Responding to cross-border logistics disruption in Southeast Asia with Janio COO Ali Madihid and Head of B2B George Oliver14 min read

In the first of a two-part series on cross-border logistics in Southeast Asia, supply chain experts Ali Madihid and George Oliver share how they’ve responded to the supply chain disruptions created by the global response to COVID19

About Janio

Janio is a cross-border logistics service provider that simplifies e-commerce deliveries in Southeast Asia. Combining technology with market knowledge, Janio provides an effective end-to-end logistics solution, including international cash-on-delivery and customs clearance, where shippers can manage international shipments on a single platform. For more information, please visit https://www.janio.asia

About our guests

Ali Madihid
Ali has over a decade of management experience in areas of business development, corporate strategy, global supply chain and operations management. He has held senior management roles in Expeditors International, SATS, Reebonz and Zalora. Currently, he serves as Janio’s COO, developing the company’s networks and capabilities.
George Oliver
George was brought on to manage the B2B business at Janio. This comprises of furthering Janio’s already strong Air offering while building out our new Sea and Land capabilities across Janio’s ASEAN and wider global network. Prior to Janio George was CBO of Kargo, the first technology-enabled full-service trucking fleet in Myanmar. As CBO George was in charge of driver and customer acquisition, successfully building a fleet of 2,800 fully trackable trucks and winning long term contracts with MNC’s which included Coca Cola, Adidas, Mitsubishi, Nestle and K+N. Before this, George co-founded the first EU focused rice exporter in Myanmar trading at the peak of 2,500 tons per month, and in an earlier life worked as a financial technology consultant in London.
Timestamps
00:32 Introduction of Ali and George
1:22 How Janio started and how their scope has evolved to include more B2B upstream offerings (Ali then George)
4:56 How COVID19 has impacted supply chains (Ali then George)
9:07 How cross-border transportation (airfreight in particular) is adapting (Ali then George)
12:04 Dealing with new standards of quality and safety across countries (George then Ali)
14:46 Impact of COVID19 on supply chain diversification (George then Ali)
Takeaways
1. While volumes have grown with merchants moving online to meet demand, cost of air freight and sea freight has also increased with a lower supply of cross-border transportation [options].
2. There’s an opportunity to introduce multimodal solutions for businesses to reroute their supply chains and diversifying their sourcing.
3. Communication and transparency are important as it can be difficult to obtain the correct information dealing with customs and regulations in different markets.

Paulo: Welcome Ali and George! Thank you for joining me today. Let’s start with a few words from you both to introduce your work at Janio and how you came to be a part of the company.

Ali: Janio was founded in April of 2018. What we initially started out with was to focus on cross-border ecommerce. We realized that the cross-border space, especially in ecommerce, is traditionally dominated by two verticals. One is called what we call the express boys, your DHL, or SF express, etc. On the other side are your poster boys, such as Post Indonesia, Post Malaysia, Shipping by AMS, etc. 

While the express boys’ service level is very good and all, the pricing was extremely high, especially for an AOV of 40$, shipping a product from Singapore to Indonesia, logistics cost can be as high as 25%, which doesn’t make sense. On the flip side, for the poster boys, while the cost is lower, the service may not be desirable for customer experience with regards to ecommerce. 

We desired to create a product right smack in the middle, in the soft spot, whereby service expectations are met, and the price is also still favorable to the ecommerce shipper. So that’s how Janio started. As we grew along the way, more of our customers ask us for assistance to support them with their upstream logistics which is the B2B from the manufacturing to their warehouse. So we slowly expanded our product or service offering from ecommerce B2C to B2B and that’s where we met George and we pretty much hired him as the VP for B2B as a product. George over to you.

George: I started off in B2B shipping back in Myanmar, where I started a couple of startups, one of them’s still going, Kargo Myanmar. I came across Ali and Janio through one of their main investors and I was looking for a company that was ready to start building out the cross-border B2B, it was something I was really excited about especially in Southeast Asia. 

Met Ali and Junkai and we started July last year. Really it was right around the beginning of the B2B journey for Janio, but what was great was that we had a really good group of clients all ready to go that we were doing B2B services for. We had a great platform to start building the whole B2B structure inside Janio from scratch, so that’s the back-end, the network partners, the SAPs, right up to our brand-new B2B cross-border technology platform that is now ready and online for all our current customers and new customers to track their shipments through. So it’s a year in and we’re ready to launch to the market, Janio B2B. 

