Charting an empire

Busy days ahead: Logistics companies expect e-commerce to be a key growth driver moving forward.

Busy days ahead: Logistics companies expect e-commerce to be a key growth driver moving forward.

THE logistics business seems a natural fit for Allan Yeo. It is his life-long passion, he says.

Right after graduating with a degree in supply chain management, he started learning the ropes of the industry in a logistics management firm.

His affinity and talent in the sector became apparent when Yeo quickly rose through the ranks. Within three years, he was promoted to branch general manager at the age of 26.

Having proven his mettle in the sector, Yeo turned his focus to his personal ambition. He decided it was time to own a business of his own in an industry he knows how to excel in. He set up Empire World Express Sdn Bhd in 2011, an integrated logistics company based in Subang Jaya, Selangor.

Armed with seed capital from bank loans, Yeo started work with a team of three people to service third party logistics needs.

As a small player in the field, Empire relied on providing quality service and offered sound advice to customers to meet their needs. This helped the company grow as it build a stronger rapport with its customers.

Empire also offered other services such as registration and documentation for products to be imported or exported.

“Not all customers, especially the small and medium size companies, understand or have the capacity to meet all the requirements and regulation concerning the movement of products or goods, especially when it involves imports or exports,” says Yeo.

Growing team: Over the past seven years, the number of employees has increased from just three to more than 25.
Growing team: Over the past seven years, the number of employees has increased from just three to more than 25.

Empire, as the name suggests, is a reflection of Yeo’s aim to be among the dominant logistics service providers with presence in the regional market and customers across different sectors.

But to achieve that goal, a relatively newcomer like Empire will need to leverage technology to gain ground against its bigger rivals in an increasingly competitive landscape.

“We intend to achieve a safer, faster and more reliable way for deliveries to be done,” he says.

Thankfully, his strategies have helped the company grow rapidly over the last few years.

Empire’s rapid expansion can be seen from its warehousing capacity which is growing at a staggering pace, at around 50% annually for the last three years.

“Even now, we have already started looking for new investment opportunities in warehousing to support our growth. We are now looking at acquiring warehousing services company to increase our operation scale and help meet our growth targets,” he says.

It may also be interested to acquire logistic or warehousing management technologies to improve its efficiencies, he adds.

Another option it may explore is land acquisition to build a completely new warehouse that is tailored to its own specification.

The company has already set aside a budget of around RM10mil for the proposed expansion, including its warehousing facilities acquisition plans, over the next three years.

Quest for space

Warehousing has always been the single largest cost centre for logistics operators like Empire. And as land become more scarce, it is becoming a lot tougher to find a suitable parcel in sought after locations such as Puchong, Subang or Shah Alam. Land cost is also, noticeably, escalating.

“Places like Klang still have pockets of land and warehousing facilities. But its location is not strategic as it is far from Kuala Lumpur city centre, and the loss of travel time will make operations less efficient,” says Yeo.

At the moment, the company has around 36,000sq ft of warehousing space under its operations.

Yeo says the company wants to look at acquiring more space rather than continue its current practice of leasing spaces to expand. He also welcomes any approaches or solicitation for potential land acquisition to construct its own warehouse.

The company has also been approached by strategic investors and other logistics peers interested to take up a stake in the company or to work on a joint venture. But Yeo is declining such offers for now. The founder of Empire says he stills needs to have full control on the direction of the business for Empire to achieve its goals.

According to him, Empire is aiming to achieve a revenue of at least RM50mil before 2021.

Looking for more space: Empire wants to acquire more warehousing facilities as its operations grow.
Looking for more space: Empire wants to acquire more warehousing facilities as its operations grow.

After that, it may then consider other corporate exercises such as giving up a portion of his stake for a strategic partnership or team up with a bigger rival to go regional. He hopes to eventually team up with a player that can help it establish branches and offices in overseas markets.

For now, Empire’s cashflow position is still strong and it can afford to fund its immediate expansion plans.

This also means that the company has room to increase its gearing given that it has a good track record with local financial institutions.

This could help it tap into any opportunity that may arise. Yeo says the outlook for the sector remains positive and it is still brimming with potential.

However, there is also increasing competition and certain economic trends haven’t been very favourable for companies like Empire.

Over the past two years, Malaysia’s appetite for imports, and the overall trade volume in general, has experienced a noticeable slowdown, says Yeo. This is particularly so in the oil and gas industry, which happens to be the main revenue segment for Empire.

The oil and gas industry saw a drastic slowdown in activities and thus, a reduction in requirement for imported equipment.

During this period, Empire had to work hard to acquire new business from other sectors such as consumer and electronic products to make up for the shortfall.

Today, Yeo reckons that Empire is one of the specialists in logistics solutions for bulky items, and currently serves large electronics clients including car batteries for Proton and Alcatel phones.

E-commerce boom

Yeo, who remains the sole management and main decision maker for Empire, currently controls 100% of the group. The company has more than 25 employees and expects to register average revenue of RM12mil.

Currently, oil and gas equipment make up about 40% of its business volume. Another 20% comes from the food and beverage sector while e-commerce takes up another 20%. The remaining volume is taken up by retail products such as electronics and IT equipment.

Like many other logistics company, Yeo sees a strong future in the e-commerce sector. He expects e-commerce to be the main growth driver for the company and is looking at expanding its fleet of vans and trucks to help meet the increasing demands of e-commerce players.

E-commerce has been heralded the rare bright spot for the retail industry in Malaysia, having grown substantially with nearly 70% of the population, or more than 21 million people, buying products online.

Logistics players are fast capitalising on this trend to grow, offering solutions that encompass services beyond just moving products from one point to another.

While Empire has a technological advantage to build on, Yeo notes that the potential in the e-commerce space has also drawn in more competitors.

Apart from existing local service providers and the largely well-established foreign logistics companies like DHL, the market has also seen the recent entry of many other logistics companies from the region, particularly from Korea and China.

This makes competition, especially for the multinational business segment, a lot tougher.

“These large logistic players have the scale and brand recognition to offer the MNCs. But we have begun to get noticed, and the fact that many established brands such as Proton, Sasa and other electronics and consumer product linked-companies remain with us gives us the confidence to reach our target size and scale in the next two years,” says Yeo.

SME , logistics , Empire World Express