First published in The Business Times on 08 September 2020.
COVID-19 may have put a bit of a crimp in the sails of Legend Logistics, but having spent the better part of the last two years making sure their fundamentals were in place, they are still in expansionary mode.
The integrated logistics group started out as a freight forwarder but decided to expand their range of services to include specialised logistics that focuses on supporting the transportation and handling of large out-of-gauge (OOG) cargo - an industry term referring to large loads which are unable to fit into traditional containers - for the infrastructure and construction sector two years ago.
This move leverages founder Than Chung Kiat's deep expertise and track record in boat and yacht logistics, and is one of the key growth segments identified by the group.
Investing in innovation
Mr Than had identified Australia as a natural extension of Legend's business early on.
"Countries with a large market base such as Australia are bright spots which attract Singapore companies with high growth potential," he says. "We expanded our specialised logistics business into specialised trucking services to participate in Victoria state's massive infrastructure and construction projects."
To prepare for this, Legend established an office in Melbourne, Australia, in 2018, with some help from Enterprise Singapore and the latter's overseas representative office.
"Enterprise Singapore was very helpful because they have a lot of contacts on the ground," says Mr Than. "They actually set up some visits with potential customers for us but we weren't able to go ahead because of Covid-19."
Despite the choppy waters, the company is still moving ahead at a quick clip.
Their specialised logistics arm achieved their first major milestone just this year, when it was awarded a line haul contract for Australia's West Gate Tunnel. In logistics, line haul refers to the movement of freight with any mode of transport by land, air, or waterway between cities.
The tunnel project was first proposed by infrastructure company Transurban in 2014 as a means of alleviating congestion and providing an alternative to Melbourne's heavily congested West Gate Bridge. The Victorian government announced in 2015 that they would proceed with the project.
Mr Than credits the firm's ability to think out of the box and their continuous investment in innovation and optimisation to "re-engineer" the entire delivery process for their successfully clinching the deal. They are in fact in the process of developing their second-generation flat rack system which they have been using for customers in the construction sector. "Our customised trailer system is able to significantly increase productivity. The resulting savings are then passed on to customers whereas current players there were not able to provide customisation using their current assets," says Mr Than.
According to Mr Than, Legend's setup significantly reduces handling time since the setup can perform multiple roles over the course of the journey, thus significantly lowering the risk of damage to the cargo as the number of times it needs to be loaded and reloaded is greatly reduced.
"(So) despite being new in a mature market like Australia, we gained a competitive advantage by being an innovator and cost leader in the industry," he says.
In May this year, Australia's Victorian government announced a A$2.7 billion stimulus package, billed the "Building Works" package, to stimulate the Victorian economy and pull it through the Coronavirus pandemic.
Many of the projects announced were new while others had been planned but were being brought forward; in addition they were specifically chosen because they could begin quickly and thus stimulate the economy.
"This is an opportunity for Legend to serve the Australian construction industry to fulfil their logistics needs," says Mr Than.
He adds: "A lot of development in Australia is moving towards cross laminated timber or prefabricated timber building systems for multi-storey, commercial and residential construction.
"This is where Legend has demonstrated our capabilities, by implementing our customised flat rack system to eliminate double handling, reduce damages, and improve efficiency. We also hire people from the construction industry so they know how the industry works, what is needed, and how we can value-add."
A related adjacency that excites Mr Than about their prospects in Australia is the country's commitment to reduce its greenhouse gasses.
Under the Paris Climate Agreement to tackle rising global temperatures, Australia has set a target to make a 26-28 per cent reduction in its emissions by 2030.
And, according to the Clean Energy Council's Clean Energy Australia Report 2019, over 850 MW of wind energy was installed in Australia in 2018. At the end of 2018, 24 wind farms with a combined capacity of 5.69 GW were under construction or financially committed nationally.
Legend points to these plans by the Australian government as reasons for optimism. Indeed, Legend has qualified as a service provider for one of the biggest wind power companies in Australia.
"There will be impending growth in demand for specialised logistics in the wind power sector that requires new players like Legend to add more capacity to meet demand," says Mr Than.
Finding growth opportunities
Even as Legend grows this aspect of their business, they are not taking their eye off the other moving parts.
Legend owns and operates its own fleet of containers, providing regional container services, focused on Southeast Asia, the Indian subcontinents, the Middle East and China. On the tank containers front - tank containers are designed to carry liquids in bulk - they are ranked the second largest tank container operator in Singapore.
