2022 – A year where it all started
This past year came with a lot of pain, long nights, and very stressed conversations caused by severe congestion and record high spot rates equal to 10x the industry norm, going back to the end of 2020. For Ardent, we found our footing amid the chaos and there have been some very bright spots along the way.
What has transpired over the last 2 years in the Ocean Freight market has been a huge anomaly. For Ardent it was a reason to step up to the plate, listen to and help our customers.
As this idea took shape, people often asked, “How did this all start?”
The idea was born when my wife and I moved back from France. We had our first child on the way, and I knew that I had to do more. The market was in shambles and several of my past customers were getting left behind. All the pieces were there: strategic relationships, industry knowledge, customer relationships, and an unsolved puzzle.
“How do I bring this all together?” I asked myself. I truthfully had no idea. I called several people who I felt could offer good guidance, but no one was going to do it for me, nor did they say, “here’s the way.” I’d have to figure it all out.
Finally, I attribute this all to one customer. “You have to help me,” he said, over and over. That’s all it took to motivate me enough to figure it out. I dove in, sent some emails & made phone calls. A few days later I had my first booking for him during the most impossible time in the industry. Two weeks later there were 5 customers on board with multiple bookings and Ardent was off to the races.
What started as a basic customer-driven idea has now flourished into a rapidly scaling global logistics services business, focused on customer satisfaction, while bringing the right technology to enhance the customer experience.
The remainder of this letter serves as an update and guide to our fans, investors, & customers. I offer some of my observations of the global logistics market and landscape over the past year, as well as an inside look at Ardent. Let’s dive in!
Ardent has a burning passion for solving our customers’ problems. Born out of the 2021 supply chain crisis, we are a group of professionals who share the same culture and mentality to always put our customers first.
Ardent is a global logistics services provider. We help companies import and export all over the world. Our aim is to delight our customers by taking off a level of responsibility in working within a complex global supply chain. We help facilitate sourcing their raw materials or finished products, and coordinate delivery of their goods to their customers and end users across the globe. Our expertise is focused on the following service:
- Ocean Freight
- Air freight
- Customs Brokerage
- Drayage and trucking
- Warehousing solutions
- Order lifecycle management / Purchase Order management
- Supply Chain oversight / control tower
Our business is simple on the surface with low barriers to entry. It only requires a laptop and knowing the right people. However, given these low barriers to entry there is often a low bar of quality service. Pricing is very competitive, and differentiation is difficult if you aren’t driven to excel for the customer. This is where Ardent knows our competitive advantage exists. We have the capabilities to service our customers faster, better, and affordably. We do this through our willingness and motivation to always provide the best service, while leveraging our deep expertise in the industry and introducing the correct technology to create operational efficiencies. Put simply, we enhance the customer experience.
In 2022, we opened our doors, acquired our first customers, and turned a business plan into action. We raised capital, convinced team members to join the vision, outgrew our operational capacity, made mistakes, found technology partners, and started to find our way.
Most importantly, we set our goals and created a culture for the strategic path ahead. Setting the goals and defining our culture will help us remain focused for the years to come and keep the entire team aligned as we continue to scale our business and acquire new customers.
“The only constant in life is change…”. Volatility and disruption in global supply chains are commonplace, and agility is paramount today and for the future. The headlines may change, the events will vary, though disruptions are sure to continue. We deal with congestion, tight truck capacity, no space on vessels, 4,5,6-week delays, lost documents, cargo on hold, regulatory changes, geopolitical stress, you name it. It takes a warrior’s spirit and champion’s fortitude to show up to work every day. We face head on the chasm of the unknown and overcome these logistics challenges every day.
This brings me to my first point: It takes a special person to show up every day and handle the logistics needs of our customers. Which is why everyone says this is a people business. It’s true! At Ardent, our #1 strategic focus is our people.
Okay, okay, okay. I know everyone says that. Few deliver, and fewer still do so consistently. But I can’t put it any more plainly. We will not be successful without great people. We’ve grown now to a team of 8 team members from all different backgrounds and experiences. Every single person on our team is driven by our customers. This brings me to our first Culture point:
- Serving our customers drives our daily decision making.
