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EXECUTIVE SUMMARY

Premier mercantile services private limited is one of the oldest and largest stevedores and terminal operators in Pakistan. pms was initially started by Mr. Haleem Siddiqui and his younger brother Mr. Muhammad Shoaib Siddiqui in 1964. The inspiration and idea to start the project came from Karachi port trust which lacked in efficiency and productivity, the brothers felt the need of private stevedoring and terminal operating company to capture the large market by providing better services, improved quality and efficient handling by installing modernized equipments and latest machines and by installing a computer based system. Mr. Siddiqui has faced several challenges and problems in running the business. The intervention of government has caused many obstacles for the company; to become proficient the company had to set up modernized machines which required permission from the government, the company was dependent on the govt. and this took a lot of time. Other problems, which they have to go through, were malfunctioning of machines, accidents in handling which affected the productivity plus customs obligations. But, due to the hard work, commitment and expertise of Mr. Siddiqui in this field, he managed to cope with all the problems successfully and established PMS as one of the largest stevedoring company at the Karachi Port – at one point handling half the container traffic of Karachi Port. According to Mr. Siddiqui there are three factors that play a significant role in leading the company towards the path of success. Number one being the Services that are provided by the company, secondly, the commitment of the company in fulfilling its orders and promises with its clients or customers and last but not the least, honesty of the company in terms of providing better quality services. Today around 75% of the revenue in this industry is generated by PMS itself. PMS now provides on-board stevedoring services to over 30,000 Container Units. Per months and provides container handling services to several shipping lines calling at the Karachi Port. The two major competitors of PMS are m/s badaruddin stevedores and friend’s corporation stevedores.

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INTRODUCTION Premier Mercantile Services (pvt) limited was founded by Mr. Haleem Siddiqui and his younger brother Mr. Muhammad Shoaib Siddiqui in 1964. PMS has been engaged in providing cargo handling services at the Karachi Port since its inception in 1964. PMS was one of the first stevedoring companies in Pakistan to invest in modern container handling equipment. Through progressive investment and steady growth PMS is now one of the largest stevedores at the Karachi Port – at one point handling half the container traffic of Karachi Port. Equipped with the latest container handling equipment, PMS Provides on-board stevedoring service to over 30,000 TUE (“Twenty Foot Equivalent Container Units.”) per month and provides container handling services to several shipping lines calling at the Karachi Port. PMS has a dedicated container yard at the East Wharf of Karachi Port used for stacking containers and delivery to the trade/Shipping lines. PMS also operated and empty container yard at TPX area outside the Karachi Port. PMS is also the main sponsor and majority shareholder of Pakistan International Container Terminal Limited which operates a state-of-the-art container terminal at the East Wharf, Karachi Port.

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SALIENT FEATURES OF THE COMPANY Following are the salient features of the company that makes it best among others: •

PMS is the oldest and largest stevedore and Terminal Operator working on Karachi Port

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Terminals on both East and West wharf for the handling of vessels as well as containers

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Total area of around 70000 sq. mts at East wharf, KPT for handling of containers.

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Total area of around 20000 sq. mts at West Wharf, KPT for handling and marshalling of containers.

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Total area of around 45000 sq. mts at TPX, Outside Port premises at M.T. Khan Rd. as well for the handling and storage of empty containers.

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Most modern equipments for the handling of containers which are:  Four Reach Stackers of 5 high  One Top loader of 4 high  Four Empty container handlers  One Heavy Fork Lifts (TCM)  Ten fully equipped hydraulics Trailers

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PMS is the only company in the history of KPT to have its own State of art Shed for the handling and storage of export cargo.

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PMS is the proud sponsor of PICT which is the first Pakistan based state of art terminal equipped with the most modern equipments for the handling of vessels in KPT

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Skilled and efficient staff for the handling of cargo as well as containers

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ORGANIZATION CHART STAFF HIERARCHY

Director Operations Secretary & Off. Asstt

Chief Accountant Accountants & Assitants

Terminal Manager

Chief Engineer

Commercial Staff

Dy.Manager Terminal

Equipment Incharge

Off. Asst.