Paulo: Right, I think I saw Ali’s Linkedin post on [the launch]. So congratulations, it’s been just a year, but you guys have already been doing a lot in terms of B2B. Moving on to the topic of this podcast, supply chains, and the impact of COVID19, so I just want to get in broad strokes, what the key takeaways are for you guys working in Janio in terms of the impact of COVID19 on cross-border logistics. So how are cross-border logistics providers in Southeast Asia been impacted?

Ali: George I think you can add on, but when COVID started, we all thought it’s just another SARS — it’s just limited to China. We came to a realization that it’s bigger than SARS when countries such as Singapore, Malaysia, Indonesia, and the Philippines started locking down. Then on top of that, the airlines starting shutting down also. That threw our supply chain to disarray because for cross-border ecommerce we’re dependent on the commercial flights flying in and out from the different cities. So the immediate impact for us was how we had to move our shipment in spite of all the flight cancellations. That was a stress period with regards to our supply chain, especially managing the B2C portion during the initial period. 

Thankfully we’ve been lucky that we have understanding customers who understand that we had to overcome I would say a slight transition period adjusting our supply chain, from commercial flight to freighter flight, from airfreight to cross-border trucking and also sea freight. 

Two months in this lockdown period, we’ve been humbly lucky. Volumes surprisingly have been growing purely because many of our merchants are focusing their marketing dollars on digital marketing or online marketing. It has seen a surge with regards to our volume. We are much grateful for it. With that said, cost has increased significantly, because even though demand is growing there are fewer supplies of airplanes and cross-border transportation. So we are trying to find the sweet spot, trying to hybrid the demand requirement and the supply requirement and to always ensure that cross-border logistics B2C with Janio still remains competitive because that is our initial promise to the market. With B2B George can add more color to it. 

George: With B2B obviously it’s been a great opportunity for us, not just meeting new clients, because it’s the first time that anyone’s supply chain ever, really in living memory, has just turned off, and you’ve had to find a new way to suddenly get your new products either packaged together in console B2C, so it can get to a new country and so then you can do the last mile, or just the normal supply chain getting into the middle of the distribution warehouses. What they were normally doing is now totally different. 

So we had the opportunity to meet our clients again or speak to them about lanes that we weren’t doing for them that suddenly they were ready to open up to us and say, “Look, we’ve got all of these problems, our current suppliers, they’re helping us but could you also help us.” So that’s been a really cool opportunity and we’ve won a lot of business from our current midsize clients. We’ve managed to grab a lot more of their business the whole way back through their supply chain. 

And then also with the big B2C players and other guys in the industry we’ve also won business from them, by offering our multimodal solution. Say, they’re trying to get from Thailand to Indonesia. We have been trucking down to Singapore and shipping from Singapore into Indonesia, whereas before they were flying direct. So by being flexible and having our in-house supply chain consultants we’ve been able to catalyze on this fluid environment when it comes to cross-borders solutions across Southeast Asia. 

Paulo: The impact I would say has been generally positive, from B2C to B2B because you guys have mainly been flexible and you have all these different solutions and offerings in terms of how goods can be taken from point A and point B. I would like to dig deeper into what has been mentioned about cross-border transportation being heavily affected — what the adjustments are in the short-term in terms of recovery when these freights and flights go back into operation. What will be the changes we’ll see in terms of how they operate? 

Ali: I think during the initial period with all the sudden lockdowns, it’s first and foremost [about] trying to understand how does it impact our operations because it’s not just the freight portion, but also customs and regulations in respective countries. After gathering all of this information, we openly communicate this with our customers, tell them what we are trying to do, or what we are doing, and how this will impact our customers. At the end of the day, I think open communication and transparency is very important because our customers would need to communicate their customers with regards to changes in service expectations. 

We think we were able to manage the crisis very openly and very well, especially in the initial period at the frontend portion. At the backend portion, it was a struggle to be very honest. We were getting on calls with different service partners, trying to get all the different information and to make sure we have the correct information to make our decisions — whether to fly or not to fly, whether we can move by sea or not. It was a frantic struggle with regards to the operation, but we have a good bunch of lads who were able to oversee this. After that we came back with a different solution like what George said — an intermodal solution. We look into our network and offer the intermodal solution to make sure that we keep shipping for them. 

