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Wed, Oct 6, 2010
The Straits Times

Going the distance to deliver the goods

By Francis Chan, Jonathan Kwok, and Dhruv Velloor

In the second of a six-part, fortnightly series sponsored by enterprise development agency Spring Singapore, Francis Chan, Jonathan Kwok and Dhruv Velloor look at how local logistics firms can become world beaters.

WHEN most people think of the logistics industry, names like UPS and DHL tend to spring to mind.

Few would have heard of A-Sonic Logistics. But since 2006, the company's founder and chief executive, Ms Janet Tan, 49, has built up a major logistics network across 14 countries which has attracted more than 1,000 clients.

It is a wholly owned unit of Singapore-listed A-Sonic Aerospace, which has faced difficulties of late.

Earlier this month, the Singapore Exchange placed A-Sonic Aerospace on an early warning watchlist after it had posted three straight years of losses.

Those financial difficulties started when it bought AirOcean, a logistics company, in late 2006 to create A-Sonic Logistics. The acquisition costs led to an impairment loss in 2007 and 2008.

Airocean was also then in the spotlight for the wrong reasons after its former CEO Thomas Tay was charged with offering inducements to a Jetstar Asia official.

Still, despite a slump during the recent financial crisis, the logistics business is going from strength to strength.

A-Sonic Logistics' network is vast for a small and medium-sized enterprise. Its 670 staff handle operations in 34 cities. It is concentrated mainly in Asia, and has 18 offices in China alone, although it also operates in countries like the United States, the Netherlands and Australia.

The medium-sized company's capabilities extend beyond the simple point-to-point delivery services provided by smaller companies.

A-Sonic Logistics' key selling point is its ability to transport goods through any combination of land, air and sea. This is in contrast to other larger companies like UPS, which are primarily air transporters.

The company also devises alternative and cheaper routes of transport - something that is appreciated by clients that need to keep a sharp eye on their bottom lines.

An information technology ordering system was rolled out in 2008 to organise the movement of goods worldwide. Warehouse management services are also offered to clients.

With Customs brokerage services in place, clients do not even need to worry about clearance for their goods, said Ms Tan.She reckoned that the company is likely the only Singapore company with nationwide Customs clearance in the US.

She said these capabilities mean that "the customer only needs to focus on sales and market demand".

"The rest is handled by us," she added.

Unusually for a logistics company, A-Sonic Logistics conducts technical and professional diploma courses in Singapore and Vietnam. Students are trained for careers in logistics and jobs with A-Sonic, providing a ready source of trained personnel.

Business has boomed as a result of all the groundwork and the economies of scale reaped from its size.

A-Sonic Logistics' revenue for 2008 was US$247.6 million (S$328 million). Turnover nosedived to US$150.7 million during the economic slump last year, but the company has bounced back this year.

In the first half of this year, it notched up revenues of US$120.9 million, almost equal to last year's total, and is hoping to surpass the 2008 figure.

A-Sonic Logistics' success has not been without difficulty, however.

The period following the AirOcean takeover was the toughest, said Ms Tan. Replacing senior management took time.

Most crucially, AirOcean's fragmented and uncoordinated IT system needed to be overhauled to coordinate cross-continental cargo transport.

Ms Tan said many more hurdles remain as the company looks ahead, as "A-Sonic Logistics isn't large or ambitious enough" to take on industry kingpins just yet.

Red tape also remains an issue. Ms Tan told The Straits Times that A-Sonic Logistics once needed to put down a US$80,000 cash deposit with the local authorities to obtain a licence to open a single office in China.

Finding staff who display "character and competence", while not too difficult, is another constant challenge.

Personal obstacles are also present.

"It is difficult being a lady in a man's world," Ms Tan told The Straits Times.

She said that in her early days in Beijing, men were reluctant to trust her.

Although she has established herself in a male-dominated industry, it is difficult for women to succeed, she added.

A-Sonic Logistics' current strategy involves expansion within Asia. An office in India will be opened soon and other locations such as Bangladesh, Cambodia and Indonesia are being considered.

But what are most important, said Ms Tan, are the evolution of A-Sonic Logistics' IT system, improving customer satisfaction, and the growth of the company itself.

Emphasising the need for it to push on, she said: "We believe that logistics will not go out of fashion. It is the mother of all trades."

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