Asst. Mgr Admin & Claim

Dy. Manager Operations

IT Department

Drivers & helpers

Onboard Supervisor

Tally Clerks

On board checkers

Asst. Foremens

Hardware & Network Assistants

Export Consolidation

Yard Foreman

Alongside Clerks

Computer Data Entry Staff

Checkers

SERVICES PROVIDING TO TRADE Following are the esteem services that PMS are providing to their customers: •

Vessels Stevedoring

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Handling containers under hook

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Terminal Operations for the cargo & containers of nominated customers

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24 hrs Receive / delivery facility of Containers

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De-stuffing of nominated Containers in KPT Sheds

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Consolidation of cargo meant for export in very own state or art shed

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Storage of Laden & Empty Containers

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Maintaining of stock line/Customer wise

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Transportation of Laden as well as Empty containers.

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Prompt reporting to our customers through electronic media. 4

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One window Operation through efficient and friendly customer Service

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Repairing and washing facility of dirty and damage containers

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Office facility with all basic necessities like Telephone, Fax and computers with internet facility etc.

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CLIENT LIST PMS is very fortunate and feels proud that it has some of the big names of the trade in its clients list such as HLL, Maersk, PIL and Safmarine. They are also the stevedore of country’s national shipping line (PNSC). Following are their prominent clients in the trade which are using the services of their company: •

AMI Pakistan

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Anchor Shipping (Maruba & Emirate Shipping Line)

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Buksh Investment (MNSL)

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CIM Shipping (ARC & EM Key Shipping Line)

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Consolidation Shipping and Logistics

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Delta Shipping (PIL Shipping Line)

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Delta Transport (HLL Shipping Line)

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Globelink Pakistan (Pvt) Ltd.

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IAL Pakistan (IAL Shipping Line)

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ISPI Corporation (MISC Shipping Line)

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Maritime Agencies Pvt. Ltd. (K Line )

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Maersk Pakistan (Pvt.) Ltd. (Maersk Line)

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Marine Services (Pvt.) Ltd. (Norasia, Transasia & Pollux & Castor Shipping Line)

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Ocean Shipping and Logistics (Maxicon Line)

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Pakistan National Shipping Corporation (PNSC Line)

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Ravian International Agencies.

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Riazeda Pvt. Ltd. (Balaji Shipping Line)

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Safmarine Pakistan Pvt. Ltd (Safmarine Shipping Line)

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Sea Hawk (Sea Hawk Shipping)

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United Marine Agencies Pvt. Ltd (RCL Shipping Line)

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Yaseen Shipping (STX Pan Ocean Line)

PROJECTS 6

Below are some of the projects of the company which can clearly portrait the company image regarding reputation, efficiency and professionalism: •

Development of Software for the tracking and reporting of cargo as well as containers

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Setting up a custom examination yard with all the basic requirements such as CCTV, Computers with internet link via remote links and security guards

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Stuffing of Cargo on in reefer containers with the help of Stuffy at -65 temperature

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Handling of Project Cargo Vessels

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Handling of RORO vessels contains APV & APC

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Consolidation of Export Cargo

FORTHCOMING PROJECT To facilitate the trade one step further the management has decided to build a modern dry port in Punjab at Prem Nagar near Raiwind in collaboration with Pakistan Railways. Currently the feasibility work has been done and construction phase started, it provides a complete service of marine and train/tailored to the customer’s specific needs, saving time, controlling costs, and streamlining operations at Karachi Port and at Lahore ICD along with flexible and comprehensive expertise.

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PROFILE OF THE ENTREPRENEURS: Name: Mr. Muhammad Shoaib Siddiqui Age: 50 Family: Married and has three children. Education: BA (private) from Pakistan, ITC (Inter transport course), ICD Course from UN and CILT (Chartered institute of Logistic & Transport) Last job held: No other jobs. Designation: Director Operations of Premier Mercantile Services, Personal funds invested: No personal funds, loan obtained from bank. Other companies started: Started Al-Hamd Internatinal in partenership with a foreign company but left it after a few years; Plans to establish another Inland Dry Port in Lahore. Name: Mr. Haleem Siddiqui. Age: 55 Family: Married and has three children. Education: BA (private) from India. Last job held: Worked in Navy as a Captain for 2-3 years, and then worked as a tele-contractor in KPT. Personal funds invested: No personal funds, loan obtained from bank. Other companies Started: Mercantile Services ltd.