Every single person we’ve brought on board has expressed their passion for serving customers. They’ve all felt the impacts to the experiences of the customers and team members alike when an organization loses its way and shifts focus away from the customer experience. At Ardent, we exude a desire to provide agile solutions for our customers. As a new and growing company, we are primed to do this! We don’t have corporate hoops and barriers to jump through to get anything done. We’re not a clunky old station wagon that barely moves, we are a youthful roadster ready to race and rally for our customers and grow together.
- Bad news travels fast – Be Reliable “Do what you say and say what you will do”
In logistics, things go wrong. The ability to deliver bad news to the customer immediately shouldn’t be a differentiator, but it is! We aim to always ensure to share good news, but the bad news should always travel fast. As a service provider, we are in the information-sharing business and unpleasant or “bad” news is still good information. Sharing facts as they become known is critical for our customers’ success in decision making and end user communication. We’ve all seen or experienced companies in the past that would rather conceal information regarding the shipment, container milestones because it was a downfall in service level. At Ardent, we pride ourselves in communicating bad news alongside clear timelines for resolutions and ongoing updates. This is customer service 101 that we intend to master. With the mindset that bad news travels quickly our customers are left with more options to reduce the burden of whatever obstacle may lay in our way.
- Enjoy & celebrate success
Too often, we see the corporate mentality of the “what did you do for me today? And what will you do for me tomorrow?” Where good behavior and accomplishments get brushed under the rug. Celebrating success internally and creating a positive working environment should be in everything that we do.
Our Culture points:
- Be Reliable – “Do what you say and say what you do”
- Create solutions – help identify our customer’s “job to be done” and a framework to execute
- Improve customer experience and operating efficiency every day
- Get in the weeds / trenches
- No excuses – buck stops with me
- Build the process, trust the process, improve the process
All in all, we’re here to do things differently. The world is changing quickly and too many companies are stuck in their old ways. Our aim is to embolden our team members with responsibility, challenges, and trust.
We also made significant growth in our volume and continue to maintain a positive trajectory to start the new year.
Our digital strategy is different than most. Rather than focusing on one giant platform build and have a do-it-all approach, we are focusing on different buckets of customer experiences and attacking these buckets with technology to optimize how we interact with our customers.
This year we’ve implemented a few different platforms that help Ardent excel over the competition.
- Instant Quoting / QMS – We have partnered with a new company, Waysync, that will help us drive our instant quote tool on our website and internally help us manage our quoting process to customers. Waysync will also help us implement a sales enablement platform that will allow us to become more efficient when interacting with prospects and existing customers. We recently received a nice write up from the Journal of Commerce, Check it out!
- Milestones & Tracking – We have a few ways to pull in data for the milestones and tracking of Ocean & Air freight. Currently, our TMS provider, Go Freight assists us in retrieving the carrier updates and sending them to our customers through a customer portal. We can create email notifications for each status update as well as automate in transit reports. On our customer portal, customers can log in to see their shipments, documentation, and invoices.
- Destination management– Destination managent is a key focus for Ardent in 2023. Providing customers visibility and the ability to have a hassel free way to deliver containers, return back to port, and avoid costly demurrage & detention is crutial for the customer experience.
- Invoicing & Billing – There’s no quicker way to lose a customer with incorrect billing & Invoicing. The customer experience around billing & invoicing is a top focus. Currently, Ardent allows our customers the ability to pay invoices online directly.
- Order Lifecycle management – This covers the full journey of a Purchase order, both tactically and strategically from inception through delivery. An order is the transactional component of an organization’s plan to meet demand. Demand is a result of actual and expected sales, inventory, and rate of consumption. The more accurate these components, the more effective the plan is when executed. Things get interesting when factors act on the plan and organizations react, often overcorrecting. This leads to additional costs, lost sales, padded lead times and excess inventory, which all negatively impact cash flow and liquid capital.
The number of parties involved in the order lifecycle are numerous, and collaboration at key milestones in the process are critical to executing the plan as written, while mitigating deviations as early as possible. The more robust an organization’s supply chain, the more labor intensive this becomes, and operations juggle emails across time zones, manual spreadsheets, and continuous attempts to reconcile data in enterprise systems. Managing the front of the order lifecycle in an intuitive platform that enables suppliers, buyers, and the logistics teams to perform their necessary functions in one place at scale should be today’s operational standard. The data gathered from the execution tactical can then be analyzed against the plan, informing any necessary adjustments to future orders. Success is measured over time with increased sales, reduced slow-moving inventory, improved cash flow and available operating capitol achieved by having the right materials in the right place at the right time, with only the proper inventory in place.
