AMI’s Sharon Wright: The benefits of neutrality
19 / 06 / 2017
Various ways have been suggested over the years to give small to medium forwarders the tools to compete with the larger players.
One that has been a big success in the UK market — and which is spreading its model globally — turns 40 this year.
AMI these days stands for Air Menzies International, but when it was founded in 1976 it was Air Marketing International. Founder Tony Realff in fact bought the name from an airfreight group which had operated charters to Nigeria. Realff had a completely different idea — to set up an air cargo wholesaler.
Sharon Wright, the company’s current vice president Europe, who has been with AMI since its inception, points out that the world was very different in those days. The IATA rate ruled — and could be changed only at 30-days’ notice.
“The IATA rate was what you paid and there was a big fat minimum weight,” she recalls. This was a big disadvantage for smaller forwarders, whose shipments came under the minimum. “It is amazing to recall now, but they could end up paying up to £7 a kilo [$12-$13 at the time].”
Realff’s idea was a simple one: combine shipments from a number of smaller forwarders and so get them a better rate.
Consolidation, in other words, but the concept barely existed then. “We really started consolidation: It was a very innovative idea,” says Wright.
The other key concept was neutrality. Even in those days large forwarders would co-load, filling up spare space in their block space allocations with shipments from smaller agents at advantageous rates. But there was always the worry that once the goods were in their warehouse, they would read the labels and try and win the shipper’s business for themselves.
By contrast, AMI took the firm line that it would never talk to shippers. It has stuck to this for the past four decades.
The AMI concept was so successful that it quickly spawned imitators. Companies such as PBL, ICM, Cargosave and Air81 all decided they wanted a piece of the wholesale action. But they did not last.
“The trouble is that you can’t do wholesaling on a small scale — you have to enter it worldwide and do everything,” Wright says.
“Lots of our rivals specialised in one particular sector, but that never worked so well.”
By the early 1990s, the wholesaling sector in the UK was attracting attention from the corporate sector. John Menzies, UK newspaper retailer and distributor, was looking to diversify its business and bought Cargosave. It also entered the ground handling business, where it is still active.
“Within a year they realised that they had bought the number two business,” Wright remembers. In 1993, they made an offer for AMI which Realff accepted. “Essentially AMI then did a reverse takeover of Cargosave, because our executives ended up in charge,” Wright says.
She praises Menzies as an owner, saying they have enabled AMI to innovate and grow. “We have always had a million ideas and Menzies has been very willing to invest.”
One big change for the company came in 2006 when then senior vice president of AMI, Peter Weir, came up with a plan to expand the wholesaling concept to other markets. Where possible this was done by acquisition, but true wholesalers, as opposed to co-loaders, were not easy to find.
In 2007, AMI bought Universal Air Cargo, with operations out of Australia, New Zealand and the US, and in 2008 it acquired MMA of South Africa. These two purchases trebled its turnover.
In other markets AMI has had to set up its own locations. It now has 23 overseas offices, including Germany, the Nether-lands, India and China, the latter a joint venture. All of these, says Wright, have been organic: “We opened our own offices and started with nothing.”
Success in these markets has not always been as immediate as it was in the UK. Wright admits that India, now in its third year, has been “a slow burn”, with customers in particular having to get used to the idea that AMI will not try and poach their shippers.
She says it is now paying dividends, however.
“Customers like our concept and our honesty,” she says. “We are completely above the counter and open in our dealings.”
In other markets AMI is up against different concepts of how to give smaller forwarders an edge.
Germany has buying groups such as Future and IGLU, where smaller players club together to get better rates. “Wholesaling is more of a difficult sell there,” Wright admits. “We are different [to the buying groups] and some customers get confused. In the Netherlands it is different — wholesaling is a well-known concept there.”
Other expansion is on the cards, with Wright saying that a new person has taken charge at Menzies Aviation and “we look forward to opening their war chest”. One key target, she admits, is Dubai.
AMI also looks at markets which are big UK export markets. “If we can open in these places, we can handle the other end of the chain.”
Otherwise the company uses partner forwarders to handle its shipments at destination — to get them through Customs and make sure they get to the consignees — but these are forbidden to sell AMI services, as this would compromise neutrality.
This hints at another way AMI has expanded. It is no longer just about getting good rates; it also aims to offer a one stop shop for other services. “We are allowing forwarders to be virtual forwarders,” says Wright. “Lots of them don’t have warehouses anymore and we can provide that, and also documentation, Customs entries, and so on.
“They can then focus on selling to the shipper.“They can just be in a small office, or operating out of their house. From our point of view offering these services binds them in, makes then need us more.”
Another emphasis is on offering online services. AMI’s motto used to be “one call books it all”, but these days forwarders look to the internet for such things. AMI first offered an online quote and book website in 1996, but technology — and people’s awareness of online services — has come a long way since then.
In August 2015, it relaunched its online service, which now offers UK forwarders a choice of quotes, prices for transport to and from the airport, documentation and also Customs services, all on one portal.
Since 2010, the company has also run a separate express website, click2ship, which can be accessed from the US, Australia, New Zealand and South Africa as well as the UK, and Wright says with the growth of e-commerce this is a rapidly expanding business.
Going forward this will be a big new focus — to get e-commerce from what Wright calls “all bona fide freight movers” — that is fulfilment houses and postal companies as well as forwarders, though not directly from retailers.
E-commerce is also having the effect of blurring lines between normal freight and express, so much so that the quote and book and click2ship sites are soon to be merged, with a new combined portal hopefully to be unveiled later in the year.
AMI is also expanding its European road business —essentially the same wholesale concept but for trucking — to deal with express, and through its new overseas offices it is looking to develop its UK import business.
As Wright says, the company always has millions of ideas, which will hopefully be enough to keep it going for another 40 years.