George: The main thing I’d like to add is that air freight will be more expensive as we open up and that’s going to stay. People aren’t going to start flying in the same volume as they were flying before. You look at AirAsia, how many more — they think they can carry between 30 and 50% of what they used to be able to carry in terms of passengers. So naturally, lowcost carriers are going to be more of a premium. That’s how B2C across Southeast Asia got to such a cheap layer, is so many low-cost carriers going across, and that’s the space we bought to move our B2B and B2C volume. 

Now that’s nowhere near as many people are going to moving across Southeast Asia. We don’t know how long it will take to get back out into full capacity, but it’s going to be a while. I think air freight for the foreseeable future is going to be more expensive, and we should look at that as the new norm. So what that means is we got to look at the more multimodal solutions and sea freight and speeding up the different supply routes across Southeast Asia. And if we don’t people will have a nasty shock when they think it turns on in the next four months and air freight rates don’t drop down. They’re going to reduce but it’s not going to be like it was before I think. 

Paulo: Aside from the cost, what are your thoughts on — I guess there would be an increased pressure to deliver on safety and quality in terms of the goods that come in and stricter measures coming in from customs. What do you think will be the experience moving forward dealing with this from a country to country basis? 

George: The easiest place to start with this is PPE. Obviously everyone in the logistics industry and everyone in the supply chain industry across the world has seen this massive explosion in PPE sourcing, selling, exporting, and importing. That showed a lot of problems inside customs import and export. No one really knew whom to speak to about what was allowed to be imported, what were the certifications that different countries [took] from each other. Will the Singaporeans accept the American certifications or the European certifications? Will the Indonesians accept both? Will the Filipinos accept the Chinese ones but not the Indonesian ones? 

So there was a lot of misinformation and difficulty in trying to find who will accept what from where. I think countries are now getting better at that. I saw the Filipinos have now opened up a new government portal that allows you to check certifications that they will accept. Singapore did it straight away so it was very easy. But I think that’s going to have to open up a bit more. 

It’s shown that customs across ASEAN which is supposed to be a lot more homogeneous, is not homogeneous at all. And what applies in one ASEAN country most definitely doesn’t apply in the other. So I think that’s something that the customs agencies in different countries need to start opening up a bit more for. 

Ali: Just to add on, other than the issues with customs, with regards to delivery also, introducing contactless delivery was required especially during last mile. That was something that we wanted to ensure, not just for the safety of the customers we are delivering to, but also for the safety of our drivers. Being deemed as essential services, we wanted to make sure that we continue operating, because if any one of the drivers catches COVID, basically we would have to shut down operations for the entire station. That’s something we wanted to work towards. 

Safety is very number one for us. But something had to give. So productivity had to give because we had to cut our manpower in half, split them into teams, but all in all we adjusted quite well. 

Paulo: So we’re seeing all these adjustments that you and George have mentioned, that will go hand in hand with the supply chain diversification that we’ve been seeing, even before COVID19. Recently there was this news about Apple set to produce millions of AirPods in Vietnam. What are your thoughts on that trend in this new context? 

George: For me I was very shocked when I spoke to a lot of my B2B clients — our midsized B2B clients, Singaporean fashion brands, Malaysian brands. I was really shocked at how little they thought about diversifying their supply chain before this outbreak. So these guys got hit really hard because all their manufacturing was in one area in Shenzhen in China with one group of factories. The moment those turned off, their whole supply chain stopped. Even if the ecommerce side was going nuts, they couldn’t just deal with it. They really had to wait until Shenzhen reopened, and so that put them back three months. 

It’s only now, which is good — it’s an opportunity for us because that means we can open up and test new lanes for them be it Vietnam or Indonesia. Large companies like Apple find it very easy and they probably already had fingers going into different countries be it [because of] costs or other reasons. But the mid-size companies need to really start thinking about diversifying into sourcing from different markets. 

Ali: Pre-COVID we saw basic manufacturing moving out from China and going into countries like Vietnam and Indonesia, but going at a slower pace. Governments like the Japanese government throwing more money to reinvigorate in-house production. These are some of the positive we are seeing from a global supply chain point of view. I think most of the manufacturing will still remain in China, but I think at least basic manufacturing will go down to Southeast Asia.

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