#SgGoesGlobal: Why PIL is sailing through the storm with innovation

#SgGoesGlobal: Why PIL is sailing through the storm with innovation

With shipping firms facing record-low growth globally and struggles to survive, PIL plans to ride a wave of success, armed with new technologies such as Big Data and a vision for further expansion overseas.

PIL knows what to expect in its next chapter - and that's to expect the unexpected.

Fifty years after his father founded Pacific International Lines — then just a humble, homegrown shipping outfit with two vessels in its name — Managing Director Mr. Teo Siong Seng said it's still full-steam ahead for the company, which has today blossomed into one of Asia's largest shipowners.

"The next 10 years, we see ourselves becoming even stronger with even better market penetration," Mr. Teo said on 15 March, 2017, the eve of PIL's half-centenary.


It was a bold pronouncement considering the prolonged downturn that's been dogging the shipping industry for years — one that PIL has not been entirely immune to. "The past decade has been very difficult," Mr. Teo admitted.

2016 was particularly turbulent. Shipping companies across the globe faced record-low growth as the industry witnessed a rash of mergers and acquisitions, and the fall of South Korea's once-powerful Hanjin Shipping, which filed for bankruptcy in August.

"Last year, our industry went through 'five weddings and a funeral,'" Mr. Teo said. "The market has not seen such volatility in its history."

But imbued with the same moxie and vision that has fuelled the company's past 50 years of success, and bolstered by the continued help of IE Singapore which has served for many decades as a close partner and ally of the firm, Mr. Teo said PIL is undaunted by the challenges ahead.

"It's at times like these that it is all the more important for us to remain focused, to not panic and try to find ways to survive," he said.


The Waters Less Travelled

Going global has been part of PIL's modus operandi from day one. The firm ventured overseas to China in the first year that it started operations, and since then, it's become a company well-known for journeying into some of the least-travelled corners of the globe.

"We started as a very small shipping line with limited capital, but we were aware of our advantages," said Mr. Teo. As a tighter firm with lower operating costs, the company could risk going into emerging markets like the Middle East and Africa, and even conflict-plagued countries like Iraq during the Iraq-Kuwait War in the 1990s, and Yemen and Sudan today.

"Trade to very difficult areas has become our hallmark," said Mr. Teo.

For much of its global journey, PIL had the support of a "helpful" ally, he added. "We've been working with IE Singapore for a long time, since back when it was the Trade Development Board [which was renamed in 2002]. IE has been very helpful. It has a very good reputation, and has helped us in dealing with local authorities in China, Africa and Southeast Asia."

IE, he added, has also helped the company connect with potential partners for overseas projects. In 2015, for instance, IE was involved in the facilitation of a joint venture between PIL, PSA International and China's Beibu Gulf Port Group to establish a new container terminal in the Chinese province of Guangxi.

Looking ahead to the next 50 years, Mr. Teo said he foresees IE playing an equally important role in helping the company tackle future challenges and to stay competitive.

PIL will specifically be looking at three areas of growth in the coming years: improved technology, connectivity and manpower.

The company, said Mr. Teo, is currently working with IE to figure out how new technologies like Big Data, blockchain and digitalisation can help the firm enhance efficiency and stay ahead of the curve. IE is also assisting PIL in its efforts to increase its global reach and improve the connectivity of its network. Creating new trade flows — both over water and inland — is a central goal of the firm, said Mr. Teo.

An example of this is the new trade route being developed in and out of Chongqing, a city located inland in southwest China that sits at the confluence of the Yangtze and Jialing rivers. Together with a number of other Singapore firms, PIL is currently working with IE to establish a logistics and transport hub in the city -- infrastructure that Mr. Teo said will significantly slash transport times to and from central China.

He gave the example of how coffee beans fromVietnam had previously been transported to coastal Guangxi before being carried inland by train into central China. With the new hub in Chongqing, the beans will reach its destination in half the time, he said.

PIL also aims to improve its capabilities as an end-to-end supply chain provider, which means having the capacity to not just transport cargo from port to port, but also inland. In Sudan, the company has established a trucking operation to transport products into the heart of East Africa. It is now planning to launch something similar in Egypt, where IE has helped the firm set up an operations centre in the capital Cairo.

Last but not least, Mr. Teo said PIL is committed to further manpower development, specifically training their staff in Singapore so that as the firm expands its overseas operations, their employees can share in the growth.

"This [goal] means a lot to us," said Mr. Teo. "As a family-run business, we are the owners, but we believe that ownership is shared between all our staff. It is important to us that our employees share our ambition and our dreams."

IE, he said, is currently working with PIL to develop international manpower programs to train their Singaporean staff to transfer overseas.

PIL knows what to expect in its next chapter - and that's to expect the unexpected.

Into The 'B-Division'

PIL's future is looking bright.

By the end of 2018, the firm says it will reach a capacity of half a million TEUs, thanks to the addition of 12 new container ships to its current fleet of about 180.

That'll elevate the company's position from a "C-Division" player in the global shipping industry to the "B-Division," said Mr. Teo. "We will be comfortable to operate at this size and there are only a handful of companies like this."

Having experienced 50 years of both challenges and wins alike, Mr. Teo saidPIL knows what to expect in this next chapter — and that's the unexpected.

"Every day is a milestone. Nothing is ever the same. Everything is always changing," said Mr. Teo. But "what's important is that in all this chaos, one has to remained focused," he said.

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- Produced in association with IE Singapore -