After ten years of service, leading third-party logistics (3PL) services provider, Momentum Logistics is determined not to stand still as it enters a second decade. Its operational headquarters at the Sharjah Inland Container Depot (SICD) now serves as a hub at the Sharjah Inland Container Depot (SICD) for a global expansion that can boast contracts in Saudi Arabia, the US, Iraq, Turkey and Pakistan.
In a wide-ranging interview with T&FME, Group CEO Peter Richards says the company plans to double revenue in the next five years. And with fleet enhancement critical to its growth it has chosen the New Generation Scania truck the form the core of its investment.
The company started as support service to Gulftainer, at what point did it make sense to start broadening the reach of the company?
Momentum Logistics was launched in response to the rising demand in the logistics side of the supply chain ecosystem. We were beginning to see a gap in the market when it came to end-to-end solutions for our clients. This was especially evident in 2014 when the Khorfakkan Container Terminal (KCT) managed by Gulftainer operated mainly as a transhipment hub.
Containers were being moved between KCT and Sharjah Container Terminal, which is also part of Gulftainer’s portfolio, through feeder vessels. The bulk of this cargo could be transported by road, and it was clear to see that it was an opportunity waiting to be tapped. We were quick to respond to our customer’s needs, and today Momentum has grown into a global 3PL solutions provider.
Your international expansion has been stunning…
As a business, our strengths lie in freight forwarding, inland transportation, logistics cities, container services and contract logistics. We are currently looking at several opportunities within these core business segments in markets such as the USA, Lebanon and other countries in the region.
How are you offering something to different to establish players in new markets/countries you are entering?
Our differentiation is marked by our unwavering commitment to quality service. This comes from our extensive experience in transport markets in Europe and by adapting the professionalism from the region into the UAE and GCC markets. We are not looking at reinventing the wheel, as much as addressing the gaps in the market. As it happens, innovation is only as good as the demand in the market, and our strategy builds on anticipating these needs.
Was there a moment, a deal or period, that stands out as a turning point for the company in its first ten years?
We have had an exciting journey over the past decade and there have been numerous highpoints that we are proud of as a business. Although, one of the achievements that does stand out happened just a year after we decided to expand our services. In 2015, we successfully gained the contract to complete transportation movements for Dow Chemicals.
This was significant at the time, given we were still a relatively young company, and market competition was just as intense as it is now.
What do you regard as the main reasons for your success to date?
Customer-centricity has continued to be an important factor in our success. In fact, our decision to diversify Momentum’s business model was a direct response to customer needs. Having said that, our ability to be nimble and market-oriented is a testament to our experienced, committed team. Being part of an industry that is at the crossroads of change owing to digitisation, we have also consciously taken steps to upskill our people, implement technology innovations and be sustainable across our operations.
Some examples of these enhancements include our fleet replacement programme, which allows us to be less port-centric. This increased our customer base and created higher demand for contractual business.
In terms of technology advancements, we introduced superior IT platforms, including GPS and online bookings software, which aids our clients. We are also developing an electronic data interchange, which will give customers access to timely, accurate cargo information.
How are you going to reach your goal to double revenue in five years? It’s an ambitious goal…
The global 3PL market is expected to grow to US$1.3 trillion by 2024. We are witnessing some of the best growth years in this segment, and at Momentum, we are optimistic about our ability to ride this wave. Since inception, we have continued to innovate and enhance our offerings, and we plan to continue to find new opportunities for growth.
Currently, we have a number of options open to us, but in essence our focus is on increasing the Momentum fleet size. Our approach towards this expansion may be organic or through an acquisition, or even a hybrid strategy aimed at adding value and maximising returns.
You’ve planned to purchase almost 46 trucks as part of this programme, what is it about the Scania trucks that fit your requirements?
The Scania trucks are trusted across the world in markets, especially in markets where there is a growing focus on creating sustainable transport systems. The 46 Scania vehicles that we have purchased so far includes 15 P410 4×2 Euro III tractor units, 15 G460 6×4 Euro III Tractor units, 15 P400 4×2 Euro V Tractor units and one P380 4×2 Next Generation Euro V Tractor Unit.
