Joda and welcome to Shared Lunch, brought to you by Chasis with Business Desk. My name is Rebecca Stevenson, senior journalist at Business Desk. Today we take a look at a favorite company of Chasy's investors, freight and logistics giant Main Freight, to talk about Watson store for the year ahead after some challenging times. We're joined by Main Freight Managing Director Don Breit.
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Welcome down.
It's great to have you here in the studio. What people will be really keen to know about. What do you see as the state of play for the environment for main freight now? And has that deterioration in international freight rates and domestic freight tonnage turned.
I think it's changed. I think we're getting back to some normalization after you know, terribly strong peak of freight tonnage movements over twenty two and twenty three. It's a hard road right now. Across most markets. There's no doubt that the state of the economy, state of retail has curtailed the amount of volume that's moving. But frankly that's
good for us. You know, during twenty two and twenty three, we had far too much on We moved far too much freight for the sake of our people and for our customers, and service levels win as good as what we would like them to be. So to get back to some state of normality is a good thing.
How important are those service levels to the business, And you know, we're you getting any feedback from customers through that period.
Or services everything. Our quality is what we stand for, so we've got to get it right every time. You're only as good as your last delivery, as we would say to the team. So for us, it was a combination of things. You had such volumes of freight that you couldn't get space on shipping lines or airlines. You couldn't have enough warehouse space, so we had to have overflow warehousing to take care of that volume. And then the domestic line or requirements. You know, there wasn't enough
rail wagons, there wasn't enough trucks on the road. There wasn't enough coastal shipping, so that caused delays and that upset customers, There's no doubt about it. But a lot of our customers were grateful, they were understanding and they realized that we were performing as best as we could in the environment.
You've obviously mentioned their rail and that's you know, been a really huge story, I guess with iraqs and the kind of announcements and non announcements that have happened there. You know, what do you see as being a good outcome now for that scenario, Well, to.
Get a decision would be good, wouldn't it. You know. Unfortunately, we're all sitting in a question mark and there's certainly something that main for it doesn't like to do sit in a question mark, so we would like to understand where it's heading. Unfortunately, I think we've got politicians that think they know better than those using rail. Rail is a big part of what we do and we see it as an important part of the transport infrastructure of
this country. Unfortunately, we've got politicians and bureaucrats who perhaps think they know.
Better, and have you had conversations with you know, the Finance Minision, the people making those decisions and what are you telling them or what would you like to tell them? Who the financement, Well, they.
Have I mean they have not made contact and they you know, I guess it's the way they behave. I suppose they think they do no better rather than the businesses that are at the cold face. And it's just not us, it's our customers and our competitors who I'm sure could offer some good advice as to what they should do. But no silence is golden.
So you'd like to see, you know, investment though, and some sort of security around.
Rail well there needs to be some investment in particularly the Crook Straight Fairies. I mean, the current fairies aren't going to last much longer than twenty twenty nine. The port infrastructure has got a problem definitely, and picked in
the napire Port is put forward to the government. We understand an interesting proposal about what could be done in terms of the Wellington port infrastructure for the rail fairies, but to date I don't think was you know, they haven't heard anything back from the government either, So you know, as I say, it's not just main fraid, it's also our competitors and other port players who can offer some good advice and some perhaps some views on what should be done for the long term, but at this point
in time they don't appear to be listened to.
It's obviously probably quite a sort of fundamental basics sort of part of the infrastructure that you need. But you've also seen, you know, a lot of developments. I guess around in terms of technology for freighting. You know, what are some of the innovations that you're seeing in the industry and also that you know main freight is adopting or looking at.
Oh, the technology continues to evolve. I mean, if we go back to the early days in the early nineties, we had phone tracking and you know that was innovative at the time. But today, you know, we're have got technology on the dock, we have technology in the trucks. We're using AI to try and find efficiency for our customers and warehouses and across the supply chain. So it continues to evolve. It's exciting and our people love embracing it. I still think we probably spend more money on it
than IBM. But as such as life in terms of what we.