In Q1 we are partnering with a world-class software solution built specifically for the “first mile” of the order lifecycle. The solution allows our customers to communicate with their suppliers and logistics service providers using live order data, share status updates, drive exception management, and provide an origin experience akin to a supply chain control tower. The need is ever-present in most of today’s supply chains and we are keenly focused on deploying this solution immediately to the market at large.
A lot of people want to place 100% of the blame of record high rates solely on the Ocean carriers. Even President Joe Biden has made the foreign ocean carriers the villain in the inflation story. I worked inside the nucleus of one of the largest ocean carriers in the world in 2019. I can say with certainty that they are not the only ones to blame.
There’s a lot of negative to take away from a severe capacity crunch & dysfunction in the logistics world. China covid lock downs were like a whack-a-mole game. We had more than 100 ships queuing outside LAX / LGB. Ports lost their efficiency and had massive drops in throughput. The chassis supply couldn’t keep up. Warehouses became overstocked and containers sat on top of chassis in parking lots. But a new theme is emerging now as we all start to look back.
A great quote I heard this year, “You don’t build a church only for Christmas and Easter.”
This quote is very true for the entire supply chain. To be prepared and keep up with another possible giant surge in demand would require a significant investment in capacity that will be largely underutilized. The fact is no one will be willing to pay for this.
The system faltered but didn’t break! Companies around the world made it through this crisis, and a record amount of volume has moved through the system. People came together to help customers. New partnerships were forged. Supply chain executives made more of an impact for their corporation than anyone ever imagined and the focus on having a solid supply chain strategy has emboldened several organizations. Now, we’re on the other side, wondering what has just hit us, and what’s coming next.
This change in the fundamental way that corporations look at their supply chain & logistics will be a net positive for the next 10 years of the industry. The teams that I like to call the “offensive line” of the industry, where they never get praise, but always get punished when things go wrong. This is changing. Chief Supply Chain officers and Chief logistics officers are entering the C-suite & getting a seat at the table. This will bring out more focus on choosing the right partners in the future. This event has taken the supply chain from a profit killer/ cost center to a strategic advantage.
“What’s coming next?” is a question that has proved to be the most unanswerable question out there. Anything at any given second can disrupt our market, can anyone say Suez Canal? But the direction we’re headed in today is a severe overcorrection. I liken it to a massive wave or Tsunami that has come, which can only be followed by a large trough. Following this direction, ocean liner profitability and market rates will continue to fall until there is a recovery in global demand and a reduction in overall inventory from large retailers & importers. We don’t expect this to happen until the end of Q2 – beginning of Q3 2023.
Below is a list of predictions that I for-see will develop soon that we’ll need to be aware of:
- 2023 market will be tougher for a lot of LSPs (Logistics service providers).
- Markets are contracting and several LSPs will experience a tightening of gross revenue and will potentially need to act quickly or will find that they are not ready to handle a loss-making year.
- Competition is going to heat up.
- One of the most apparent trends is that all the sales teams that were hiding during the great surge in demand are now back to knocking on doors. We’re already seeing this. The RFP season will get aggressive. But ocean carriers will continue to only focus on larger, more impactful customers.
- Market rates will stay low until there’s an upward shift in demand.
- Fundamentals will need to shift towards a new peak season of demand. We expect this to materialize by July / August of 2023 but will largely be determined by the Federal reserve’s timing on when to stop rate hikes. Until then, we don’t see many large upswings in demand. Even the normal spike during Chinese New Year is turning into a mute period. Rest assured, demand will return and we’re likely to see new records broken again in the future.
- The Ocean Freight market will segment further into slow/ low reliability & fast/high reliability.