You are one of the first to have the New Truck Generation Scania in the region. You must think highly of the truck.
We are proud to be the first logistics provider in the UAE to be operating the P380 4×2 Next Generation Euro V Tractor Unit. This vehicle is yet to be available in the market. We are currently using the launch unit unveiled locally in November last year. It is clear to see a marked improvement in performance and fuel efficiency. We are very excited by the enhancements they have made in this vehicle.
When did you realise you needed to invest in your fleet? Has it been a case of growing organically or strategically renewing your fleet?
Like any business, we did experience some hits and misses as we tried to enhance our fleet. In 2014, we purchased some used vehicles from Europe. However, the maintenance costs were soon beginning to spiral well beyond our expectations. Our team head soon identified the need to change our vehicle purchasing strategy and began investigating other options, which led us to purchase the fuel-efficient alternative currently in our fleet.
Originally, we had begun phasing in the new vehicles as replacements for the existing fleet, offloading the worst performing vehicles. However, the most recent batch of 16 trucks were added to the fleet as additional vehicles and we are expecting to add more vehicles throughout the rest of this year.
In terms of fleet renewal in a challenging market for many, would you say it is a buyer’s market?
There are certain price advantages given the market conditions, especially across the automotive sector. We believe that these challenging times offer an opportunity for ambitious businesses to benefit and thrive, even as the market recover. Timing is crucial in this case. It also comes down to the larger business objectives, whether it is capacity building or maximising margins.
You mentioned the market conditions, what programmes do you have in place to improve operational efficiency?
At Momentum, we regularly monitor our operations to ensure that we offer quality services without compromising on efficiencies. This consistent check allowed us to take time-critical decisions, such as the migration to a fuel-efficient fleet, which has reduced our maintenance and fuel costs. Through on-board telematics, we are also able to monitor our drivers’ performance and reduce VOR time, thereby making best use of our resources.
Do you see any major trends in the market? What advice do you have for fleets in terms of dealing with them?
The market is undergoing a shift. We are seeing a decline in the owner-operator markets as legislation becomes more enforced. This offers an opportunity for us to increase our fleet size and fill a potential gap. The demand for professional transportation companies is on the incline and new fleets offering the latest technology and safety standards is becoming a requisite for major carriers. Owner-operator fleets could benefit from greater collaboration with established players that have longer-term contracts and a stronger expansion pipeline.
10 years is still quite young for a company. Do you feel you are comfortably part of the establishment of the industry?
Very much so. While we are still relatively young, our reputation is preceded by Gulftainer’s own track record, which spans over four decades. Momentum Logistics has over 500 clients worldwide today, and we are building on our portfolio through strategic expansion and investments. We understand the markets in which we operate and that goes a long way in establishing trust with existing and potential clients.
Related to that, would you say there are disrupters – operators that are challenging the status quo – coming through?
There are hundreds of companies disrupting the logistics sector today, and in many cases attempting to mirror the Uber model in the trucking market. We see this as a positive trend that allows us to branch out into new ways of delivering exceptional value to our customers. At Momentum, we are embracing these companies and trying to work with them, and even working through issues such as service levels, which is commonplace with fledgling businesses.
Looking ahead, how do you see the industry developing?
Within the UAE, I believe we will see a further decline in the number of transport operators, offering opportunity for established companies to increase their fleet size and footprint throughout the GCC. On a more global scale, technology disruption will continue to drive the demand for transparency in the supply chain. Companies are also increasingly looking to tap into a sustainable supply chain ecosystem, where the priority is on working with logistics providers that put resource efficiencies before profitability.
Where will Momentum Logistics be after the next ten years?
Where won’t we be? Our goal is to position Momentum Logistics as one of the largest operators in the UAE and GCC region, with operations stretching around the globe in key markets.
