As a marine logistics company with a global focus, Peters & May has a unique perspective on the industry. We spoke to David Holley, managing director/president of Peters & May USA, about the company’s experience in 2010 and outlook for 2011. Below is the first part of our two-part conversation with Holley.
Let’s begin with a little background — some of our readers may not be familiar with what exactly a marine logistics company like Peters & May does. Could you explain what do you do as a business?
As a company our focus is in the area of international boat transport. We have focused on an area of logistics in which we best perform and where our expertise allows us to offer solutions of excellent value. At the same time we also provide shipping solutions for international racing events (both sailing and powerboat) as well as shipping marine spares and accessories. We offer complete door-to-door solutions so when a client has a boat to ship we handle the complete process from start to finish. The benefit of working in a niche field of logistics is that we can continually gain experience in that sector and use that in our day-to-day operations.
What types of clients does Peters & May work with?
Our client base is very diverse and comprises boat & yacht manufacturers, private individuals, race circuits (power & sail) as well as individual racers and teams. We hold long-term agreements with a number of key manufacturers and it is due to this volume of exports that we are able to negotiate excellent rates from the shipping lines. By working closely with the lines and employing staff that have a firm knowledge of both boats and shipping we are able to cater for everything from 16-foot ski boats up to 150-foot super yachts.
As a company that ships internationally, you have an interesting perspective on the marine industry. Could you talk about how Peters & May is approaching 2011? What is the company’s outlook? And is it different internationally than in the United States?
With offices strategically placed around the world we have been able to get a perspective from all angles. We always have a solid business plan in place and fortunately we have been able to adjust to meet the change in the economy. The global recession has changed the way that both manufacturers and dealers have had to do business. The dealers have much more of a controlling hand over the manufacturers. Whereas in the past the dealers were ordering 5, 10, 15 stock boats that is not the case anymore. Although we would love to see additional volume rolling out of the factories, the recession has given us an opportunity to show what qualities separate us from the competition. With the dealers selling boats to order it means that there is a lot more pressure on the factories to produce the boats on time and subsequently they call on us to make sure the boats are delivered to the overseas dealer in the timeframe stipulated by the customer. We are used to working with this kind of deadline and are able to pull strings to make it work.
Personally I feel that the boating industry is still some time away from a recovery. We have seen exports from the USA pick up since March and areas such as Australia and the Mediterranean have shown particular progress. On a good year we can export over 5,000 boats from the USA, currently the figure is more like 3000. We expect a good increase in new boat exports in 2011 as the old stock units and repossessed units are starting to move out.
Internationally it seems that the yacht manufacturers (boats over 40 feet) are moving into building bigger models. Some of our key motor yacht manufactures are now producing units over 90 feet rather than the 40-60 foot range. This is another example of adapting to the change in demand and the restraints of the economy.
Can you describe some of the challenges your company faced during the recession? And how did Peters & May address those challenges?
The recession affected the USA office almost immediately as our client base is primarily manufacturers of small boats. The UK office saw a delayed reaction as they deal with manufacturers of large yachts that take a few years for manufacture. In a way this was a stroke of luck as we were able to assist each other as well as our other offices by pulling resources. Fortunately our holding company (Constantine Logistics) does not believe in debt so we were in a strong position before the recession hit and were able to adapt our business plan accordingly.
The cost of advertising and the number of advertisers reduced so we took the opportunity to maximise brand exposure by increasing our levels of advertising. We focused on working with manufacturers to reduce their costs and at the same time increase the levels of service offered to their dealers. Although the overall volume of units shipped has reduced we have in fact increased market share and will be in a stronger position as the economy recovers.
What about industry-wide? Have you seen any big changes in the marine industry as a whole?
I think there were a lot of companies in the marine industry prior to the recession that were under the impression that they were untouchable. The high volumes of 2007 had everyone dreaming of large profits, and although they were over-spending, they felt comfortable as the unit volumes kept the cash flow strong. The sudden slump in the economy left large manufacturers with cash flow issues and when the banks started to close in they were forced into making massive cuts to avoid bankruptcy. It seems that this recession has taught everyone a lesson and a smarter approach will mean a safe but slow recovery. There is a lot more focus on customer service to retain dealers rather than simply relying on price.
Look for the second part of our Q&A next week.