October 4, 2017 - Logistics organisation BDP was founded over 50 years ago. Over this time, one of the most dramatic changes it's undergone has been its implementation of new, in-house technology.
Thanks to a team of around 200 programmers, BDP is not beholden to anybody outside of the business. "We've been on an upwards technology curve for the last 15 years," says Gary Phelps, Senior Vice President of Global Air Freight.
One important initiative has been SmartVu, a tool that integrates all the company's logistical operations around the globe. It can be tailor-made to the format customers require, whether that's by containers, kilos, deliveries or pick-ups. Customers are trained to use the tool by staff in their region, and they can choose how they want this information delivered, whether it's on a dashboard screen or by getting frequent real-time alerts to notify them of what is arriving, when, and of any potential issues.
SmartVu is proprietary to BDP, whereas Phelps explains most competitors use third party systems. "It works great," he says. "It allows customers who are procuring logistics services from us whether by air, ocean or ground to stay ahead of competitors."
Last year BDP became a member of Cargo IQ, a consortium of carriers, airlines and other freight forwarders from around the world who help with efficient forecasting for deliveries from door to door.
Three years ago, the company began its Unit Load Device (ULD) program, enabling it to build its own pallets to streamline services, so a customer's goods don't get split into separate deliveries, making it possible for delivery times to be up to a day earlier, and reducing damages like scuffing, crushing, and damp.
The program is currently expanding, and Phelps says that most competitors don't have a system like this in place because building the pallets would add an extra step to the process.
A close-knit business
Another key differentiator is that BDP is still a family-run organisation owned by four brothers, making for a more tight-knit feel perhaps when compared to its larger competitors.
Throughout his extensive career in logistics, Phelps says this is the best company he's ever worked for, citing less bureaucracy as one example. "BDP is a definite breath of fresh air. They want you to succeed and they want the customers to succeed. Maybe you can make more money and get more stock options, but it's a 90-day grind [at other companies].
"Whereas here I get up every day, I love what I do, I love the customers I work with, and they seem to love us back because they're spending more of their hard-earned kilos with us, so that's always a good sign.
"They have a choice, they can use their kilos with whoever they want but they're choosing us over the competition."
The freight market
Phelps says the industry is hugely competitive. "There's huge pressure on yields right now, you've got to find a balance where you save the customer money and still make money. When freights are priced too cheaply they just sit there and don't move. You get what you pay for."
There is a constant up and down of supply and demand, Phelps says. "Right now, you're seeing fewer freighters, some being retired in many cases from a passenger point of view, and also from a freight point of view, everybody's moving into mini freighters.
"We try to work with global carriers that have both capabilities, a limited fleet of freighters, and also with a large fleet of 350s or Boeing 777s. Then we leverage based on that and spend 80% of our funds with those carriers, and we meet with them every 90 days to put together dynamic pricing for people who want to play in the stock market.
"For people who want to play longer, we put together block space agreements or soft block agreements to carriers saying you will deliver x number of kilos per week. It just depends what you're looking for."
The biggest challenge is, and always will be forecasting. Phelps explains that just like hotels can never predict how many rooms they will fill, the same applies to air freight. They might know what capacity there is, but there is no way of knowing if a truck will break down or a driver will get lost.
"The market is very dynamic at the moment," he says. "2018 will continue to be a space vs. rate scenario - I see continued pressure on the market for increased rates, I see that our larger competitors and larger contracts with customers are going to continue to see yield problems and, as long as the fuel stays where it's at, the airlines are going to continue to increase their pricing by 15% next year.
"It's up to us as procurement professionals to find a way to mitigate that back to the customer."
BDP has just opened its second European gateway in Frankfurt, alongside its existing one in Amsterdam. Additionally, it has Asian gateways in Hong Kong and Shanghai, and in the US it operates via airports in New York, Atlanta, Chicago, Houston, LA and Miami.
"We have 12 lanes that we stick to and focus on," Phelps says. "Those are the key lanes, and we know we can do things with those lanes, both from a procurement and from a logistics movement standpoint. We try to work with our air and ocean partners to make sure we see the visibility on savings so we can pass those on to our customers."
However BDP's vision is not to vastly expand and become the biggest in the industry, but to provide the best logistics service for customers globally. As Phelps says, "we're adding new logos to our portfolio constantly. We don't try to become too big too quick, we're slow and methodical in what we're doing to provide the best value and solutions for our customers.
"We never like to say we'll be the cheapest or the most expensive," he continues. "We like to say we're going to design what you're looking to purchase." By looking at customers' individual logistics spend and model, BDP is reducing transit time to create savings for the customers, which additionally expands its wealth.
In 2017 BDP has been up by 50% on air freight in terms of kilos, compared to the rest of the market which is at approximately 8%.
"We're working on our 2020 plan right now," Phelps adds. "I can see a lot of good things from what we've done in the US, Europe and Asia. We have an excellent ocean and air freight plan in place to secure additional kilos and containers as we move forward."
Source: Supply Chain Digital