Smart and Streamlined Logistics Services
Javelin Logistics is a third-party logistics provider based in Newark, California which performs specialized warehousing and inventory management, as well as local, regional and national transportation services. The evolution of this company truly began January 1, 2004 when our interviewee, President and Chief Executive Officer Malcolm Winspear, joined the firm and decided to take the company in a new direction. Growth was soon to follow.
In 1996, Javelin was formed operating under the name Power Freight Systems. Malcolm came onboard when he acquired the company in 2004. At that point, Power Freight was primarily a small air freight forwarder with ten employees. Malcolm was looking for his next opportunity, and several people advised him to speak with the owners.
“They were looking for someone to help them grow the company, and bring them more of an operations and business management background. As it turned out, I bought the company from the owners, and continued having them work with me instead,” says Malcolm.
Malcolm was intrigued by the firm because it was an air freight forwarder that had survived the logistics chaos that followed the terror attacks of 9/11. This was at a time when no planes were in the air, and the U.S. air freight business came to a halt. Power Freight was able to suddenly transition from moving cargo by air to transporting it on the ground, and continue providing a level of service to their customers which enabled the company to survive when many others did not. This was a testament to their business flexibility, their employees, and their customer relationships.
However, Malcolm felt that the small company was overly focused on one particular aspect of logistics and one customer vertical, which was air freight forwarding services to hi-technology/semiconductor companies. Ironically, when he started with Power Freight in January 2004, the Company’s logo was “A New Direction in Shipping.” His long-term plan for the company was to take it in that new direction – from being primarily a domestic air cargo forwarder to becoming an integrated logistics service provider, with comprehensive freight transportation and material management services.
“We needed to become a better surface transportation provider. We needed to be able to handle truckload and less than truckload (LTL) transportation, and to do local cartage in various markets. We needed to be able to provide dedicated and non-dedicated transportation as well as specialized transport and delivery. We had to be able to perform material management services including warehouse storage, inventory management and control, and order fulfillment. In this way, we could go to our customers and say, ‘I can handle all your products and services for you,’” says Malcolm. LTL or less-than-truckload forwarders transport smaller freight volumes and will combine several customers’ freight on the same truck or in the same container.
Third-party logistics providers (3PLs) offer transportation, warehousing, and related value-added services so companies do not have to provide their own costly vehicle and facility resources, and can more readily adapt to market and business level changes. Most offer some but not all services. By offering a complete suite of services, customers will not have to go to different companies for their warehousing, local trucking, air freight, or domestic or international freight forwarding. Transitioning to this business model is what Javelin has been doing over the course of the last thirteen years since Malcolm arrived, including changing the name from Power Freight to Javelin Logistics in April 2012.
Javelin has a comprehensive solution for all their customers. For transportation services, Javelin works primarily in air ride freight transport rather than parcel services. This deals with larger shipments requiring a specialized vehicle or trailer, and there are many other carriers that cannot do that effectively. “We don’t want to play in the general commoditized product sphere. We want to be able to provide services to these customers that have a higher expectation and need for what we do in terms of moving their product. This could be because the product itself is more valuable or fragile and needs a different type of truck, or it’s oversized and needs a higher capacity trailer, or requires higher levels of visibility, or needs specialized delivery and installation. These sorts of specialized transportation services are not handled well by general commodity carriers,” says Malcolm. Because of this, Javelin can move the conversation from relationships that are just price-based to those that are service-based.
Javelin operates a hybrid transportation system. It operates as a freight forwarder and has a network of vetted carrier agents that it uses to transport shipments all over the continental U.S. In some markets, however, where it has a physical presence, the company also operates its own fleet of trucks, with logos and its drivers in the cab.
There are many challenges to logistics, but one of the main ones has to do with Javelin’s size. It is not a huge company, so the ability to secure new business can be challenging when competing with huge players like Federal Express. “Our market strategy has to be different because we need to explain who we are first, and then what we can do. Only then can we have a discussion that differentiates us from our competition. It’s a different approach for us, particularly as we evolve into doing more third-party logistics warehousing,” says Malcolm.
Javelin is doing a lot of this right now. Customers’ materials or finished goods are put in one of its ten facilities. Some are dedicated to a single customer and some are multi-use. When talking to customers now, Javelin first learns what the customer’s service requirements are, then explains to them what its capabilities are and how Javelin can service those requirements. The customer needs to feel comfortable putting their inventory and their business in Javelin’s hands.
