Most of Mongolian business people from the private sector, which is carrying our economy on their back, told that they started businesses from peddler trade.
But nowadays, there are plenty of young executive directors, who manage the businesses with their professional education and knowledge. Ms. Bayartsengel, CEO of leading international freight forwarding company Landbridge LLC is one of them. She graduated from the Mongolian National University as an economist, and did MBA at the Institute of Finance and Economy.
Recently, transportation has become an issue of arguments, especially transport logistics. Almost everybody speaks of its solution, though most of us know the matter not well enough. We imagine transport sector by MIAT and UBTZ and think it is tough business usually run by men. How you have been involved in this business?
I was employed in banking system when Landbridge LLC., was founded. The founders proposed me a job. Even I imagined freight forwarding job as physical transportation like many others, I decided to try and accepted the proposal. It was not long since
foundation of the company; however, founders were experienced people and had great belief and ambition to influence strongly to their coworkers on what they want to do and how it to be done. I liked what we have been doing and fell in love with transport logistics straight away. People from all different business industries turn to us to have goods, equipment, in general, “everything but the kitchen sink” transported from every corner of the world. Organization of cost-effective, safe and on time delivery requires alternative solutions on using proper combination of transport modes and routes. It has to match the requirements of the border or customs authorities on goods from country to country. It is like “A” and “B” plan shown in films about bank burglars. Yes it is tough job requiring different skills such as quick-thinking and perspective-taking as well as ability to be precise and responsible. It is because of huge funds involved in this big flow of goods. One of many good things, that our business do is supporting other businesses and facilitating the every growing business sectors. We spend 28% of total costs on everything we consume including food, clothes and all we use, for transport related expenses. Thus an effective transport and logistics solution has great impact on our cost of living. It is nice to think yourself doing generous contribution to improve everybody’s life, isn’t it? Freight forwarding is so called “friendliest industry” as we cooperate with transport and logistics organizations from all countries. We have friends all over the world and are welcomed wherever we go.
Are there any possibilities to reduce transport logistics cost? Even 5% of decrease of cost on everything would be great savings in total economy.
It is about 7%, but not 28% in developed countries, which means we have big room to catch the level. Of course, there are numerous factors on it, including infrastructure, legal environment, market purchasing power, development of business industries. But still there is huge potential to minimize the cost when everyone manage good use of things which depend on themselves. Awareness about transport and logistics impact to the other business industries and government support of the activity in this sector would promote accumulation of experiences, national best practices as well as new product development and innovation. It is very rich industry in means of products and services interrelated tight to each other. Each of them needed to be developed independently. There are lots of work to be done and inexhaustible opportunities.
People speak of diversification, since possibility for business expansion is limited to landlocked location of the country and market purchasing power. Are we affected by transport policies of our neighbors?
It is important to turn disadvantages into advantages. We have two big economies on both sides. Our southern neighbor has 1.4 billion populations while the northern neighbor has 150 million populations. The trade between these countries reaches almost 100 billion US$. Moreover, the European countries have about 400 million dollar trade with China. China carries most of freight by sea at a low cost. But its south coastal areas face big deficits of infrastructure, workforce and energy supply. Thus there is tendency to build up many logistics hubs in the hinterlands or northern parts of China. Local delivery costs at both sides of China and Europe from sea ports to the consignees in local points is high due to trucking or railway connections.
In this region railway transport develops intensively. The PRC considers coordination of regional development and began to implement a project “One region, one road". Our country serves as a bridge connecting two big states, moreover, two big continents. Kazakhstan transports 27 million tons transit freight between the PRC and Europe while we transport only 2 million tons of transit cargo 2015. Today we see, our economic situation is not good; however, I believe it to be temporary problem. But we have huge deposits of natural resources which can be processed and produced anyway. There will be huge demand of transport. Transport logistics is very diversified industry itself. Along with basic modes of transportation by air, sea, rail and auto we provide many additional services such as customs brokerage, warehousing and distribution. Usually, logistic providers develop each of them vertically by modes, routes or commodities. But we see no company in our market really focused on one of them.
Are there many freight forwarders operating in Mongolia? What kind of transportation mostly you organize?
There are over 200 companies registered by the Ministry for Road and Transport. They are all similar, though they differ by freight volumes and number of product and services offered. It is perfect competitive market. On one side, it is good to minimize delivery cost at possible low level for customers, on the other side, unregulated competition in disorder unlikely to provide possibilities to have a industrial development beneficial to future and to build capacities. Our Company aims to provide different services of transport logistics from “one window” to customers. As Mongolian main trade volume uses by rail connection, we take the lead by number of containerized imports among other freight forwarders. At the same time, we are one of the top three air cargo handlers by freight volume, while we organize regular consolidation service from Europe to Mongolia with 3 departures per month. We are providing quite good customs brokerage service. As all those product and services have very close relationship to each other, we have a possibility to make rich basket of many different transport and logistics product and services and develop at same time. For instance: customs brokers get shipping documents from the origin of loading, because we organize transport too, which shortens time of cargo release, then customer can save on container rental charges. Customer could have a choice of different modes on certain commodity depend on it’s urgency by air, cost effective by rail or an alternative by truck from single service provider. Supply chain efficiency increases in this way. Even economic situation and financial income of the country was not good last year, we organized same freight volume compare with 2014 and expanding our product and services with reduction of costs. Market fluctuation is natural. We should consider making use of this time to increase our knowledge, improve technology and management as a profit. Mongolian say “Be prepared, look before you leap” I am optimistic about future.
It should be difficult to manage so many different activities and so large in scale. How you organize your work?
Oh, It can’t be managed by someone alone. I am really proud of my team who loves what they do. We have about 100 employees. The company have a correlated matrix structure. Business process goes in line system where every staffs or departments have an equal participation in importance. Nowadays, people understand well the tendency to do social-oriented business to create wealth together and to distribute fairly. There is no priority above common goal to achieve, from which all benefit. I think a regulated democratic system is likely to develop in business in this way. In this contemporary world a proper usage of information technology increases productivity and reduces over cost. Since its foundation, our Company developed in house transport management system. And we have been able to increase labor productivity by approximately 50% through 80% reduction of paper records, 90% increase of speed on overall information exchange as well as speed of track and tracing increase by 60%. Managing the company, my main goal is to build institutional capacity developing professional logistics specialists with relevant knowledge, experience and responsibility. Such people should lead the industry, further to make contribution into brighter future of the country. We are in non-asset based business tightly related to human factors. In my opinion, if you have right business no business impossible. In a short time since our company was established, we introduced number of new things into the market such as free customs clearance, freight forwarder’s liability insurance. We organized charter flight for medical equipment with radioactive elements, used first time Lianyungang port of China for Mongolian transit shipments. Main scope of freight forwarding is more concentrated on filling logistics gaps rather than physical transportation. Combination of different modes and routes of transportation, as well as transshipment procedures, documentation and cargo handling, requires right logistics solutions to organize for customized needs of our customers. There is no greater feeling than making something looked impossible to possible and even easier.
Thank you for information about the transport logistics sector that is not always exposed to our readers. We wish you and your staff success of work.
Interviewer: Tergel.B