- We just saw Maersk announce a service that is advertised as being slow to generate demand. Customers have now endured longer lead-times; this will be acceptable in some instances if costs can be kept very low. But the entire market will not be satisfied with this trend. The Market will find more divergence from Fast and Slow. The market shouldn’t punish the slow customers by having them pay the same amount as the fast customers. And we shouldn’t offer fast customers a slow service when they will be willing to pay for a better service. I think that 10-20% of the total Transpacific market volume would pay a much higher premium during specific times of the year than in the past to receive on-time performance & reliability. Watch out for this trend as the market rebounds.
- Small niche ocean carriers will abandon the Transpacific Trade.
- This is already happening. Over 10-15% of the Transpacific market turned into a wild west market of “shell carriers” and we will see these companies fold & abandon the trade. The charter prices paid during the flock to source additional capacity do not make sense at the current market rates.
- By the end of 2023 – there will be an entire new focal point in the market around risk.
- Will it be China/USA due to Taiwan Straight?
- Will we see another Canal Blockage? – will Panama suffer a severe drought totally blocking larger ships to the East Coast?
- Will there be more strikes in the market?
- Will the reshuffling of Ocean Alliances or Alliance ban totally shake up the market?
All in all, there’s a lot that can happen and several of the above we will certainly see in the next 2-3 years. At Ardent, we view all this as exciting! Amid disruption we see opportunity to innovate and serve – this will be the differentiation!
We’re here to always service our customers. If it were up to us, we’d love to help our customers with every single piece of a customer’s logistics and entire order lifecycle from start to finish. But, as we look at our providers & suppliers, we’d never over rely on one provider, and our customers shouldn’t either.
There’s a saying, “A Smart rabbit has 3 burrows.”
From a customer perspective, there’s always going to be uncertainty in the market. In the stock market the best way to hedge yourself from uncertainty is to diversify. Having a stock portfolio in stocks & bonds & cash, or international & domestic, or small cap, mid-cap, or large cap, is diversified and will help you overcome any unforeseen circumstances. Cyber-attack anyone?
We would advise customers who are choosing logistics partners to always have safety valves, back-up options and tier-2 providers. If you only work with Ocean carriers directly, consider having some portion of volume for NVOCCs, or if you only use one or two main NVOCCs, consider looking at a third option or back up. Select an A-provider that will get consistent weekly volume, then have a B or back up provider that gets regular volume but doesn’t always get their full allocation when you’re in down weeks. Then have an either niche or premium tier option to help when you’re in heavy periods or have needs outside of your baseline demand pattern.
Bigger is not always better! There are plenty of times where going with a bigger player (shopping at big-box retail) makes sense! However, in other instances it is the furthest realistic solution for customers. Often, working with the big guys as a smaller or medium sized player, you won’t get the attention or service that you deserve. These larger providers have severe pitfalls when selecting to work with them.
Pitfalls of working with large providers:
- Customers often hear the response, “No”
- Customers are expected to mold to or fit in the service provider’s “box”
- Realistically, customers are in the bottom 10-20% of priority.
- Large corporations are not agile! – ever heard of a credit check taking 3 months?
Ardent is here to assist in the decision making of our customers and provide a reprieve from always being told no. Working with rigid companies can be a huge pain. We don’t want any customer to go unnoticed or their emails unanswered.
In conclusion, our plan is to grow sustainably, be prepared, and serve unmet needs in the market. We will push the gas pedal down when the market goes through a large growth / expansion phase & we will sustain and make limited hires as the market slows. We will take a brick-by-brick approach never take no for a first and final answer. Finding talent will get easier as buy-in continues, and we’re looking to attract talent in the marketplace who aren’t looking. If you are looking, check out our available positions. We have a stealth outreach plan to top level producers in the industry. This will become a strategic advantage for Ardent in the next few years.
We know that we are a small fish in a very large ocean. But that’s okay! Everyone started from somewhere. Apple, Google, Amazon started as an idea, some started in garages, and they all had a year 1. We are blessed and very pleased with our progress and direction for the years to come.
Lastly, our simple ask would be, if you’re a customer in this space come have a conversation with us. We encourage you to become a part of our early adopters. We’ll never ask upfront for you to trust us off the bat, however, we ask that you give us the opportunity to prove to you that we can be trustworthy. If you’re a new and growing company, like several of our customers already come join our movement to help support and lift each other up daily while facing the several daily unknowns that happen in the industry.
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Find us at our website ardentgloballogistics.com
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Wishing you all a prosperous 2023!