In terms of what separates Javelin from the competition, Malcolm looks at it as a matter of perspective, or in his terms “outside-in” thinking. When talking to a potential customer, Javelin comes at it from the customer’s perspective. It is not a matter of just ensuring their needs fall within the scope of what Javelin can do. Javelin tailors its services to the customer.
“We say, ‘Let’s talk about your business, about what your current practice is, and what your frustrations and needs are. What do you want from a logistics service provider, and how we can wrap our services around your requirements?’ It’s a different approach,” says Malcolm.
Javelin’s headquarters is in the San Francisco Bay area and the economy there is booming. In the last eight months, Javelin has added two new Bay area facilities. There are some huge companies that are growing rapidly and draining the available local workforce. Companies like Google, Amazon, and Tesla, whose manufacturing plant is only four miles away, are hiring thousands of people, and unemployment is now negligible. However, there are also other issues to consider. Changes in human resources requirements, state and federal employee management regulations enacted in the last few years, tax rates and benefit costs all affect Javelin’s ability to attract people.
“It’s a double-edged sword. We do so many things that are designed to help employees, but it ends up making it more difficult to adequately compensate employees and still price services competitively to customers,” says Malcolm.
“We tell our team at our employee and staff meetings that our goal is to make sure that the only people that leave this organization are doing so due to retirement. We want them to have been here for a long time, to have progressed through the ranks, to have invested in the retirement program, to have had a good run and enjoyed their job, and we want them to sail happily off into the sunset after Javelin Logistics,” says Malcolm.
There is a phrase that is becoming fairly commonplace in business: Innovate or die. The logistics industry is changing extremely fast, and companies have to change with it. Technology is a big part of this revolution. Javelin is not a multi-billion dollar company, so to compete with the bigger firms takes a great deal of creativity and innovation.
Javelin needs to grow and develop new services. Both geographic and vertical expansion is necessary. The company has to know its strengths and limitations and needs to be innovative and flexible while bringing in new services, such as Javelin’s expanded transportation services.
“We needed to be able to do truckload transportation better, so we started a truckload brokerage operation underneath the Javelin umbrella. We added customs bonded transport services, and added other TSA and CBP regulatory certifications. We started acquiring and obtaining better technologies to do warehouse management, material management, and inventory control services. We have expanded our distribution center footprint and now have 800,000 square feet of warehouse space. We still have a long way to go to be able to figure out all we can do in the marketplace,” says Malcolm.
One of Javelin’s biggest opportunities for growth has to do with the explosion of e-commerce, e-retailing, the internet and how that is changing the way consumers buy and how their purchases get delivered. More change has taken place in this segment in the last thirty-six months, than in the last two decades.
As an example, Malcolm recently attended a logistics conference, and Amazon was the focus of all conversation. Amazon is changing logistics, home delivery and warehousing. Amazon is putting up warehouses that save money on electricity because they do not use light bulbs. No light is needed as everything is robotic.
“Javelin has to figure out how to transition the company to better take advantage of that particular avenue of growth. We recognize that distribution and e-commerce order fulfillment is where the world is going. It’s the future of commerce in the U.S., and that is where we need to focus,” says Malcolm.
Suppliers are critical to Javelin’s success. This includes their agent carriers, vehicle and trailer leasing companies, material handling equipment suppliers, and a myriad of other vendors and partners. The corporate mission statement states that Javelin treats its suppliers like it does its employees, treats its employees like it treats its customers and treats its customers like it treats its suppliers. This circular concept spells out that everybody needs to be treated with the same level of integrity, respect, and professionalism.
The semiconductor industry is still an important component of Javelin’s customer base. The industry is growing, but it is extremely volatile. Companies are getting bigger and acquisitions are happening, which complicates the supply chain. Growth by fifteen to twenty percent per year results in challenges; there are issues associated with increasing that manufacturing capacity, and these companies need their suppliers to keep up with their demand for materials and components as well.
“It’s unbalanced, disruptive and very complex. It sometimes results in a reactive rather than proactive management of the supply chain. There are a lot of last minute order changes, a lot of expedites, and real time tracking and tracing information is critical. A lot of these things are becoming more and more daily activities, which used to be an anomaly,” says Malcolm. The new world of commerce is forcing companies to adapt or perish.
On a final note, Malcolm sees the importance of providing the broadest suite of services possible to the companies and industries it serves, while still retaining its expertise and core competencies. Javelin must recognize its capabilities and strengths, and not attempt to be the solution for all potential customers. It has to be a comprehensive logistics company, striving to add as much value as possible for its customers, and most importantly it needs to ensure that these customers stay with Javelin long term. Malcolm believes that this will happen more through providing inventory management, distribution and fulfillment services, than providing just transportation services.