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INTERVIEW •

About yourself and brief introduction of the business? What kind of services do you provide? Mr. Shoaib Siddiqui did private graduation and then started this company with his elder brother Mr. Haleem Siddiqui. Mr. Shoaib Siddiqui has a work experience of about 35-40 years. The company has bulid many strong international contacts with the various countries, which helps in providing better services. PMS basically provides cargo handling services at the Karachi Port. PMS currently has around 2000-3000 employees and four offices. PMS deals with the handling of 60,000 containers per month on average. Other than KPT (Karachi port trust), PMS is one of the first stevedoring companies in Pakistan to invest in modern container handling equipment. PMS is the only group in Pakistan involved in the handling of cargo, equipments and ships.

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How was the firm created? How did you get the idea?

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How did you get started: − How were the finances arranged? All the initial investment was made by obtaining loans from banks as huge investment was needed. It would not have been a wise decision to put personal assets at stake. − Location of the company? The company’s first office was on rent in Wrighter’s Chamber, with the passage of time, the company moved its offices at Business Center, now the company has huge offices and stills plans to expand the business and establish a separate building for PMS.

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Basic competitors? 10

In general there are 30 other stevedoring companies but following are the two major competitors of PMS:

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M/S Badruddin Stevedore

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M/S Friends Corporation Stevedore (pvt) ltd.

Growth in terms of revenue? 75 % of the revenue is generated by PMS and the remaining is shared among the other stevedoring companies.

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What are the measures that your company takes to maintain stability? The company believes in making less investment in order to maintain stability, to sustain the environmental and other external factors and to keep up with the normal pace. To maintain the stability, the company reduces the administration cost, management cost and repairing cost of the machines to up to 60%. And the company cut downs it cost by renting the equipment for handling the cargo instead of buying them.

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Legal obligations? The company faces major interference and involvement of customs and agencies. The company is required to recieve permission from the customs after thorough investigation in order to remove the threat of any suspicious movement of object. To make this method, less time consuming PMS has installed scanners to detect any suspicious object in the containers. Documents are provided to the customs and KPT, beforehand to avoid any delay, and to keep the track of the containers.

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What are your company policies? The company ensures to provide: •

Complete handling of cargo, from uploading to discharging of containers.

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The company aims to bear all the cost in case of damages and theft.

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To prevent from losses, the company has insured itself. 11

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The company follows the organizational safety regulations from UN to protect the staff.

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The company is completely against downsizing; it wants to maintain the current number of permanent employees (i.e. 3000); for extra workload it hires temporary staff.

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Transit claims: when the company exceeds the specified time they have to pay extra charges.

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In order to protect the activities the company records all the activities of the employees.

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Effect of political, economical situation on your business? The economy of Pakistan plays a vital role in the stability of the company. As a matter of fact, the import and export of the country always depends on the economy of the country, and PMS basically deals with the import and export of cargo both outside and inside the company. Presently the export and import of the country has reduced up to 35%, which has also affected the company. In adverse conditions, the export and import of container reduces, which lessens the number of containers eventually. In adverse condition the company does not believe in downsizing the employees, instead the company considers to cut the number of equipment for handling of the cargo on port. The company avoids making any additional investments in the period of recession. The number of containers due to the present situation has reduced from 60,000 to 40,000.

