Matson Navigation Company：Triggering Chinese Market by one point

In the others’ suspiciousness, Matson crossed his uncommon first two years depending on her only shipping line operated in China, Ningbo-Shanghai-American. The line goes well and its scheduled container service has greatly raised the container transportation efficiency between China and American. This line is a hot and being scrambled by many shipping giants.
As the initial full-American-invested shipping company in China, Matson insists the belief “Not largest but best” and concentrates on her Ningbo-Shanghai-American line with neither buying huge vessel nor investing China ports.   
Does the busy scene outside really have nothing to do with Matson? Recently we had a interview to Mr. Gao Qiang and find Matson’s surprising but reasonable answer.
One line in two years and one point triggering the Chinese market
R: You have taken the MD position for a period. What is the marketing condition for Matson Asia at present?
MR. G: At present we operate by one line, Ningbo-Shanghai-American, and use scheduled weekly container liner. The complete line is Longbeach-Hawaii-Guam-Ningbo-Shanghai-American longbeach, which means in Ningbo on Tuesday and Shanghai on Wednesday. Now this line has been operated for more than two years and is very successful, not only on finance and management but also from the feedback from the customs
R: Why only one line Ningbo-Shanghai operated? Is there any consideration on opening other lines?
MR. G: yes of course there is always, from the past to the present. At that time our analysis is that other lines are necessary since the Chinese economy will surely grow, so does the trade between China and American. But the first question occurred to us is which port we should to choose? We consider on the above two questions.
The first, of course, is the market. Since our upper stop is from the Middle-South Pacific, it is beneficial to choose Shanghai-Ningbo. This is from the line’s angle. But market means more and from the market’s angle, we have good opinion on Ningbo and Shanghai. From the volume (three years ago) the biggest market for American is in south china. And when we were entering the market we focus on the future more than on present. The industry shift, variation of all kinds of costs, the change in the exchange rate and forwarding of the manufacturing from the north to the south decide our judgment, that we should find a place with more potentials both in the future’s development and the volume’s development. So we choose the line Ningbo-Shanghai, which is a wise vision following the big trend. This judgment validated our first considerations.
The second consideration is our ship is small, both has advantages and disadvantages. On the disadvantages, it is obvious that small ship carries less things. In south China, the ships there are large, which is different from Shanghai. Shanghai Waigaoqiao Port has the limitation on the water’s depth. So our disadvantage becomes advantage. In Waigaoqiao, I think we are one of the mere shipping companies, which can take Shanghai as the last berth-port. I mean this berth-port is the last in China and the next port is American. This caters to the high add-ons gained in Shanghai market. And the schedule is very strict. And from the ship travel’s quickness and the reliability, the demand is high, Since Shanghai is our last stop, we can satisfy these demands.
According to the considerations from the above two angles, we choose Shanghai-Ningbo.
The next step, we have good opinion on the Shanghai-Ningbo Market. If there is changes we are willing to pay more capital to invest. Of course it is not suitable now because the fuel price and the ship charter market. The cost is a big factor. Our clients are telling us that if we open the second line, they will choose our ship again. The feedback from the clients are very active on the opening of the second line, the key point for us to consider is the cost.
R: Facing those unfavorable factors such the rising fuel price and the rising seaman’s price, how should Matson deal with these problems and develop at full speed?
MR. G：I think that everyone sees this difficulty. Thought it seems this is a unfavorable factor, but from another angle it is g good thing. Because in this year people realize this question for the first time, The realizers includes shipping companies, many shippers, shipping dealers (for example the docks), ports in both China and American and inland railways. The whole industry realizes this.
In fact this problem has been realized before. But at that time it mainly refers to the shipping companies. Because the shipping companies need to cast accounts and operate everyday and shipping companies are clear that their cost is developing fast. But at that time the shipper and other related shipping dealers did not feel this influence because of different reasons.
This year from the situation at present, everyone wants to solve this problem. I think this is good. Though the problem has been existed for many years, maybe it is not hard to solve. Of course shipping companies are close and can feel the pressure from the cost. So we hope the solving plan could be long-term and mutual-beneficial.
R: is there any specific solving plan?
MR. G: Yes. From the shipping companies’ angle we communicate with the clients and want to achieve an agreement on the BAF. Present is the initial negotiating period and has not come to the final stage. Late April is the final period.
From the feedback received now, the clients understand the shipping companies and the difficulty in front of the shipping companies. Everyone shares the same difficulty which will also occurs in the clients’ own operation process. Even in their daily life this difficulty also occurs when they add fuel. In general the clients can be reasonable and achieve an agreement on the solving plan, which is mutual-beneficial.
