Anti-cyclical investment strategy
The transport and logistics industry is evolving rapidly in the countries of Central Asia too. The Kazakh logistics group Globalink is celebrating its 20th anniversary in 2014. At the Breakbulk Europe 2014 trade fair in Antwerp Siddique Khan, the company’s president and CEO, and Christian Doepgen, the ITJ’s editor-in-chief, found time to talk about Eurasian plans, crises and opportunities.
Congratulations on your 20th anniversary! What formula has brought you through to the present day?
We see ourselves as the largest freight firm in the countries of the former Soviet Union, active from western China to the Baltic region. The secret lies in the mix.
Can you give us an insight into your company’s current structure?
We now have a total of slightly more than 1,000 employees, and generate an annual turnover of more than EUR 100 million annually in 32 branches. 20 years ago we opened our first office in Almaty.
Does Kazakhstan also generate some of your business?
Yes, increasingly so. However, about 40% of all business activity in Kazakhstan is still generated by government institutions. National companies can improve their chances of success in the tender process on the basis of their taxable revenue and number of employees. We naturally take advantage of these government incentives and location-specific advantages.
Your main focus is on international business. How do you manage to handle the flow of goods?
China’s development has acted as a driving force for our company. We’ve decided to use three access points to Eurasia, which means that we handle 90% of our traffic via hubs in the Baltic states, the United Arab Emirates and China. The aim of our network is to develop solutions from a single source for our contractual partners, and to support them along the entire supply chain.
Isn’t that the aim of all freight forwarders – especially the large ones?
We consider ourselves to be more of a multimodal transport company, rather than a pure freight forwarder. Ultimately, it depends on the experience you can provide as a service company in the respective region, in order to successfully handle shipments. The margins on a shipment from New York to Riga are different from those for transporting a consignment from New York to Tashkent. This is where we see our opportunity as a niche specialist.
So you don’t shy away from investing in assets, as some other firms do?
On the contrary. We see the fact that we invest in assets in the various regions as an advantage for our contractual partners too. It allows us to remain reliable.
So how do you respond to crises, such as the current one in Ukraine?
By viewing crises as opportunities. Actually, our current business activity in Ukraine has declined by 50%. Which has led us to decide to invest, because we’re seeing significant price decreases for warehouse space and rolling stock for railfreight services. That’s where we come in.
Is this a new strategy?
No, we responded in exactly the same way in the immediate aftermath of the 2008/2009 financial crisis, for example. At that time, many market players were reluctant to invest in the Chinese-Russian-Kazakh border town of Khorgas. Whilst they’re now paying for this in the form of significantly higher costs for new facilities there, we were able to open our own freight terminal last month.
So your investment is anti-cyclical?
Definitely. Crises are useful because they cause markets to adjust to reality. As a consequence of these upheavals you can gauge the most favourable moment to enter a new market. Over and above this we have built up significant railway business with our own terminals and rolling stock in the CIS market.
As regards assets – do you have your own vehicles, as well as warehouses?
We own around 100 trucks and lease about 500 to 600 vehicles. We intend to triple the size of our own fleet in the near future. We’ve found that such a measure is a good selling point, as it enables us to increase both customer reliability and our flexibility.