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What are the changes that came in the company over the years? In the early period of 80’s the operations of Premier mercantile services were basically manual, as the containers were not containerized, the companies had to discharge the cargo manually. With the passage of time they started to use crane-lifting and fork-lifting and now they are using reach-stackers; also all their record keeping is computerized. The company has brought many changes in itself from the time started, the company started with the handling of general cargo but then in 1978 the company started the handling of bulk cargo (which generally includes coal, wheat & sugar etc). In 2001, the modernization in this field helped the company in cutting cost and to be more productive and efficient in 12

terms of dispatching and uploading cargo from/on ships, which in result made the company more successful. They have also installed scanners which make it a lot easier to scan the containers for the Custom. •

What are the success factors of your company? Mr. Siddiqui believes that three factors play a significant role in company’s success. − Services − Commitment; − And honesty.

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Do you have any future plans/new business? Mr. Siddiqui plans to start a mega project; an inland dry port in Lahore in the August 2009, Inshallah! Challenges of the new project: Government has played a major role, in delaying the Lahore project. Mr. Siddiqui had planned Lahore inland dry port about 5 years ago, but the plan took enormous time due to the inefficiency of the government managers, which in turn caused delay in receiving loans from the banks. Strengths of the new project: Government has dry ports but due to lack of marketing they attract very few customers. This new dry port would offer efficiency and reliability to their customers. They would provide guaranteed transit time, no fluctuation in freight charges, no need of security deposits, one window operations; they would offer direct custom documentation. Marketing for the future project: − Personal marketing − Newspaper and magazine advertisement

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Do you think your company is flexible in adopting change? The company adopts new changes without any resistance. It even accepts changes easily; as they installed computers with the changing demands of the time, hence they can claim that they are the only stevedoring company which has complete computerized systems. 13

Even now there are companies which are lagging behind as they haven’t accepted the changes with time. •

What are the challenges faced by the company? The company has faced many hurdles from time to time; the interference of brokerage has caused many problems for the company. And the government has also caused many disturbances for the company; the involvement of the government in this business refrains the company from bringing change in terms of modernization of equipments. The company had to fight with the government for permission in this regard for a period of about 15 years (1980-1995) and had to go through a phase of constant struggle and fight. The delay in the modernization of equipments, in installing new equipments effected the growth of the company. The company is bound by law that they have to hire DLB (dock labor board).

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What do you think is your company’s competitive advantage? According to them their competitive advantages are: -

The company has large amount of latest equipment which makes the company more efficient as compared to its competitors.

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They have the expertise in this field. Mainly the extensive experience of the entrepreneur Mr. Shoaib Siddiqui.

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Services_ they provide all three services in one package.

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They charge relatively low prices.

How your company differentiates itself from its competitors? Their cargo handling is very efficient they don’t waste any time. Their prompt shifting of unloading and loading the cargo is also another way they differentiate themselves. They reduce the occurrence of damages by careful handling and even if any accidents happen they compensate the damages.

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How do you market yourself? The company believes in word-to-word marketing of their services, their strong connections and relationships build throughout the passage of time plays a major role in 14

this regard. The company also markets itself through advertisements in newspapers and magazines such as “Murad Shipping Advertisment”. •

What do you think are the major qualities of an entrepreneur? − To become a successful entrepreneur, Mr. Shoaib Siddiqui believes that an individual should be patient and calm. he should avoid hastiness and rapid success. − An individual should know how to manage his time efficiently. − And last but not the least; an individual should be committed to his work. He should be committed and loyal to his words and fulfills his promises made to the customers.