For us and from the expectable plan from the clients the shared fuel market has uncertainty and everyone hopes more transparence and expectable factors can be added in the treaty this year, which means a more flexible and predictable adjustment would be made. There is a feather in the Sino-American trade. That is the American shipper is always large company such as international enterprises or listed company. For these clients, the cost could be reflected from the budget and budget is needed every year. This budget relates to many departments, even in different areas, such as mainland purchase, HK purchase and Euro-American purchase and so on. It calls many coordination and we also understand the clients, From their angle they expect an transparent way for the BAF. They need a clear direction in advance. So when they do the budget they can give a good consideration on this part. From this angel, it is the same with the shipping companies.
The shipping companies think so too. In front of a incertitude factor, a certain way would be fixed. The detailed price could not be fixed firstly but the international fuel market cannot be controlled. We only hope a reasonable agreement could be reached and though I am a little optimistic, I still hope a certain agreement could be reached this year.
Not largest but best
R: in your opinion, what is the advantages of Matson?
MR. G: our business is a fundamental one, not high-tech. You can call it logistics or somewhat which all means an A to B transportation service. Transport the things from A to B by fastest, exactest and most economical way is the core of our industry and the most important competitive ability.
For example in the market of Shanghai-Ningbo-American longbeach-American line, we have the best speed according to the two years’ effort. The veracity and reliability are also the best. I think this is the most important.
We are doing in a fundamental industry. And maybe you have transport the cargo from A to B. But if you did not send the files in time, the clients may feel you do bad because they do not receive the related files, It is hard to booking but the shipping company is viewed by clients by the exactness of the process from pick-up to delivery.not on whether there is the permission of pick-up and delivery. I know there is such a circumstance that a booking is made but the transportation is without a result. The ship is on time while the cargo is not on time.
I always talk to my colleges on what is a service and what is the service thinking from a customer’s angle. It is a basic reason without professional analysis. If you are the clients, what is you focus on and what is the shipping company focus on? The view of shipping company is the same with the view of clients. We start from booking, The booking is made and we have made promise to our clients. So we must success. We can not make the clients feel uncertain for the booking, transportation and delivery. A promise is a promise.
Back on Matson’s core-competitiveness, I think more work, energy and providing convenience are required. The thing I always mentioned to my staff is that we come late since many companies have come to China for 20 years and solid foundation has been lay on market, basic facility and influence. We come here in front of such a market, how should we compete and win the clients’ business? Whether our basic service can provide the clients the fastest door-to-door service decides whether we have a core-competitiveness.
To achieve this goal, what we should do everyday is to pay attention to every details and see whether every time the cargo can delivered to the clients according to their demands, whether the files’ delivery roll its hoop, whether some process is not smooth. We promise to deliver it at 8, can we? We promise to answer back within two hours and do we do so? If not, what’s the problem? Maybe it is problem of the staff’s craftsmanship, the problem of the staff’s working attitude or the process problem. Maybe all the above problems exist. Once there is a problem, we solve a problem. From the first day, we do best in the three parts. If we have some disadvantages on the three parts, we can make progress. I think this attitude is most important.
Our catchword is “not largest but best”. I think this is very important. In China we want to be large and strong. Now we focus on being the best. The strong means the best. If you are the best in your client’s heart, you must be the strongest.
R: What you just mentioned is from the service angle. What are the advantages on the safety angle?
MR. G: Safety means two parts: one is traditional safety, which means crew’s safety and ship’s security. The other safety is the safeguard. The two problems are very important to our company and as an American shipping company, our ships are made in American and our crews are American. As the American shipping company on the Sino-American line, we have obligation and duty to do best on this point. We have also taken many measures. For example, yesterday a chief security officer from American company is still in Shanghai. He went to Shanghai and went to the dock to see if there is any hidden trouble of safety in the dock’s operation and the ship’s operation. He also went to the shipyard in Nantong to see if there is hidden trouble in the security. If there is some any trouble, we will negotiate with the shipyard. This is very important to our safety.
Invest carefully. The thing suitable is the thing best.
R: In recent years, dock-investment has become the important events for those large shipping enterprises. What is your opinion on this phenomenon?
MR.G：There are two purposes for the shipping company to invest the docks. One purpose is relating to its own shipping operation. Since if the dock is free, the operation will be convenient and also of guarantee. In fact we have some docks in American and we do have this kind of feeling. But in China, it is totally different. On one hand, Chinese economy develops too fast. Many shipping companies choose berths here and the amount of the ships grows fast. For example, in the Shanghai market, the shipping companies that have their own docks will not surely use their own docks. Or in a great degree they do not use their own docks, So this effects service differently. On the second hand, investing docks is an investing action, The investing action is related to the investing theory. When you have certain amount of capital, you must have a choice. The project with a good return would be the one we invested. I think different companies have different ideas. Some companies like docks and think this can bring a long-term, stable and high return. Some may choose from other projects. I think this is different for different company, or different period. In China, ten years ago or twenty years ago, there are foreign merchants started the business in the dock of Huangpujiang, Shanghai. in the recent twenty years, dock-investing as a investment received high profit. But now since many funds have great interest in dock=investing, great investment have been made. I think at this moment everyone is considering how to analyze, how to considering input and return.
