What is the background of Giga Shipping?
PRABAKARAN: Giga Shipping is a Malaysian company started by locals. Myself and Dato’ Adrian started Giga Shipping in 2001 and expanded through collaboration with other locals and foreign participation in order to move the company forward. Shipping is a very capital-intensive industry and we needed support. Relatively, the shipping industry is very young in Malaysia. We need technology transfer from advanced countries such as Japan or Western nations. We were able to collaborate with the Japanese and then allowed them to take a small stake in the company. That allowed us to progress very quickly. If you look at what we were in 2001 compared to what we are now, we have made incredible strides and are a great deal ahead of our peers who started under similar circumstances.
Giga Shipping was founded in October 2001. In 2002, we started on a collaboration with Straits Auto Logistics, providing us with one plural vessel. Subsequently, in 2006, there was another collaboration. Eventually in 2008, Giga Shipping was able to take over Nexus Mega Carriers, which provided freight forwarding services as well as land transportation for the delivery of motor vehicles and motorbikes. During the same year, Giga was able to form an alliance with Westports and from there we were able to form another company, Giga Car Terminals, offering storage facilities, PDR services to our fleet customers for importation of vehicles as well as for the export of vehicles from Port Klang, Westport.
With all of these services, which includes the vessel operation from Straits Auto Logistics, Nexus being the freight forwarding company as well as the transporter, we were able to provide value added services as well as supply chain for the complete delivery of vehicles from factories to dealerships and branches across the nation, including Sabah, Sarawak, and the Federal Territory of Labuan.
In what ways are you working towards the advancement of Malaysia’s shipping industry?
PRABAKARAN: It is the technology transfer that has allowed us to bring in modern assets that allow us to provide the services that we need for our customers. In that respect, if you talk about modern assets, we are talking about modern vessels, particularly the roll-on roll-off ocean going vessels. Besides that, we also continuously have a regular plan to replace fleet trucks, which we usually change after 7-8 years. This is an ongoing process ever year. Besides good employees and having modern assets that meet the ever changing models for vehicles, which usually get bigger and bigger, and vessels have to change in accordance to that. The trucks have to easily manage different sized vehicles on one single journey. Of course, having all of that, most importantly is our relationship with our customers. How we develop our interaction with customers is one of the key factors ensuring customers come back to you for more services.
So it is about employees, it is about the assets that we deploy, and how we coordinate our services from start to end. In all of that, today, we are looking at how to put everything into a single piece of information, that is information technology, and we have just recently invested close to MYR10m ($3.2m) and the system will be ready for deployment in early 2015.
What is Giga Shipping’s contribution to the Malaysian economy?
PRABAKARAN: The company today has close to 400 employees and 98% of them are Malaysians. Of course, when you say Malaysians, that means they are from a multicultural group including Malays, Chinese, Indians, and of course local ethnic groups as well. All of these people are part of our group.
We also believe that there is an opportunity for Malaysian seafarers to be part of our employment onboard vessels. Each of our vessels carries about 20 crewmembers. So there is plenty of opportunity created. These vessels are imported from abroad and it means foreign indirect investment in the sense that this is building up the nation as part of the 2020 vision of the government and we are playing a very big role.
What new investments do you see in the pipeline for Giga Shipping?
PRABAKARAN: Besides the IT investment, to which we have already committed MYR10m, there are two kind of investments. One is for the continued replacement of fleets, assets, trucks, and obviously vessels as well. There is a continuous replacement plan and that is all part of our overall investment plan. Besides that, additional investments may be required in developing land areas. Land is very important because land is necessary to hold vehicle stocks until they can be delivered at a later point. So this land that we are talking about, we have already acquired in Kota Kinabalu and Kuching and it is used in the delivery of vehicles to customers. Every time we open a new market or a new sector, the same thing happens. We have to look at car terminals and so on. So those are where the investments will be. If we are looking at different markets, outside of Malaysia, we would then need capital for the investment with our foreign partners.
Malaysia has already declared itself an incentive country for manufacturers to position themselves. The National Automotive Policy announced in early 2014 makes it progressively more viable for foreign car makers to be in Malaysia.
Where do you see opportunity for investment today?
PRABAKARAN: There are customers who require service providers like us to offer car terminal services. Car terminal services here means pretty much a holding center for vehicles that could be as big as 50 acres or 100 acres and the need for this is for holding stock before it is delivered to dealerships and after it is out of the factories. This holding area is important, as it will become a transit point for the customers. So this is one area where we think in a few years to come, there will be a big demand, particularly because Malaysia has already declared itself an incentive country for manufacturers to position themselves. The National Automotive Policy announced in early 2014 makes it progressively more viable for foreign car makers to be in Malaysia.
What kinds of growth are we seeing in Malaysia’s automotive industry?
PRABAKARAN: The country has experienced very good positive growth in the automotive industry since 2010 and now you can see more and more car makers positioning themselves. Automatically there is a growth in demand for vehicles; public transportation is inadequate, so therefore we see every household with at least 2 or 3 cars. At the same time, the fiscal policies of the government and the Central Bank have been very encouraging for buyers, so they have very good incentives for purchasing, which makes it easy to own a car. Looking at that, we believe that down the line in the next 5-10 years, these factors will not change very much and because of the incentives provided by the government for the development of the automotive industry in Malaysia, we believe this growth will be expected to remain for both the domestic market as well as the international market. So we strongly feel there is continuous potential in Malaysia.
What are your thoughts on regional expansion?
PRABAKARAN: We have been in this industry for the past 20 years and we know that there are some countries around the ASEAN region that are about 20 years behind the times, and some 30 years behind the times. So if you are looking at that and comparing it to our model of success, I believe that if we can duplicate our model in those countries, we will have a great opportunity to develop something there as well. Of course it didn’t take us just a couple of years to come to where we are; our team has been in shipping since the 1990s before founding Giga Shipping in 2001.
Now the group has a very rich resource of employees from the captains of the industry to the leaders of the transportation and shipping industries. Combine all of that and we have a great potential to move forward regionally.
What are some of the challenges you have faced?
PRABAKARAN: We are in an industry which is very competitive, and because of its competitiveness, we have many service providers offering services similar to what we offer. What sets us apart from them is that we are involved in the whole supply chain logistics; we basically provide value added services, and therefore, pricing may not necessarily be competitive because we add value across the supply chain. Some of these value added services include free storage days, free fitment services for accessories, and besides these items, we also offer marine claims and processes all managed by us internally. So customers do not need to have a marine department. They save a lot of money in that sense; we give back in terms of savings. Those value added services are actually indirect savings for the customer.
What are Giga Shipping’s competitive advantages?
PRABAKARAN: This is a competitive market for us. Because we provide end-to-end solutions including land transportation, trucking, freight forwarding services, car terminal services, and this is from the factory door to the dealership door, and along the entire process there are many value added services that we provide and that includes right up to the process of insurance claims, which we do ourselves. We are an agent for the insurance company and are authorized to issue a cover note. So all of these factors provide value and it is not just a price that can be compared with another service provider.