ACFS: Three-pillar policy for success

By: Ruza Zivkusic-Aftasi


Wanting to be on port in every port, Australian Container Freight Services is becoming more of an infrastructure business than a transport company

ACFS: Three-pillar policy for success
Terry and Arthur Tzaneros

 

For ACFS chief executive Arthur Tzaneros, infrastructure has always been the next step for growing his business.

Since establishing the port logistics company 14 years ago at the age of 28, Tzaneros has been busy adding key strategic property assets to the  business portfolio, working "methodically" to a business plan that is to connect his port facilities via road or rail in the most productive manner.

With each of his facility strategically located in port locations in order to maximise quick and efficient utilisation of the wharf initially, it’s fair to say ACFS is in the epicentre of industrial areas now with its "go west" strategy, with additional sites off the port located within a 15km radius of customers.

Committed to growing with clients’ needs and providing a full "port to customer door" container freight logistics service, ACFS’s success is based on a three-pillar policy, Tzaneros explains, with the first maximising TEU (20-foot equivalent units) in every transport leg of the supply chain. 

"The second and third is to maximise weight and cube in everything we do," Tzaneros says.

"In order to fulfil that policy it goes from the procurement of our fleet, the procurement of our sites and how we get cargo to and from our sites and our customers.

"In order to maximise the highest TEU per truck, it is focusing on higher productivity vehicles that carry four TEUs on as many legs of the transport task so either a Super B or a A-double," he adds.

"We don’t consider ourselves to be a transport business but rather an infrastructure business that provides containerised logistics services.

"That change came in 2015, when we did a merger with Patrick and our strategic portfolio substantially grew; and in 2016, we acquired four port properties in each of the eastern states when ACFS was 100 per cent privatised again to the Tzaneros family.

"Our focus since being  fully privatised has been on our strategic infrastructure properties being a key driver for the development of our business."

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PROPERTY VS FLEET

ACFS was established by Tzaneros and his father Terry as a transport company with the intention of transforming it into a logistics business. Today, there are 300-plus trucks and 1,200 trailers in the national fleet.

"It was never the intention to be an asset-hungry business in mobile assets (trucks and trailers), as our focus has always been from day one to have strategic property," says Tzaneros.

"Mobile asset was something we ideally tried to stay out of but in order for our business to be successful, it was very quickly realised we needed to acquire some trucks to service our business because we couldn’t rely on other carriers providing that service to us.

"In the early days, I did approach Terry saying ‘we’re not going to succeed unless we’ve got our own fleet’, and the promise of no trucks had to be broken.

"We’re a service business and you have to manage your KPIs and you have to be better than everybody else.

"Without our own fleet, we had no reliable capability, we were relying on other carriers  delivering containers to our warehousing facilities – and we were at their beck and call, so I said to Terry we just needed six B doubles at the time."

Located in six ports across the eastern states, ACFS’s dream of expanding on the port in every port soon became a reality when it was awarded a third-party logistics contract for Big W in Brisbane in 2006, which commenced their Brisbane operations.

"We didn’t even have a site or operating business at the time in Brisbane but Big W and Woolworths Group entrusted us to service their requirement, as we offered a new 3PL [third-party logistics] solution to the market, which was to bring containers off the wharf, unpack them on the port and distribute using their preferred carrier," Tzaneros says.

The following year ACFS was awarded the national contract for Nestle, which saw them open a facility in Melbourne, becoming east coast operators in the space of 12 months.

"That initial growth was a very heavy investment by us as a family," Tzaneros explains.

"The game changed to an extent that we were now an operator that could service one customer across the three busiest ports across the eastern states and at this point the pact between Terry and myself to not to acquire trucks and trailers was over.

"We quickly realised that we were to become a fully-fledged transport and logistics business with significant warehousing and a significant fleet capability.

"That journey was all about strategically expanding on the port in every port as quickly as we possibly could; and sometimes that meant grabbing port properties before we needed them and investing in our future before required."

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ORGANIC GROWTH

ACFS is the largest privately-owned container logistics operator in the country, moving over 750,000 TEU annually and employing over 1,200 staff.

Its container freight activities are underpinned by extensive knowledge and experience across the transport, depots/intermodals, warehousing and empty park sectors, with facilities strategically located in the port in every port in order to maximise quick and efficient utilisation of the wharf 24 hours per day.

ACFS has over 350 customers on its books and is a business that’s primarily grown through organic growth, excluding the large Patrick acquisition.

With no genuine sales team at hand, ACFS’s "sales team" is each and every employee that represents ACFS, from truck drivers and warehouse workers to management.

"The fact that we’ve been able to grow at double digit growth consistently on the back of our service and performance as a business, I think is credit to the people within the business," Tzaneros says.

EMPLOYER OF CHOICE

A business that works at speed, those who make it past the first year usually stay with the company for a long time.

Half of the workforce has been there for more than five years.