R: what kind of investments do Matson have in the future?
MR. G: I do not think investing docks is a bad project. I think it is the problem of opportunity. If there is proper opportunity, any shipping company or listed company will consider it. Our group’s business has three parts: Shipping, real estate and logistics, and some agriculture products in Hawaii. At present we only have shipping in China, in fact, we have interest in all the three parts. The success of the first line gives us confidence and a specific knowledge on the Chinese market. In the past, people only think there are many chances in China, now the successful case gives strong support to this point, and confirms the belief for the company to invest in China. We are paying attention to the yangtze river triangle delta and other places to trace some projects, including logistics and real estate. Real estate is mainly for the industry estate and warehouse now. On shipping we are considering the start of new lines. Because of the cost, it is not very beneficial to start new line now. But this does not stand for the future and there may be some change in the future. On shipping, there are two changes. One is the fuel cost will fall or the transportation price frame change into a sense. This is good news for opening new lines.
R: What is the developing aim for Matson?
MR. G: The group wants to take China as a strategic increasing point. Starting this line is the first step. To really develop this to the company’s increasing point, the group has great interest to do a further investment in China to explore the new business. We actively strive for, review and negotiate for some projects. But in general, we are a very stable company. We agree that there is a large potential market in China and we will invest on the most proper project according to our condition. I think the success of the first line has proved this sufficiently.
  Social responsibility raises the brand value of an enterprise
R: What is the dialectical relationship between enterprise development and social responsibility realization? Is it really like the things that many companies considering that focusing more on the social responsibility will influent the company’s own development?
MR. G: I think there are influence, but not the negative one. The positive effect can promote the enterprise’s development. For example, our Matson’s parent company A&B is selected as the most responsible company by one American company. The reasons come from the three following parts: firstly, the most responsible company. We always organize some charity activity such as donating and we also do some influence and effect in the community. Secondly we are the environmental-friendly. Our shipping company and real estate company leads ahead on this point. For instance, for some companies, they ship the big plastic bag full of trash to the dock and throw it there or to the high seas directly. But on our ship we equip a special container and put some different buckets in the container. Some trash can be callback and some are living trash. We diver the trash into different kinds and when we get the appointed places, for example the Hawaii or Los Angeles or American western shore (China still does not have this condition and we will make negotiation on this problem), we put different trash into different recycle places. Doing this may influence our space or add some troubles, but we think it shows the responsibility from one side. The third is how we treat our staff. Form the three parts above; we are selected as one of the most responsible company.
From the nowadays society, the social responsibility has positive effect upon the enterprise. Why? Firstly, by doing this you receive the social recognize from the governments, your community, your clients, your partners and your staff. I think recognize is very important. Sometimes it is tangible and sometimes it is intangible. At the same time recognize of the enterprise makes a part of the company’s brand.
As everyone knows, some foreign enterprises in China, when we mention them, we would remember other things except the products. The side not relating to the product maybe an incident, the question reflected on the net. The company’s dealing methods may differ because the company’s detailed actions and attitude on the intelligence property are different from the general recognition of the Chinese society. In all, these large enterprises have some other ideas in their mind except their own products.
Now in American many consumers would like to buy the products made the enterprises with social responsibility and resist the company with heavy pollution. So to these companies, positive or negative economic effects have occurred. In our industry, if you go to Los Angeles and Long Beach to see the no.710 Road and you will find it has been terribly blocked. By these cases, you can truly feel how important it is for an enterprise to have social-responsibility sense.
R: How do you treat social-responsibility of an enterprise?
MR. G: For this duty our Chinese branch just starts to carry it so I would like to introduce the situation in American. Every year for the Earth Day and Beach Day we will organize the staff to pick trash and the staff’s reaction is active. On the other hand, how should a company obey the law is strictly regulated by the accounting law and as a member in Matson the individual also feels this point deeply. The next week the American company will send a training executive here to train the staff how to obey the law. The company pays great attention on this point to everyone. So though it is a company’s action, the individual reflects it.
R: What would you like to say most to 200 thousand members?
MR. G: I would like to express my congratulation to the honored Shippingchina.com as it is so outstanding to own 200 thousand members now. As an American Shipping company, we received a lot of support and care in the premier years in China. And thanks to my clients too. I hope we can grow together with our clients and ports & shipping cooperators by exploring in the new business fields in Chinese market.