Meanwhile, on the container shipping front, they provide freight forwarding and other logistics services. They also provide container feeder services in niche markets and emerging ports within the South-east Asia region.
In March, Legend launched a new container feeder service between Port Klang in Malaysia and Kuala Tanjong in Indonesia to serve the Kuala Tanjong Industrial Estate that encompasses the Sei Mangkei Special Economic Zone.
This has strengthened Legend's position as one of the leading container operators in Indonesia, says the company.
"This service was planned three months ahead. We did the ground study in January and recruited the necessary manpower in March. This proved beneficial for us, so even though the Movement Control Order (MCO) was implemented in Malaysia and the travel restrictions to Indonesia kicked in, we were ready to launch the service," says Mr Than.
He notes that having a team on the ground proved especially useful during the pandemic.
"It's tough because for us, most of our activity is outside of Singapore. Singapore is more of a control centre; 95 per cent of our business activity is outside of Singapore.
Indeed, he credits the team on the ground in both Port Klang and Kuala Tanjong, and Melbourne, as playing a key role during this period.
"Even though we were not able to visit our customers and explore other markets due to Covid-19, our local team helped us engage our customers. That's why internationalisation is critical; it helped us continue to build our brand across the region and continue to engage our customers through our local presence."
In recognition of the need to have the right talent, Legend is looking to build up its talent pool through Enterprise Singapore's Global Ready Talent (GRT) Programme.
The programme aims to build a pipeline of global-ready talent for Singapore enterprises by exposing more Singaporeans to internships and overseas work opportunities.
The programme comprises two key components: local and overseas internships for Singapore enterprises that are keen to build their talent pipeline to support business expansion plans, and the management associate programme which provides support for Singapore enterprises keen to train and invest in overseas work exposure for young Singaporeans to deepen their in-market knowledge.
Legend specifically is looking to develop management associates with the plan to deploy them to their overseas offices.
"We want them to gain deeper in-market knowledge and overseas exposure opportunities to enhance their capabilities and skills with exposure to local and international working culture. These will help Legend with our future expansion plans as having a ready pool of talent that we can deploy to any part of the world will play an important role in building our brand globally," says Mr Than.
The plan, according to Mr Than, is to recruit four to six fresh graduates to train with the Singapore team for six months before they get deployed to their overseas offices.
An eye on expansion
Notably, Legend has also grown its business vertically, now providing tank container cleaning facilities at operationally challenged ports in Indonesia.
Mr Than explains: "The station we're at is a few hundred kilometres away from the port. So we set up a depot next to the customer's factory and this saves on logistics costs, planning and trucking."
This plan to develop stickability obviously works.
"Indonesia contributes about 25 per cent of our group revenue and we are looking to further entrench our position in Indonesia by exploring more operationally challenged ports, deploying our assets, bringing our service closer to our customer, vertically integrating the service by deploying our equipment, and starting feeder service and tank container cleaning stations, as these will help the customer to save cost on logistics," says Mr Than.
They are also looking to further deepen their presence across Asia, specifically Thailand and Vietnam, where they currently provide freight forwarding as well as tank and container shipping services.
"These two countries have always been our target markets as demand from these two countries has remained strong. In fact, amid the economic slowdown in the Asia Pacific brought about by Covid-19, the volume and demand for containers for transporting essential goods has remained resilient," says Mr Than.
Currently, about half of their cargo is food-related so the plan is to start providing service routes to more areas, says Mr Than.
"The trade war between China and the US has actually benefited us because our presence is mostly in Southeast Asia and India. This is where the main activity has been for the past 12 months. So we actually see a lot of growth in this region."
And, beyond that, the Middle East and Europe may be on the cards.
"Our volumes have started to grow there," says Mr Than. "That's where our customers bring us and so we've followed the cargo flow and set up office.
"Legend is probably one of the few operators in Singapore that has an office in India. And from India we have access to the region, including Bangladesh, Pakistan, Nepal and Afghanistan. These are the areas we are focusing on in this region."
He concludes: "I wanted to move even faster than this, but Covid-19 slowed us down by about 20, 30 per cent. But I still see a lot of possibilities.
"Logistics is an essential component of the global supply chain and Legend will continue to strive to provide our logistics solutions and service capabilities on a global scale."
