GEODIS project work compliments other business sectors

In an interview Luke Mace, Senior Vice President Global Freight Forwarding/Project Logistics for GEODIS, outlines the business of project logistics and how it fits within the GEODIS corporate ecosystem.

AJOT: From an organizational perspective, Geodis has “Project Logistics” operations working under the Freight Forwarding line of business. What are the advantages of this organizational arrangement i.e. How does this organizational system enable “Project Logistics” to pull in and scale resources to both Geodis lines of business and outside Geodis to address project demands? Does the Project line run its own P&L within the Geodis operational structure?

Luke Mace: Within the Freight Forwarding Line of Business, Project Logistics operates alongside Ocean, Air, Customs & Foreign Trade, and Supply Chain Management (4PL). While we maintain our own independent profit and loss (P&L) statement, our strength lies in collaboration. By partnering with the other freight forwarding products, we ensure that our collective knowledge and expertise are fully leveraged across the entire Line of Business.

For instance, we work closely with our ocean and air teams to capitalize on the global volumes in General Cargo. This teamwork not only enhances operational efficiency but also opens avenues for shared success. While the benefits of these connections are often clear, some of the most significant advantages are less apparent. Our ongoing advancements in digital technology, for example, would be challenging to achieve in isolation.

A key focus for us is “rightsizing” or scaling our operations effectively. We dedicate considerable time to analyzing market trends, identifying which segments are experiencing growth or decline, and balancing opportunities in the short, medium, and long term. This proactive approach helps us maintain stability within our team and ensures we remain competitive in a constantly evolving landscape.

AJOT: Approximately, how many people work directly under the Project Logistics segment?

Mace: We currently employ slightly less than 1,000 full-time employees across 36 countries. This figure excludes shared resources within the Freight Forwarding Line of Business, such as Finance and Human Resources, allowing us to focus on our core activities dedicated to driving our business forward.

AJOT: While sharing the transportation element, by its nature, the Project business is considerably different than other logistics activities — projects take a long time to develop, and logistical support can go on for a considerable period. What are some of the unique challenges involved in Project Logistics as compared to standard transport and logistics operations?

Mace: The Project business is a perfect complement to the General Cargo activities of the GEODIS Group. If the sales cycles are longer for projects, the fact that projects have a firm start and end date provide better visibility. When the project activity includes risks which are not as critical within General Cargo, the rewards are also higher. And, in terms of activity cycles, projects tend to peak at the top of the curb of general cargo and thus support a smoother landing.

What makes the project activity different is the need to consistently look a step ahead. While executing current projects, we need to be identifying and preparing for the next opportunities.

Keeping an eye on industry sector developments is crucial. For instance, we’re currently experiencing growth in sectors like Carbon Capture, Hydrogen, and Battery Energy Storage Systems (BESS) all unknown to us a few years ago, while we see other more traditional sectors decline in terms of portfolio share.

Factors such as geopolitical issues, government regulations—including tariff modifications—local infrastructure, compliance standards, project funding, and currency stability all play significant roles in our planning. These variables can be complex and are not always immediately apparent, yet they are vital to the successful execution of our projects.

AJOT: The equipment used in Project Logistics is often highly specialized to enable oversized loads. An interesting example occurred earlier this year (February 2024) when Geodis deployed an Antonov AN-124 freighter to transport oversized freight to Colombia. Could you describe the moves involved in the project and the process involved in deploying such a large aircraft?

Mace: Over the Christmas week of 2023, we undertook a significant project involving the transportation of 249 pieces of oversized cargo to southeastern Colombia. Our initial plan was to use the La Orquídea Bridge in Boyacá; however, after its collapse in August 2023, we were left with no viable road transport options. This challenge prompted us to quickly devise an alternative solution.

The success of the project hinged on meticulous planning between GEODIS and Antonov. After thorough assessments, we identified the Antonov AN-124 as the only aircraft capable of handling the cargo’s exceptional size and weight requirements. The operation was executed impeccably, and we’re pleased to report that the customer was very satisfied with the outcome.

AJOT: Globally, what are the prospects for project market. What are the prospects for business segments like O&G (LNG projects have been on the rise but will it continue?), renewables (particularly with current energy transition) and capital projects (US Infrastructure Bill and other sovereign investment)?

Mace: This is the question we all contend with: where should we invest our time and resources? As previously mentioned, there are numerous variables to consider, and sometimes the focus should be more on geographical locations than on specific industry segments.

The power industry, for instance, is experiencing significant growth and is set to continue investing globally. Conversely, sectors such as military and defense, as well as humanitarian efforts, are also growing. Navigating these trends requires careful consideration of both market dynamics and regional opportunities to make informed investment decisions.

AJOT: The supply chain has faced several recent trials with the Houthis attacks in the Red Sea and Panama Canal low water diversions being the most notable. How do such challenges impact project logistics?

Mace: As discussed earlier, Project planning and budgeting are defined well in advance. Events such as the diversion of cargo around the Cape of Good Hope have therefore a significant impact on project logistics since they extend transit time, limit available capacities and increase costs. Our mission is to assist our customers in meeting their construction deadlines while mitigating the costs impacts. It’s vital to recognize that you don’t have to be directly in the vicinity of disruptions to feel their effects. For instance, we’ve seen the impact of incidents in the Red Sea on the transpacific trade lane, largely due to vessels being repositioned. These ripple effects can complicate logistics and require us to develop strategic solutions to ensure that our customers remain on schedule while managing costs effectively.

AJOT: What changes in the “project” industry have had the most impact on the day-to-day business? How have the dynamics of the logistics business itself impacted logistics? There is considerable discussion on how AI will impact logistics but how might AI have an impact on Project logistics?

Mace: Over the past decade, one of the most significant shifts I’ve observed is the increasing amount of time dedicated to the complexities surrounding the physical movement of cargo—not just the act itself. We invest considerable effort in compliance measures, striving to create a zero-harm environment, and there’s been a heightened focus on sustainability in recent years.

This brings us to the role of AI. As part of our commitment to digitalization, we’ve heavily invested in AI technologies. While I don’t believe we can fully automate the movement of true heavy lift cargo, there are certainly aspects where data can enhance our operations. For example, utilizing predictive analytics allows us to improve planning and optimize logistics, ultimately leading to more successful outcomes.