Do for our customers and what are some of the ways that you're looking to use AI or are using AI at the moment.
Well, we can look to trends in terms of freight volume, and when freight VI in moves, we can look to, you know, perhaps where AI thinks shipping rates and air freight rates might go. It's just the trend that AI can provide for us. It gives us another tool to use on behalf of our customers.
Yeah, it's quite interesting. It does seem to be a lot of that kind of predictive tracking. You know that in a lot of businesses, AI is actually a bit more fundamentally useful than perhaps the sort of more elusive ideas that are out there.
Yeah, I think it's useful. You know, we certainly wouldn't reject using AI. It has a role to play. You know, how deep that delves into the business of ours and of our customers remains to be seen. But while it's available and providing us with useful information data analysis, it's it's a good thing.
And if we could talk just a little bit about your you know, divisions. You've obviously got transport, warehousing, air ocean. What's been happening in terms of those businesses? Are you seeing any difference I guess in terms of you know, freight volumes or waiting through your divisions.
No, not really, I mean all three work together. And I guess where the big difference lies is that we need to build new warehouses, either own warehouses or for that matter, lease new warehouses, and we continue to increase the size of the warehouses that we have. We're learning all the time that we can't run with small warehouses. And we've just opened our latest warehouse in Sydney and more Bank, which is served by rail from the Port of Sydney to electric straddle carriers for the container to
be placed at the door. It's capable of holding sixty six thousand pellets of product on behalf of our customers, and then we're using that as efficiently as we can for distribution of freight throughout Australia. I've just come back from Dallas and our warehouse there is two thousand square meters and yet you know when we look to our competitors in Europe that are building warehouses ninety thousand square meters.
So we've got a long way to go, but it plays an integral part of the supply chain for our customer. What's in our warehouse then gives us the ability to either control the air freight and the seafret into the warehouse and of course the outbound in terms of transportation to the retail store.
You mentioned Australia there of course and Sydney. You know, you have had the stated ambition around Australia of wanting to grow the business bigger than New Zealand. How is that tracking you know, And are there any sort of potential opportunities that you see in Australia and what are the issues for main freight?
Oh well, of course I'm not sure. It's an ambition and being a proud key that we don't want the Aussies to be bigger than the New Zealand business, but it's just a matter of size of the market and it was always going to come. And the team in Australia have done a marvelous job of growing business and in fact, in this current financial year they will be bigger than the New Zealand business for the first time ever.
And you know, frankly, we still have us for small market share, so we've got a lot more to grow. It's exciting. We're intensifying their network throughout Australia. We've found a nice little niche for ourselves and are providing good services for our customers. That could be better. We've got a long way to improve our profile, but it'll come. And those that said to us in the early two thousands to come home because we couldn't get Australia right,
we're wrong. And you know, we have found our way there. And I think if you look at what we're doing in America and Europe, we're probably in the early stages in the US, like we were in the early stages in Australia in the early two thousands. So all three of those markets have potential for growth for the business.
A lot of people like to pick up on New Zealand companies that have kind of founded in Australia or found it difficult. You know what differences I guess do you see in the Australian market, And how do you see that mainfreight is succeeding? There is anything that you're doing differently.
We're passionate, we're ambitious, We've got great people working for us. I think the lesson we learned in Australia is that you need Australians running the Australian business and that's helping us as we grow around the world. We learned some valuable lessons by being in Australia in the early days. But it's just a matter of making sure that you look after the customer and that your integrity stays intact
and you do as you promise. And I think our team there have been marvelous at growing the business and as I say, we're really only just scratching the surface of what that market's got available to us.
We've also gone into India. How's that going? And you know, what differences do you see there as well? Or are you just applying that same You need local people mindset.
Well, it took us five years to get ourselves open there and the bureaucracy of the paperwork is unbelievable. But again we needed a local that we could trust, that could grow the business for us, that we had respect for. So that took time to find that individual and it's slowly slowly as we find our feet there. It'll take a long time before we've got something of size, but at least we're established. It's main threat. It's trading with the rest of the main threat network around the world.