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Developments in Global Seatrade and Container Shipping Markets: Their Effects on the Port Industry and Private Sector Involvement Hans J F Peters Baltic Maritime Advisers, 1444 Colleen Lane, McLean, Virginia 22101, USA Abstract During the past 20 years world seaborne trade increased by almost 40%. Liner shipping grew the fastest. Containerised cargo was clearly the most dynamic sector of global seaborne trade. Containerisation has thus been a major and increasingly important element of not only maritime activity, but also of world trade and of entire global industrial structure. The growing significance of containerisation is a reflection of the changes that have occurred in the international organisation of manufacturing and production. Container lines have moved through several organisational phases in the search for profitability. Most of the advances in containership design have been associated with the upsizing of vessels, both to accommodate trade growth and to offer economies of scale in a highly competitive market. Information technology is now seen as the great battleground of the next decade among not just carriers, but also forwarders, logistics based integrators and, potentially, pure technology companies who may use their systems expertise to enter the industry at the expense of traditional players. Container handling in ports is another area where technical advance is noticeable. Increasingly larger tonnage, especially of vessels deployed in the container market, will have significant implications for ports. Massive investments and substantial productivity improvements are generally required to enable ports to meet the stringent service requirements of their customers efficiently. The speed of container handling and consequent vessel turnaround time is a crucial issue in terms of competition. The worldwide trend towards greater private sector involvement in ports has become apparent. While wholesale privatisation has occurred in a few cases, what is more common is the introduction of private finance, operation and management in place of state funds and administration. The advent of the so-called 'global stevedore' in the 1980s has had a fundamental effect on port facility financing and management. The international stevedoring industry is made-up of participants with a commercial remit. The bottom line with port facility acquisitions or new terminal developments is that developers of all categories look for annual pre-tax returns in excess of 20% of turnover. While the acquisition and development of port facilities is a global business, it is one that is highly influenced by key individuals within the international stevedores. Competition among international stevedores and between these parties and ocean carriers for port concessions has never been stronger.

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CONTAINER SHIPPING AND PORTS: AN OVERVIEW THEO E. NOTTEBOOM* Institute of Transport and Maritime Management Antwerp (ITMMA), University of Antwerp The market environment in which container ports and shipping lines are operating is substantially changing. One of the main driving forces to change emerges from the globalization process and the large-scale adoption of the container since the late 1960s. Worldwide container port throughput increased from 36 million TEU1 in 1980 to 266 million TEU in 2002. Forecasts point to between 432 and 468 million TEU in 2010 (OSC, 1997 and OSC, 2003). While the Atlantic Rim is the cradle of containerization, economically dynamic East Asia has become the world’s main container region. The share of Asia in worldwide container port throughput rose from 25 per cent in 1980 to about 46 per cent now, while Europe saw its share drop from 32 per cent to 23 per cent. The rise of world containerization is the result of the interplay of macroeconomic, microeconomic and policy-oriented factors. World trade is facilitated through the elimination of trade barriers and the liberalization and deregulation of markets. Practical evidence shows that the public sector has redefined its role in the port and shipping industries through privatization and corporatization schemes. Contemporary government intervention in an efficiency-oriented industry typically focuses on the issue of market liberalisation and the creation of a level playing field for fair competition, the monopoly issue and the public goods issue (see Goss, 1990; Baird, 2000; De Monie, 1995; Notteboom and Winkelmans, 2001 and Everett, 1996). With the reassessment of the role of the government much attention is now paid to governance issues in ports and shipping (see Brooks, 2001 and Wang, 2003). Market liberalization revealed to enhance the development of logistics throughout the world. International supply chains have become complex and logistics models evolve continuously as a result of influences and factors such as the globalization and expansion into new markets, mass customization in response to product and market segmentation, lean manufacturing practices and associated shifts in costs. Customers’ need for a wider array of global services and for truly integrated services and capabilities (design, build and operate) triggered integrated logistics strategies (Christopher, 1992 and McKinnon, 2001) and a shift from transportation-based 3PLs (Third Party Logistics) to warehousing and distribution providers and at the same time opened the market to innovative forms of nonasset related logistics service provision, that is 4PL (Fourth Party Logistics)2. Intensified competition at the supply side creates pressures on cost management and on margins. The evolutions in supply chains and logistics models urge container ports and shipping lines to re-think their function in the logistics process. Recent literature has addressed the impact of changes in logistics on the functional role of ports and shipping in value chains. Robinson (2002) places the role of seaports within a new paradigm of ports as elements in value-driven chain systems. Notteboom and Winkelmans (2001b) and Heaver et al (2000) primarily discussed the changing role of port authorities in the new logisticrestructured environment, while Martin and Thomas (2001) addressed structural changes in the container terminal community. Slack et al (2002) demonstrates how the organizational restructuring of the container shipping industry is taking place against the backdrop of logistics.

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