ACFS has been working hard at becoming an employer of choice. Its e-Solutions branded business, which services e-commerce and 3PL, aims to transform its latest warehouse development   at Eastern Creek in Sydney into a technology hub to drive efficiency and speed to market in Sydney, and has been described as the next phase of warehousing solitons for the company.


Read Tzaneros' call to action at the Safe Rates summit, here


"Our business is changing as demographics are changing and we want our drivers to start closer to home home.This has resulted in recruiting drivers for targeted facilities around the country," Tzaneros says.

"We are very focused on becoming an employer of choice – one who needs to make sure they have the right sites, the right work environment, a strong safety culture and a good fleet of trucks and trailers."

FLEET

Most of the ACFS fleet is made up of Macks due to their reliability.

The company got a delivery of 13 new Macks last December – its biggest individual order of trucks in one hit, which have been placed for both Sydney and Melbourne operations.

"We generally have a new Mack being delivered at least once or twice a month, every month," Tzaneros says.

"But we’ve had a strong surge of new customers come on board during the peak season and in order to support the volume of new customers we’ve had to acquire a large group of trucks in one hit.

"They’re reliable, performing and work around the clock generally six to seven days a week," he adds.

"Everything in our strategic business plan goes back to something; it’s well thought out, it’s not ad hoc and we’re very focused in a short-term, medium-term and long-term plan of how we execute our business."

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BUSINESS GROWTH

A continuous improvement team sits right outside Tzaneros’ office. Its sole job is to either save the company money or improve the business by one per cent every year.

A business with a steady performing culture is what ACFS is all about and as Tzaneros describes it "if you have a bad day it’s okay but just don’t have two bad days in a row".

"Our business is a business of one-percenters. There’s no point asking your team to save 10 per cent at a time as it simply doesn’t happen," Tzaneros says.

"Ten per cent is a very common number and our business is very unique when we talk about one per cent at a time. One per cent of $300 million is $3 million, so if this small team of smart individuals save us one percent on an annual basis they’re invited back next year to do it all again.

"If they don’t save us that one per cent we start asking questions."

The company’s ethos is if 80 per cent is right, "make the decision and move on".

As a results-driven business, the company tries to identify its best performers, helping them further develop and seek their aspirations.

"There’s a number of ways you can do it; through additional education, training and through broadening their experience into other sectors of the business," Tzaneros says.

"That could be a transport specialist and in order to become a manager one day they probably need exposure into warehousing or depots or empty parks or rail, so it’s getting the highly talented exposure into different areas and upskilling their capability.

"If you think you’re going to employ good people, you have to allow the good people to make decisions."

With quarterly business reviews undertaken, the company’s aim is to remain the market leader.

"That means our ideas need to remain relevant and our strategy needs to be ahead of everybody else’s," Tzaneros says.

"It’s technology and innovation, which means you have to bring a specialist in to drive that.

"We’re constantly making sure we’re working with best-in-class providers when it comes to IT – container chain, paperless warehousing, Oracle, to name a few.

"Then we’ve got other pieces at the moment that we’re developing behind the scenes – it’s about taking technology to another level through some additional providers that will be joined onto our systems."

ACFS is looking into drone technology for warehousing stocktakes and potentially to manage containers in its facilities.

"We’re not there yet but that’s where we’re heading," Tzaneros says.

"For example, it’s a daily occurrence that we have to find containers in our depot stacks, which we have to start pulling out for the next day’s customer deliveries.

"At the moment, people look for those containers, which are in certain locations, but we’re looking at the possibility of drone technology doing a sweep of our facilities to find those containers to give us the exact locations."

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The company will redeploy its staff as part of that technology upgrade, Tzaneros adds.

He’s spent some $10 million on technology over the past years and has centralised its customer service in Brisbane, sending job registrations to Manila for offshore processing as part of the business transformation.

"There will always be a need for customer service and there will always be a need for job registrations but we need to automate the processes as much as we can and that is giving our customers absolute visibility – everything in our technology runs in a live environment," he says.

Customers’ needs are constantly changing but what ACFS has learnt is to provide information at any given time.

"It’s about being proactive to reduce the customers’ cost; we’re not a supplier that is the cheapest from A to B, we have to have the best solution overall that saves them money in total supply chain," Tzaneros explains.

"We very much focus on the overall solution."

The outlook for growth became clear for ACFS four years ago when it gained total control of its joint venture with Asciano’s logistics arm Patrick Port Logistics.

That’s when the company has shifted from being a transport company to an infrastructure business.

Tzaneros says the joint venture with Patrick was the best decision he had made but also the most challenging period of the company’s business life cycle to date.

"What came with that was some significant land holding," Tzaneros says.

"Culturally, it was very challenging in needing to reengineer facilities the way they operated. Probably the hardest thing was the cultural aspect of putting ACFS and Patrick together.

"In those early days, we tried to find a middle ground to appease everybody but when we became fully privatised again in 2016 we had a look and said who are we?

"The answer is, we’re ACFS and we’ll do things the ACFS way."

 

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