LOGISTICS firm Mac-Nels Singapore has certainly come a long way since its inception in 1975.

What started out as a 'one-man operation' is now a significant player in the freight forwarding business, with a network of more than 50 business associates worldwide.

Besides clinching the IS0-9001 certification, Mac-Nels also made it to the list of top 500 small and medium-sized enterprises (SMEs) in 2005.

Although Nicholas Er took over the business from his father only three years ago, his involvement in the industry began much earlier. 'I started off in the freight forwarding industry as a 16-year-old working part-time during the school holidays in my Dad's warehouse, learning the basics of the trade,' he said.

After his tertiary education and national service in 2004, Mr Er underwent various work attachments at Mac-Nels' business partners overseas.

Each stint lasted for three to four months in countries such as Australia, United Kingdom and Canada. