNA of the three companies. One being the focus on customer service, all three companies historically have over 300 years of experience in this and were recognised as being leaders in customer service and customer focus. And we wanted to retain this quality. And the other aspect was process excellence; attention to detail and having clear processes, clear systems and ensuring that they work smoothly,” he said.

So, the process of building a new corporate entity was started: it was registered in 120 countries around the world, with a global head office here in Singapore. As importantly, a new brand name in Ocean Network Express or ONE, was created, a new management team brought in from across the experience and scale of the three different companies and a new IT platform developed that did not consolidate lots of different systems that were there before, but which was dedicated to the task demanded by ONE, all operated from a new data centre here in Singapore.

“We are looking to operate a new global system that is cloud-based as much as possible, and all the staff come across on new contracts so they take off their K Line, MOL and NYK hats and arrive in a new office with new branding and a new ‘go to market’ strategy. And they are now ONE, all with a different look and feel,” he said.

And why choose Singapore as your global headquarters, when as you say you are a global operation across 120 countries?

“All three companies have historically been involved with Singapore in the past. K Line, MOL and NYK have all had operations here in Singapore and had regional offices here as well and that is not just for containers, that is at group level with bulk and car carrier operations represented here as well. So, there is a long and close association between the three Japanese companies and Singapore.

“Secondly NYK, and to a large extent K Line, had a significant global presence here so it was obviously a key candidate city for a HQ. At the end of the day we came to the view that Singapore was the right location; it very much fits the international maritime cluster approach; it is a good centre for hosting our global operation, and being able to employ staff with the right skill sets whether local Singapore staff or expats we bring in. Singapore is a major centre for our operations and is a key hub for ONE. It is also a conduit for people and visitors and we get a lot of visitors passing through on the customer side and on the terminal partnership side as well. And lastly, there is ease of travel from here. We are a global operation and we have to cover 120 countries in the world. And not to forget that we are a member of THE Alliance Consortia, and we decided to base its shared service centre and Operational Control Room here in Singapore,” he said.

But as he stressed to me, Singapore has a government here and business partners here who really support business: “It is really pro-business. They provide a positive business environment for us to operate and manage the business from. We also have a significant amount of volume passing through, with over 75 services a week calling at Singapore, so it is a significant centre for us.”

So what is ONE’s strategy moving forward?

Mr Nixon again: “We don’t aspire to be a top three player in terms of scale, but we do expect to be a larger player than the three legacy companies individually.

“We talk about being ‘large enough to survive but still small enough to care’. With a customer experience being uniform on a global basis, focused on that point-to-point FCL service delivery, with excellent systems and service reliability in place. Some carriers will be different by being just port-to-port, while some would like to offer a wider logistics offering. But at this moment we are very clear that we are an inland point to inland point FCL provider and we will concentrate on delivering that service to a high level of ability at a competitive cost,” he said.

But in answer to my question about whether container shipping lines can make money in what is a very tough shipping market, his view was clear: “We have to find a balance between the three different stakeholders in the industry: one is the customer, one is the shareholder of the operation and the third is the regulator.

“At the end of the day, container shipping is the servant of global trade and we need to have a healthy container shipping industry which can continue to support and help the expansion of global trade and which can make a realistic return on capital long term. One of the challenges we face with the sulphur cap coming into force in 2020, a global regulation requirement that we fully support, is that it will force the need for change in technology as well as change in the cost for container shipping operators. As a major player in the market we will do whatever we can to minimise the cost in the supply chain but there will be an increase in cost and that cost will have to be passed on and shared with everyone in that supply chain,” he said.

Will that have a positive effect of weeding out the inefficient players? Mr Nixon again: “Not sure about that, but it will mean that some of the fleet which is quite old and is not so efficient will have to be reviewed. In terms of viability of the fleet. All of us have older vessels and we will have to continue to review the economic value of our fleets.”

So how do you see the future panning out, as far as shipping’s role in the global supply chain is concerned?

“There are two changes that are happening. One is the supply chain which is changing to adapt to the consumer’s demand for the commerce offering. But not everything will go e-commerce; there will still be a place for bricks and mortar retailing, but we have seen a significant trend over the past five years towards more e-fulfilment. And that does change the supply chain set up because traditionally we tend to move containers to an international distribution centre which moves them onto a local distribution centre and then onto the store. In the e-commerce environment, we will move the product straight to an e-commerce fulfilment centre and from there it is distributed straight to the customer. And this speeds up the supply chain. You need less transit time for e-fulfilment.

“The second one is that traditionally we have looked at container shipping in terms of the big arterial routes; the east-west trades, the transatlantic to a certain degree, transpacific and Asia to Europe trades, but global trade is global and we are seeing a lot more intra-regional trade happening and this is where the greater growth is. We will see more new services developing on a port-to-port basis, so there will still be ‘hub and spoking’ happening on some of the trade lanes such as the big east west trade lanes, but we will probably see more direct services growing and developing over the coming years, certainly as intra-regional trade grows.

“At ONE, we have put a lot of focus on the intra-Asia trade and being here in Singapore we are right in the centre of that. And we are talking about any trade happening geographically from Japan and New Zealand to the Red Sea, covering over 35 countries. This is a growing market. We are seeing a lot of regionalisation in manufacturing, and we are seeing more growth in population, more affluent income levels, and this will drive in the need for further enhancements in intra-Asia services and transit times,” he concluded.

First published in WAVES magazine and reproduced in SMI with the kind permission of the Singapore Shipping Association (SSA)