Career
"When in Rome, do as the Romans do." It’s a proverb that is true not only for Italy, and not just for travelers. If you’re operating in a local market, understanding how it works is one of your key success factors, especially when it comes to international companies doing business on several continents.
The US, it would seem, is no long a terra incognita for European managers. Hundreds of books and step-by-step manuals have been published. Seminars on starting a business in “The New World” are held regularly. Nevertheless, there are specific factors – and quirks – affecting each industry.
Head of AsstrA USA Vladislav Lagun describes how a logistics business can win on the American playing field and take a small piece of a big pie:
Vladislav, what was the main motivation behind creating AsstrA USA?
The main impetus both for the creation of the department and for the development of the company as a whole was, is, and will be AsstrA's desire to become a leading provider of international transport and logistics services. In 2015 AsstrA pioneered the concept of Trade Lane Management (TLM). The essence of TLM is that between most destinations there are several routes and modes available to transport cargo. The AsstrA team decided to offer customers not a single pre-packaged solution but rather the ability to customize a delivery option that best suits their particular needs.
The TLM approach is particularly well-suited to long-distance deliveries such as those between China-EU, CIS-China, US-EU, and CIS-US. Therefore the United States was chosen as a priority for developing AsstrA’s Trade Lane capabilities. Thus, the opening of AsstrA USA is a logical continuation of the company's overall initiative. The specialized department gives us a competitive advantage and reflects our customer-centric orientation. It helps attract new clients and expand cooperation with existing ones.
The second impetus was in the numbers. In 2017, before opening of the department, AsstrA transported a combined 3,400 tons of cargo from and to the United States. Given that all the trade flow from / to the US in 2016 was 37,000 kilotons, it became clear that AsstrA still has great potential for growth in this transport corridor. A dedicated team is needed to support this growth.
What challenges did you have to face in the beginning?
The market for transport in the Europe-USA-Europe corridor is well developed, so competition was the main challenge for a new player. You need to have powerful or unique competitive advantages to withstand a tough fight.
One unexpected challenge was American shippers’ attitude to new potential partners. A large number of first contacts did not lead to anything because there was no interest in cooperation from the American side. Our requests were often simply ignored. Also, many American shippers make decisions centrally. Often our primary contacts could not answer some of the questions themselves or delayed decisions under the pretext of coordinating with the head of a department.
The search for reliable agents turned out to be a long process requiring a lot of patience but ultimately leading to lasting success. Thus, at the initial stage I would recommend investing more time and resources in the search and selection of reliable partners. In fact we have never regretted making this type of investment in any market.
The effect of sanctions – a hot media topic – is questionable. According to data from Panjiva, an international trade data analysis company, in the second quarter of 2018 transportation tonnage between the USA and Europe increased by 8% vs. the same period in 2017. And for June-July – after tit-for-tat tariffs were introduced on several categories of goods – flows increased 6.5%. In my opinion, the sanctions’ impact on trade is not as significant as the media suggests. The decisive factor was and still is a country’s economic performance as measured by, for example, GDP or consumer spending.
Which transportation schemes are most optimal in terms of price and timing?
Whether by sea or air, there are always 3 factors affecting an overall transportation project: pre-carriage, the carriage itself, and the cargo. In the first instance, the choice of a scheme will depend on the route. Price and transit time are strongly tied to the carriers and the transport infrastructure in the loading region and along the route. Secondly, specific conditions – such as type of loading, deadlines, and the type of goods being shipped – determine the final scheme of transportation.
Often, if the goods are inexpensive, the best option is to receive and send them in a sea container. At the same time, transportation to the port of departure can be carried out using a container ship for short distances or a railway platform – if feasible – for long distances.
What are the "pitfalls" of sea shipping to keep in mind?
First, in the American market the sea lines rarely give prices “from the sender's door.” Secondly, it is important to monitor the situation with sanctions. As a rule, clients themselves check to see if their product or partner is on the sanction list. But even one container with sanctioned goods can cause serious losses for alient. There is also a shortage of drivers and container ships, which means that containers can wait a long time to be taken out of port.
What short-term goals has AsstrA set for itself in America?
Our goal is to achieve a turnover of 6.6 million euros from transport involving the United States by 2020. This plan is realistic and achievable through focusing on individual Trade Lanes, developing relations with maritime operators and airlines, and entering strategic partnerships with agents to increase purchasing power.
Can you tell us about any interesting cases you have encountered?
There was an interesting case earlier this year when we were carrying cosmetics for our client in Europe. We set the delivery deadline upfront since the cargo was part a larger shipment by sea. Unfortunately, there was a critical shortage of space on ships when the container was to be loaded. Not a single line – for any price – agreed to provide space on a ship. Everything had been booked several weeks or even months before by other companies.
AsstrA USA specialists immediately began discussing air delivery with the client and organizing the details. When it became clear that container transport was not a viable option to deliver the goods on time, we moved forward with air transportation and moved 10 tons of cosmetics in two days. This excellent result was thanks to our team members’ rising to the occasion with a focus on customer satisfaction, as I highlighted earlier. The delivery was organized on time, and we earned the client’s trust that will lead to a deeper relationship in the future. Enjoy your logistics!