And it's we see it as having potential just like China did in the early days.
And are you able then to just offer that, you know, to your existing customers in areas where main freight already is Is that an sort of value add on country that your customers wanted to see.
Oh, there's no doubt about that. In fact, making sales calls in America just last week, you know, it was during some a number of the conversations with these potential customers who just added that we've opened in India or they've opened in India, and did we have the ability to help them out in India? Now we can't do warehousing, we can't do transportation, but we can provide them with
their in ocean services. And it comes as a surprise, i think to a lot of them that hear this little business from New Zealand's actually got its foot hold in twenty seven countries around the world, and India is one of them. But it's part of the network that we have, which we are trying to intensify that network around the world as we grow, and it'll take time. We have a one hundred year horizon, so we're not in any rush. But as we open in each in
a new country. It provides new opportunities for us.
Who else is on the horizon? Are there any other jurisdictions or countries that you'd like to be in?
You know, the Nordic region is certainly attractive. We're in the Americas, of course, Canada, Mexico, Chile, but we don't feel like we've actually found our feet, particularly in Mexico or Canada, or for that matter, of America. I mean, well, I think we've got seventy two locations across America, but still relatively small. If you convert the revenues that we've got in America to New Zealand dollars, that's a billion. So in New Zealand terms it's quite large, but in
American terms it's really small. I think the biggest competitor there has revenues in the mid twenty billion mark. So we've got a long way to go.
And you know, what is it like there? You know, going to the US Because a lot of people say, you know, New Zealand companies need to be ambitshias and just get there and go there.
Yeah, it's good advice, but I think if you get something half right, but you need to be prepared that you can service the whole market. So I would suggest some caution about how big and how quickly you try and grow in America. And that's certainly been our problem, as customers have asked us if we have a network across the country. We've developed it, but don't necessarily have enough freight to fill it. So those are teething problems
for us. And as I said earlier, I think it's a bit like what we had in Australia in the early two thousands. It'll just take time for us to grow that market.
Would you do partnerships in the US to try and you know, bolster your offering there.
We're not We don't have a closed mind to partnerships, but we're not the best of partners. We are pre strong on who we are and what we stand for. You know. Part of that network intensification is pick it up on a blue truck, delivered on a blue truck. So we don't necessarily want to be dealing with agents who don't think like we do, who don't necessarily have the same service levels. It's the same ethics, the same integrity as what we think we have.
But never say no capital expenditure. If you're looking to spend what are you going to be spending on.
Well, we've said to the market it's two hundred and fifty million this year, two hundred and fifty million next year, and I think they would be right, the Annusk community would be right to carry that through for the next couple of years after twenty six. That's investing in the network that's at this point in time. That most of
that is New Zealand and Australia. A brand new facility, cross Dock facility and Brisbane being built and new cross stocks actually here in New Zealand, Hastings Nelson just completing completed some new sites here in Auckland, so plenty on and it's exciting because actually when you have a new facility, you're attracting new freight growth and new customers and that
just you know, the shareholders should look at. That is confidence that we have in terms of growth and how we feel about the future, which is quite positive.
You've had a really strong track record I guess on sustainability and you know, talking about and being reporting about what you're doing. I mean, yeah, there been any interesting surprises that have come out of that work. For you and what do you see the kind of key challenges for mainfreight in terms of that sustainability picture.
