US freight company SEKO Worldwide operates in 40 countries – a far cry from its humble beginnings in 1976 as a department of a local courier and messenger service in Chicago.

Expanding the company was a long journey that led to the international arena, a strategy that was a matter of survival, according to its president and chief executive officer Bill Wascher. With almost 25 years of service invested in the company, Mr Wascher has experienced at first hand the transition that many companies have made from the domestic to international markets in an era of globalisation.

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Domestic expansion

From its early beginnings in Chicago, the company quickly grew into a network of 11 stations across the US. In 1987, the founder sold the company to Mr Wascher and five other partners. During the next decade the new leadership team embarked upon a strategy of domestic expansion, and by 1997 the company was a $115m business with 45 offices nationwide. “Then we had the wake-up call – the domestic market was shrinking and we realised we needed to expand globally,” says Mr Wascher.

After an aborted attempt to take the company public, and with some partners reluctant to risk money abroad, a sale was agreed to US Freightways – at the time the third largest small freight firm in the US and a billion-dollar company with the resources to take SEKO global.

US Freightways opened 17 directly owned offices in south-east Asia within a year and spent several hundred million dollars acquiring companies all over the world.

“They started to lose money with the directly owned business model and could not contain the bleeding,” says Mr Wascher. In October 2002, with another partner, he bought the company back.

This was the turning point. From a company haemorrhaging $3m in the month that they bought it, the duo turned things around to become profitable within 10 months. “I was the chief financial officer for 19 years and knew the company inside-out. I had the trust factor in my relationships with vendors, banks and employees – these key relationships were the dominoes to our success,” says Mr Wascher.

SEKO now provides domestic and international air and ocean freight forwarding, along with customs brokerage services buying transportation capacity from carriers and reselling it to shippers.

New strategy

Since becoming chief executive officer in 2002, Mr Wascher set about devising a different strategy from previous international attempts. “We wanted to learn from our mistakes and start from scratch to create a network beyond just developing agency networks, which means a real investment in the global branding concept and a common IT platform. We are investing millions of dollars in supply chain IT systems to give us global visibility from the purchase order, warehousing and ultimate delivery of goods,” he says.

Five years ago, 30% of SEKO’s business was international. In October 2008 this passed the 50% mark, with an annual international growth rate of more than 25% for the past four years, which is continuing at the same rate.

The company operates in Europe and Asia and has just launched operations in Africa. It chose Johannesburg and Durban in South Africa from which to launch a full range of air, ocean, brokerage, warehousing and distribution services, leasing a 4000-square-metre warehouse facility close to Johannesburg International Airport.

“Africa and the Middle East are going to be the areas of concentration for opening up new offices,” says Mr Wascher. Most of SEKO’s freight business in Africa is on an inbound basis as there is a growing demand for goods in the region.

“We are entering new markets rather than following our clients into Africa, as there is already an existence of multinational firms there,” he says.

In June the company announced the opening of an office near the Doha International Airport in Qatar to serve both import and export trade and customs brokerage services to the Qatar Peninsula and surrounding areas.

With such a different culture and market, Mr Wascher firmly believes in local representation. “Our business model is not transplanting Americans around the world, which many multinationals do – we have international expertise in each location,” he says. It is this expertise that makes a good global logistics hub, and the reason SEKO chose South Africa as its African launch pad.

The key to overcoming cultural, regulatory and economic challenges of operating across multiple global locations is having the right expertise, according to Mr Wascher. “We go into a local market and identify someone successful in one of the big multinationals with an entrepreneurial spirit to create a joint-venture,” he says.

SEKO is in the top three privately held US freight forwarders. “We don’t claim to be in the same space as UPS or Fedex, however there is a space right below that no one else is in,” says Mr Wascher.

He believes that not being one of the biggest players has worked to SEKO’s advantage in the economic downturn. “One of the luxuries we have is our size. While we are not small, we have the possibility of double-digit growth rate even in a down economy because our market share is small in relation to the enormous market out there.”

Although the company’s size may protect it, to a degree, from the global downturn in trade, operating on a global level will always make the company vulnerable to wider risks such as fuel price fluctuations. “Contractual obligations threw us severely upside-down for quite a few months when the fuel prices reached their peak because we were able to pass on to the customers less than we were having to pay to the carriers we use,” says Mr Wascher.

Challenges in China

Infrastructure issues in other countries such as China also pose a challenge. “There is a real issue with the latency of the data communications in China because the government monitors and reviews all data transmissions,” says Mr Wascher. SEKO has operations in Hong Kong and mainland China, having operated in the region for more than 15 years, with future expansion on the cards. The company has a 7432-square-metre facility in Futian, south China in Futian Free Trade Zone, which is an import-export free zone, and a 4645-square-metre facility in the Waigaocao free trade zone just outside Shanghai. “In mainland China, we are expanding inwards because that is where a lot of the manufacturing sourcing and infrastructure is moving,” says Mr Wascher.

In September the company opened a new office headquartered in Bucharest, Romania, with an additional operation in Constanta to provide customs brokerage services, flexible contracted warehouse management and both import and export trade to the entire central European region. This adds to its extensive western European network, which has a major hub in the UK. Located on the Balkan Peninsula, the offices serve the intra-European and US trade routes via transportation hubs in Budapest, Hungary and Vienna, Austria.

Global expansion is a strategy that has served the company well and ensured its survival. Mr Wascher is determined to follow the strategy that has taken the company from the brink of disaster to the thriving business it has become.

He maintains that expertise, relationship-building and finding the right personnel are the crucial ingredients to developing a global business successfully.

COMPANY PROFILE

SEKO Worldwide

Headquarters

Itasca, Illinois, US

Employees worldwide

2700

Number of global locations

150