What role does Nexus Mega Carriers play in the overall Giga Shipping group?
WONG: If you look at the group, the group is basically a total logistics solutions provider. So where does Nexus fit in? Nexus provides land transport in Peninsular Malaysia as well in Sabah and Sarawak. We also provide customs clearance and services, brokerage services, not only in auto logistics but also in general goods.
How competitive is this industry?
WONG: In terms of competition, it's very competitive. In terms of the car carrier industry, there are about 700 car carriers in the industry. Nexus has only 20% of the total carrier share, 20%. Then in terms of single car carriers, which is not part of the 700, there are many more. The tow trucks, they operate single car carriers. There are tons of them. So the challenges that we are facing all basically relate to pricing. These smaller companies, they undercut things. But we have a trusted brand. Fortunately, we have a trusted brand. This basically does two crucial things: mitigate or reduce the risk to the customers, and cushion the fall in case of unforeseen circumstances.
Then if we talk about competitiveness, we do what we do best. We also collaborate, and not only work together. A lot of people in the industry always talk about, "let's work together." We collaborate, we consult, and then we always over-deliver. Perfection is very difficult to achieve. But then if we strive for perfection, we will achieve excellence. That's the message I want to basically share with my staff.
What kinds of carriers comprise Nexus Mega Carriers' fleet?
WONG: We have three types of car carriers; articulated, which in the industry some call it long; rigid, which is the intermediate; and the single. With articulated, you can carry about eight units, and rigid, about five, and then single, just one single car. In West Malaysia, we have 120; 83 long, 32 rigid, and 5 single. In East Malaysia, we have 45. So in terms of car carriers, we have a total of 165 right now on the road. The next 25 will be coming on board. I hope to bring everything on the road by mid-October as they're in the process of registration.
So by the end of October, we should have 190 car carriers on the road in Peninsular Malaysia, including Sabah and Sarawak. I do have 33 motorbike carriers. That takes to total to 223 vehicle carriers for our company.
How much does fleet upgrade and addition cost?
WONG: For the long carriers, it costs about up to MYR400,000 ($122,000), which includes the truck and the trailer together. The rigid would be 100,000 less, so about MYR300,000 ($91,000). So if you look at the value of our fleet in total, you are looking at about $10m.
In terms of capacity, what can Nexus Mega Carriers handle?
WONG: Let's talk about last year. Last year we did about 45,600 loads and that equates to about 3,800 loads per month. This year, year to day through July, we did about 27,900 loads, about 3,980 loads per month on the average. Looking at the run rate, we should hit 48,000 by the end of this year. That's about 4,000 loads per month. But looking at next year, it all depends. The market has gone a little bit soft right now. So hopefully, the new 25 trucks that are coming on board at the end of October will basically carry us through the next half of next year. Then we will look at it and see how it goes. But looking at the industry, the volume prediction is a 3% increase, we have yet to see it but we just have to wait and see.
If I look at the next five years in terms of predictions for the total industry, its 3% growth per year, which means we would hit about 750,000 in the next five years in terms of new vehicles.
What are your future goals for Nexus Mega Carriers?
WONG: Our vision is to become the preferred auto logistics service provider in the country. In order to do that, I need to grow the fleet because if I look at the next five years in terms of predictions for the total industry, its 3% growth per year, which means we would hit about 750,000 in the next five years in terms of new vehicles. So what I would like to do is to grow the fleet accordingly, grow the fleet and then move out of our current base into a bigger base. With the current base, we cannot fit all the new car carriers.
And then the next thing I would like to do is talk to the respective truck manufacturers to basically look at us and help us to optimize the performance of our trucks because we are getting a big fleet. It's no joke. Then we need to optimize the performance in order to do better things. That's one item.
So the next item that I would like to do in the next five years is, although not immediate, would be to have a robust sales and operations planning process. So what this would do is increase the productivity of our fleet. Currently, right now it's at 77% and I need to grow it to 85%.
The third item is I would like to implement a state-of-the-art tracking and monitoring system in our fleet that gives me management, fuel management, on-time tracking, real-time tracking, and so forth. That basically will help us to move into the future. We also need a revamping of our MRO area. MRO is maintenance, repair and operation. MRO s 40% of our cost of sales, a big chunk of our cost. Fuel is only 35% and drivers are 25%. So I'm looking at this area to see how we can reduce the cost to be able to compete in the next three years.