Building trust and keeping communication fluid between shipper and carrier was what helped fishing tackle, lures, rods and reels provider Pure Fishing Inc. and global shipping company Ocean Network Express (ONE) weather the tumultuous environment that fractured other relationships between some marine businesses during the ups and downs of the pandemic and the logistics problems that ensued.
At a March 1 session titled “Building Strategic Shipper-Carrier Relationships Amid Volatility: A Pure Fishing Case Study,” Pure Fishing Global Transportation Director Larry Gorsich and ONE North America Area Sales Manager Tad Knight talked about the working relationship between the two companies and how they were able to navigate the volatility in shipping goods during the pandemic.
The conversation took place at the TPM23 and TPMTech Conference in Long Beach, Calif.
Gorsich said the relationship with ONE started in 2019 when the company pressed him to negotiate a new contract.
“Those of us that negotiate contracts know that there’s not much interest when you’re approaching a carrier in the month of August to try to negotiate a deal, and Ocean Network Express stepped up to the table,” he said.
In ONE, Gorsich said, he found a solid partner willing to do business with Pure Fishing.
“That was the beginning of a partnership that we’ve had now going on three years that … really added a lot of value to Pure Fishing’s inbound supply chain,” he said.
Early on, both companies established their core wants and needs and where it made sense, Gorsich said, adding that there were a lot of synergies in their operations.
“I’ve really kind of changed the way that I look at ocean procurement now, and this has evolved,” he said. “It’s to the point now where I’m not putting out a bid this year. I’m going to take care of the folks that took care of me for the past couple of years.”
“We’re a market-based pricing system,” he said. “I mean, we’re going to be competitive in the market, so once we get past that piece, what separates people from other people? What separates companies and relationships from other companies?”
It’s about building those relationships, Knight said.
Gorsich said Pure Fishing has weekly one-on-one sessions with ONE sales representatives to talk about forecasts. Just as he holds ONE accountable for service, he is held accountable to forecast accuracy.
“It’s a two-way street,” Gorsich said.
Gorsich is also a big advocate of “airing the dirty laundry,” in which both sides share with each other the issues they’re facing, whether it’s cargo lingering in a facility or the difficulty in finding offsite facilities to stock excess inventory or port congestion.
“I would much prefer to work with a provider that airs some dirty laundry, gives us some real insights into what the challenges are,” he said.
That information helps Knight in his internal talks with the company, especially in times of difficulty.
“When we talk on Friday and he gives me that information, I can give that to our operations people who are the ones knocking on my door,” he said. “I can give that to upper management, and say, ‘Hey, look, this is what’s going on. He’s communicating. They’re working on it. Let’s keep going. We’re fine. This is an industry thing. This isn’t a Pure Fishing thing. This is something that everybody’s encountering’.”
“And we get buy-in from every different area of the business because of this communication,” Knight added. “If we didn’t have those conversations, if we didn’t have this relationship, it turns into a very different internal discussion.”
It also opens the door for coming up with solutions, Knight said.
“The key is we’re always willing to work and talk about these things and just say, ‘Hey, look, this is broken. What are we going to do to fix it?’” Knight said. “Because if you don’t acknowledge that something’s broken together first, then you’re not going to make any headway.”
That trust not only increases transparency, but also helps to improve operations, Gorsich said.
“When we have operational issues, I’m challenging Tad all the time,” he said. “‘Please, let’s find that person in ops that is going to be able to do something. I mean, can we do a last-minute diversion? Can we switch rail? What can we do?’ So I’m continually challenging them to go deep within the organization to help us run our business better and help the fluidity of our product.”
That mutual accessibility is important and incremental, but it didn’t happen overnight, Gorsich said.
“When you have a track record of success, you don’t throw that away overnight,” Knight said. “If something goes wrong, you don’t pull the plug on it. You talk about it and then you get back to it as soon as it’s operationally and feasibly possible. It’s us building up that trust, that relationship of essentially doing what we say we’re going to do.”
During the pandemic, Pure Fishing was able to move about 80% of its Minimum Quantity Commitment, or MQC, with ONE. An MQC is service contract between two parties where both agree to ship a specified volume of cargo at a specified and mutually agreed freight rate over a fixed period at a defined level of service.
“We contract to what we can sail in a perfect environment,” Knight said. “We know we have an X amount of capacity on all of our ships, so we contract up to that and then we build account plans from there.”
Then congestion at seaports happened.
“We may have sailed, what, maybe 70 to 80% of what we could in a perfect environment, so what does that mean?” Knight said. “Does that mean that everyone is going to get their MQC? Probably not. We would still try to give them their entire obligation for what we sailed. We can’t provide a space for what’s not on the water.”
That relationship helped Gorsich deal with the issue, and both were even able to find some levity in it.
“I would tease him. It’s like, ‘Yeah, see my other 20% in the open market right now, guess what?” Gorsich said, chuckling. “You have to keep it light at that point. And I was still happy with the support I was getting.”
Gorsich said he also compared notes with his peers about their logistics situation and found that they were doing about as good or not as good in that space. He was also sure to communicate those issues upward within the organization.
“I had the support of the CFO and the CEO that they understood that, ‘Hey, you know, nobody’s getting 100% of their MQC right now, but in these crazy times, we’re still getting … contract protection to 80% of our capacity. That’s how I created my own peace of mind, instead of it turning into some kind of venom (over) … my other 20%.”
With rates now falling significantly, are shippers with low-rated cargo more vulnerable to more frequent cargo rollings?
“If a (cargo owner) is habitually having cargo left behind because maybe of a perceived lower rate or what have you, I would just challenge them to say, ‘Do you really know each other? What’s your partnership?’” Gorsich said. “Because my expectation with ONE and my expectation with any partner is that I’m not going to have cargo left behind.”
KAREN ROBES MEEKS, a Southern California native, is an award-winning journalist with more than 20 years’ writing experience. Her articles have appeared in the Los Angeles Times, San Francisco Chronicle, Orange County Register and Long Beach Press-Telegram, where she worked as a reporter for nearly 14 years. Her work has been recognized by the California News Publishers Association, the Associated Press News Executives Council and the Los Angeles Press Club. You can reach Karen at firstname.lastname@example.org