A top-tier logistics playerSeptember 28, 2022
Rudolf Hess, president and CEO of R.H. Shipping, talks to The Energy Year about how the company has consolidated its local and global presence, its logistical support for oil and gas activities, and how digitalisation is changing the art of logistics. R.H. Shipping is a logistics company with a presence in more than 60 countries.
How has R.H. Shipping managed to consolidate its local and global presence?
During our 25 years of experience, we have managed to consolidate ourselves as a notable logistics player in Mexico. We cover the entire scope of the logistics value chain, moving whatever is required. In addition to traditional cargo services, we can also move dangerous, oversized and perishable cargo, and we offer door-to-door services, added to hand-carry and express services, depending on the needs of our clients. We adapt to what our client requires, offering them fully integrated and tailor-made solutions.
Furthermore, we excel in the areas of land transportation, air freight, ocean transport and container moving. We are a top-tier exporter from Mexico to the world, and from the world to Mexico. With a presence in 60 countries worldwide, we have managed to establish a unique position in both the domestic and international arenas. One must understand that Mexico has all it takes to be a logistics hub, as it is the connecting link between the US and LatAm and has direct access to the Atlantic and Pacific oceans and to the Gulf of Mexico. This means that we have the word “logistics” ingrained in our DNA; it is our reason for being.
How would you describe your performance in recent years?
These last few years have been, to say the least, turbulent. The pandemic brought with it a slowdown of the whole economy and, with that, complications in the logistics sector. Nevertheless, there has been a steady rebound, and despite the dire situation many have faced, R.H. Shipping managed to reinvent itself and even grow 5% during 2020. We saw exponential growth in 2021, with the company going from USD 38 million to USD 90 million in revenue.
Our target for 2022 is to hit USD 160 million, which would represent a 50% growth rate compared to last year. However, this also means we have to double our efforts to reach this benchmark. To achieve it, we have taken a proactive approach, and we are now targeting new players to broaden our clientele. In times like these, one has to look for new deals, as they are not just going to fall into one’s lap.
Tell us about your involvement in the oil and gas sector.
We have managed to establish ourselves with very strong logistics projects – including over-dimensional, overweight and industrial-project transportation. Although we are not asset based, we hire the best transportation companies for the specific business we want to do. We do quotations based on quality and not on prices.
Logistics is a business that has to be carefully planned out, and we do not jeopardise quality for anything. With large-sized projects, we transport huge pieces of equipment. If we suffered any type of accident such as large pipelines rolling onto the highway, hiring a large crane to solve the issue could cost us millions and delays.
In recent years, we have been very successful in the oil, gas and energy industry in particular. Although this industry has been hit hard during the pandemic and doesn’t represent a major portion of our activities, we are seeing steady growth. The industry is starting to become a prospective one for us. We have been involved in national mega-projects such as the Dos Bocas refinery. For that project, we brought the reels from Brazil.
We also work with local oil companies such as Nuvoil, with whom we recently carried out a project where we loaded tanks from Oklahoma which will be trucked, barged and shipped to Mexico. We have also worked for Grupo INFRA to move three large projects for them in 2021. These involved transporting pieces that were 100 metres long and 200-400 tonnes in weight from China to Mexico’s Manzanillo and Altamira ports. We are also in the rig-moving business, which is bound to pick up moving forward.
What major challenges is the logistics sector witnessing?
The past year was the worst for the logistics supply chain. Ships are full. All the ports are congested, and there are tremendous bottlenecks. The logistics scene has changed over the years, and cheap options no longer exist. Regarding containers, two years ago we paid around USD 1,400 per container to the US, whereas today we pay around USD 20,000-35,000. The price has increased by more than 20 times.
The same goes for sending a container to Mexico. This now costs us USD 14,000-19,000, which is more than 10 times higher than a few years back. The rates for general cargo ships for large industrial projects have gone from USD 50 per cubic metre or tonne to USD 500. Thus, logistical challenges worldwide have added to the skyrocketing of prices, which has shook a sector that is essential for making any economy move.
How is digitalisation changing the art of logistics, and how are you embracing it?
Digitalisation is gaining space in logistics even though the sector is pretty traditional, as it’s based on the transport of cargo from one place to another. However, digitalisation is now essential for enhancing operational efficiencies. Digital systems have been critical for tracking and for sending documents. As a company, we have embraced IT solutions in the areas of web tracking, transport management systems, data integration and reporting and warning systems.
We recently bought a new app that reads documents that we have received via email and automatically fills out the accounting information in our transport management system. This system will also automatically connect to the web tracking of shipping lines and then send the arrival reports automatically on a regular basis. Whenever a shipment has left its port of origin, a confirmation email will be sent automatically.
There are thousands of shipments every month, and our system makes processing these shipments faster and more effective and reduces human error. Although digitalisation is changing the art of logistics, the Mexican market is still very old school and slow to change.
What plans does RH Shipping have for the next decade, and how important will the US market be?
In the next 10 years, our goal as a company is to reach USD 1 billion in revenue. We want to focus on the US since it is the largest consumer market globally. The US is also the largest logistics market in the world after China. This represents an opportunity for us. We are preparing to copy what we did in Mexico these last 25 years in the US over the next five years. What’s more, we have offices in Houston, the Mecca of oil and gas. This location is crucial for us to grow our energy business and our links between Mexico and the US.
Globalisation and free trade agreements such as NAFTA have allowed the cargo business to grow. Accordingly, logistical bridges have opened up in North America, meaning companies must move more material, equipment and goods from Mexico into the US and Canada and vice versa. Catering to transport and logistics needs in industries such as oil, gas, energy and beyond is our destiny, as we see we can greatly benefit from this open landscape.