Well, I think the interesting thing is that we haven't actually got on our soapbox and shouted about what we did from a sustainability point of view. If you look at what Bruce did in the early days, he was always recycling wooden palettes and plastic and the likes in each of the facilities, and then he found a water tank light which was an old milk tank lying on the side of the road and thought about recycling water off the roof. And today that's a big part of
what we do with our new facilities. If you think about the new sites in Dandinong, the new site in Adelaide, the sort of eighty to eighty five percent off grid for solar power and water, and the new sites in Dallas and Chicago are exactly the same. Mind you, the Texans thought that we were nuts putting solar on the roof when they're pointing to the ground saying that's where
the gas is. But it's our view about what we can do and what we can control in terms of sustainability, and if we had more companies particularly here in New Zealand that actually recycled the water off there, if we wouldn't have a problem with shortage of water during drought years. Anyway, for us, there's plenty of challenges. I mean, we are running electric vehicles around town in some of the major cities in New Zealand and Australia, but we can't get
electric vehicles to run efficiently long haul. You know, we're still waiting on Tesla's long haul vehicle to operate in the States. I think we've had an order place now for three years. Still nothing on the horizon. We've got two electric trucks to what they call draage off the wharf in Long Beach. We've been waiting six months for written it's just been for both of them and they've
been delayed another month. So it's frust that's frustrating for us because we would like to be more efficient in terms of sustainability across the supply chain for our customers. I think the other interesting thing is the legislation that's changing in Europe. If you are a company that owns or employees two hundred people or more, you have to report your emissions carbon emissions from next year on. It's
a legal requirement. And therefore what we have done and what we've reporting is turning heads in terms of customers and looking to I suppose supply chain experts like ourselves who are taking sustainability seriously.
So it becomes a key selling point.
You think there is absolutely no doubt. And in fact, a sales call we made in New York a couple of months ago, we produced our sustainability report on paper, the most sustainable paper we can find, and placed that on the table with the managing director of that business and he picked it up, flick through it and said, this is exactly what we're looking for. And one month later they've awarded their ocean freight out of Germany to US into the United States. So clearly it strikes a
chord with our potential customers and we're winning business. As a consequence.
Bonuses were a little bit down obviously, you know, because of the results and the climate that you've spoken about. You know, what sort of feedback do you get about that for staff? You know there our team members, do they understand the picture?
Well? Of course, we put up the profits every week on the notice board and the cafeteria, so everybody does understand how we are performing, and they do realize that actually the bonus is based around profitability and more profit than what we made last year. Naturally, they all encountered those peak periods of twenty two and twenty three and benefited accordingly. I mean, the bonus, Paul, I think out of twenty three or twenty two was ninety four million
across the world. This year, I think it's twenty seven million. But the good thing is that if you're open and honest with your people, they understand that actually, when you're not performing as well as what you did a year ago, the bonus won't be as big, or in fact, in some cases there isn't a bonus for Yeah, that's the part of it. Whilst we share the profits with those that make them, it's actually it has a capitalist intent
of about how much money we make. You can't share a bonus unless you make a profit.
Yeah, that's right. And just in terms of you know, looking forward, I guess you know you've had had this weird bubble through COVID that you've mentioned already, But do you see the picture settling down at all with you know, the kind of economic climate that we're in and sort of the uncertainties.
Yeah, it's a tough economic climate, there's no doubt in different countries are in different stages of it. I think I think New Zealand's probably in the worst situation. You know. I wonder whether the Reserve Bank governor has actually been looking at the economy from small businesses and how they've been performing. He seems to be working from data that's a little bit outdated to make his decisions. It certainly this pain in this economy, whereas in Australia, certainly they
are feeling the pain in their view. Yet our business continues to grow very well there, so trading continues to increase. Look, it's still exciting for us and we've been in this place before with tough economies. It makes us a better business. It makes us having to work harder to look at our cost structures, make sure we're delivering high quality services and make sure we're on the front foot meeting customers and growing sales.
What excites you most, you know about the future.
Oh, the business. It's just fun every day. We're so lucky to have such great people, such great customers. And you know, whilst it might be quite tiring, but We get to travel the world to be a part of our customer's supply chains, which are all different, are all interesting, and you're learning something along the way. And you know, our people have got that ability to grow a wonderful business over a long period of time. There's nothing more exciting.
He do have some new people, you know, you've got obviously a new CFO coming on board, but you've also seeing some of your directors, long serving directors leave and there has been a little bit of criticism I guess in the past about Mainfrey and how long your directors serve. You know, I guess what is your view more broadly about director tenure and are you pleased with the people that you're bringing on Well, I.
