4:38am 15th May 2020
This week, I had the pleasure to do a short interview with Sam Aparo, The Chairman of FPS Group.
Unfortunately, due to travel restrictions because of the Covid 19 pandemic, we couldn’t do a face to face interview, but with Sam in his office in Melbourne Australia, and me in Thailand under my family’s strict ‘house arrest’ rules we were able to record the proceedings, and here we have everything in print.
Thanks Sam for taking the time to have a chat.
First of all could you please tell me about the origins of Famous Pacific Shipping Australia which will celebrate its 26th anniversary on the 1st of July this year?
Firstly, let me tell you about how things got started as FPS.
FPS was an amalgamation of two companies, namely one in Hong Kong named Pacific Bridge and the other in Singapore named Famous Freight and that is how the name Famous Pacific Shipping in both Hong Kong and Singapore came about.
These two companies decided to work together, and they had a vision of creating the FPS brand worldwide.
The first country that they wished to open up was Australia.
They knew my business partner, Jonas Tang based in Sydney and they approached him asking if he would like to be a shareholder starting up FPS in Australia.
It was agreed to go ahead and on the 1st of July 1994 we opened up in Sydney and in Melbourne.
From that point other countries were started up, including The Philippines.
A further location in Australia was opened in Fremantle.
The initial concept of the FPS brand was having a local individual such as for example myself, as a shareholder.
So rather than having a foreign entity fully owning, as a shareholder you invest your own money and you bring the local knowledge to the business.
So by doing this, you get the local expertise and commitment?
Exactly, and you can grow a lot quicker, because you’re not relying on the one person to fund it, it could be 30 – 40 people cross involvement in all these offices.
The theory was if you wanted to invest, you can, but you do not have to, it is just an option, but the locals would always invest.
To what would you attribute the success of FPS?
Because the majority shareholders of each FPS office is local, there is however some international investment also.
There is a common goal working together with also joint investment and therefore commitment.
This I believe is how our brand has become really strong.
For the Group, is there a head office overseeing the group in terms of establishing policy, regulations etc.
The FPS group was started 21 years ago registered in Hong Kong, with each company in the group originally contributing as investors and shareholders.
FPS was originally a non-profit organisation, but it was decided 3 years ago make it a for profit organisation so it could distribute dividends.
There are now three main board members, namely Kettivit Sittisoontornwong in Thailand and Iskandar Zulkarnain in Indonesia and myself.
We purchased the shares from the other country members and we became the main shareholders fully owing the FPS Group in Hong Kong which is basically the company which is above all of the FPS Group companies worldwide..
As board members none of us earn a salary from the FPS Group and there is only one salaried person in Hong Kong who takes care of admin, fiscal, publicity and other tasks.
As board members we do it for the benefit of the group and having the opportunity to undertake business opportunities as a result of being a member of the Group.
One thing to note is that the FPS Group does not own any shares in any FPS Group member.
It is a solely separate company and all member companies pay a membership fee to Hong Kong as I do on behalf of FPS Australia.
The concept of FPS Group is completely different from all the other Networks out there, because we still run our own businesses, and we’re not just a network.
Our core focus really is our own business in each of our countries.
So there is a commitment within the membership to work exclusively with other members?
Originally, we were exclusive members only, but we opened that up 8 years ago to be semi exclusive. What we allow now, for example in Australia we could have two members in Australia, we could have firstly FPS and a second member maybe ’XXX” just up the road.
In larger countries such as China, India, and USA, we can allow three or maybe four, but no more than that. So, we do try to keep it as exclusive as possible and for us it is not about a numbers game.
With too many members in a country you can dilute the volumes you are carrying as a group.
The shipping Industry has clearly been hit by the Corona Virus pandemic. I’ve heard of reduction of some business by as much as 50% or more. Have you seen a drop in volume in your network?
I can’t speak for the members and can only speak for my business in Australia.
We were hit badly in February and March, but April figures were almost back to normal. For this month, it is right now too difficult to predict.
Under normal times we had clear trends in volumes but as things are now nobody has the crystal ball to be able to tell what will happen.
The new economic climate has created problems for some countries as foreign exchange controls have been instigated making it difficult for international transfers to be made as they are normally.
Is this a problem that you are facing within the network?
This is not a problem for us as most of the members have known each other for over 20 years and we help each other.
We have never had a protection payment plan in the network and we’ve never had anyone default.
Let me give an example of helping each other. There was a point when the Australian dollar took a bit of a dip in the market.
I called the member I was due to pay and asked if we could delay payment for a while as we expected the Aussie dollar rate to bounce back. He accepted my proposal without any problem as there is solid trust.
We can do this sort of thing because of the length of time we have known each other, there is total trust.
The only thing we have seen during the lockdown is occasional delay because of some changes in the banks’ systems and most people are working from home.
Moving on to the shipping lines.
I understand that you have been talking to Maersk for special rates for your members. Could you tell us more about that?
We have been discussing with Maersk for around 2 years.
It was Maersk who originally contacted us, and we flew to Singapore to have talks with them.
Just recently, we have maintained a close rapport with Maersk, and we have secured special rates including contract rates.
Maersk also guarantee neutrality on all of our business.
What Maersk actually say is, that if you support ‘x’ amount during the peak season they will support you by that amount plus 10 per cent.
If there is a new client during the peak season, what they suggest is rather than doing a contract rate, they use the spot rate. With the spot rate, they guarantee to load you, and if they do not load you, they pay you a penalty.
At the same time if you book at the spot rate and do not utilise that space, you are penalized.
So, it is an arrangement which benefits both parties, but the spot rate is higher that the contract rate.
Are you talking to any of the other carriers?
No, not at head office level, but only at regional or local.
There are only two or three viable carriers these days and over the years the numbers have been reduced. So, these days there is not so much choice.
Due to the reduction in fuel costs can you see possibly faster transit times from the lines to give a better service for the traffics that forwarders are switching from airfreight with punitive rates.
I do not believe so, as the cost of dry docking a large part of their fleet far outweighs the savings they can make on fuel costs.
As you know we are in what is being described as the ‘new normal’ which of course, is very far from normal.
As we return hopefully one day to what we remember as normal, how do you see the future of the industry and do you believe there will be significant changes to business in general and in particular to the shipping, logistics and forwarding industries?
I see a lot of changes.
Firstly, I see from the shipping lines point of view, there will be a few that will not survive. There is already talk of two or three thinking of selling up because they will not survive.
That alone, will give the lines that do remain, a lot more power, because we don’t have the flexibility of shopping around as we did previously.
In any industry, as with the shipping industry, the less options you have, the more that the operators can manipulate what really happens in the market with freight levels and services.
I believe that within the freight forwarders or consolidators, there’s going to be less which, in my opinion, really is not a bad thing, because there’s a lot of cowboys out there, so it will clean up the industry and that’s the one benefit that I can see.
Many of the good operators in our business are sometimes given a bad press because of some characters in the game who don’t operate honestly and we have at times been laughingly branded as equivalent to a used car salesman.
For me, integrity is everything.
If you can run your company with integrity and morals, you will have an advantage over your competitors and have a good reputation.
And reputation is everything!
I agree completely with you on that note Sam.
And that Sam, is a great point to finish on.
Many thanks for your time and sharing your experiences and opinions with us.
Due to the Covid-19 crisis, a great many countries are on lockdown to help prevent the spread of the...
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