Don't think that we've got a new CEO. He worked for twenty two years for us and as an assistant to Tim Williams, who has just left, so I'm not sure he can call him new after twenty two years with us. But in terms of new people sitting around the board table, Hailey and have joined us, and we're so pleased to have them around the table. And Richard had completed twenty eight years with us, and I think that equated to one hundred and seventy two board meetings,
which are a little unusual. They're not a half day meeting here in Auckland in some boardroom where you might have a glass of gin at the end of the board meeting. They are difficult meetings. They are taken all around the world. The next board meeting we have starts in Houston, goes to Dallas, then is in Chicago and finishes in the Netherlands in Rotterdam and Amsterdam. So for two days work, the directors are away for probably two or more weeks, so it's a lot of hard work.
In terms of the tenure, we're looking for people to in all parts of the business to have a career,
so why not around the board table. And in fact some of the rubbish that you see even in terms of the government departments where term is three years, well you know, quite frankly, our directors will still be learning the business after three years, so why not give them longer time at the table to guide the business for the long haul and to understand it better and rather than be there for a short term and knowing nothing making crazy decisions.
Why do you have your board meetings? You know you do hold them all over the place.
Yeah, why not. You get to meet our people, get to see our network, get to meet our customers, get to see the land and the buildings that we're putting our precious capital into. It allows the directors to be really well informed and to be as close to the business as those that are serving our customers. It's a really important part of what we do.
You mentioned, of course you knew board members that have come on, but you know, one thing that you have spoken about is wanting to bring more women in to your leadership ranks. You know, how are you going to achieve that?
We're getting there? I mean, I think in the early days. I mean remembering that there's three hundred and thirty seven branches, and a branch manager is really in charge of the business and has a P and L to answer to. So therefore we've the idea is to increase the number of women at that leadership level where they can have the most impact in the business. And from there the stars will continue to flourish and we'll find them in the senior management team. Just unfortunately we haven't got that
many in that senior management team. But we're working really hard. We've doubled the number of branch managers that are FEMA, and we have some great women in the business that will do wondrous things for us in the future.
Would you encourage women to get involved then in the freight industry? You know, why would it be appealing? Do you think?
Because it's a whole lot of fun, it's interesting, it's different every day, and just like we would say to men there that messaging is no different to men or women. It's a fun industry. It's a lot of hard work. But if you want to have some fun and work hard and learn along the way, than Mainfred's to your career.
One of the other things that people often notice about main Freight, of course, is your inspirational messages on your warehouses. You know, how did that come about? And who's in charge of packing them?
Oh, everyone has the opportunity to submit their saying, but actually the reality is they're on the back of every one of those trucks that they might follow on the motorway or on the roads, and then we pluck those and put them on the sign at the airport. So there's about twelve hundred. We're really careful as to who submits and what they submit more importantly, but they're a
bit of fun. They're a bit of soul searching, bring a smile to the face, or actually change the mind of someone as they are starting their day or finishing their day. It just might bring an intelligent message that prompts a thought process for them.
So have you got a favorite inspirational quote yourself? And have you submitted any?
Look? I guess I have the pleasure of being able to vet the ones that are submitted, and often it's a yes or no pretty quickly. I look, there's so many. The man at the top of the mountain didn't fall there. The one on the building as I got off the plane Saturday morning was the optimist sees the donut, the
pessimist sees the hole in the donut. But I suppose the best one, and I can't remember it word for word, But it's life is not about arriving into the grave safely, but actually slating and saying, holy shit, what a ride.
Thank you John for joining us, and thank you everybody for tuning in. You can watch Shared Lunch on YouTube or follow the podcast on your favorite podcast app. Leave us a rating and tell us what you'd like to hear about next Martewa. Building wealth is a lifelong journey, one as unique as you are. We believe you need different tools at different stages of your growth.
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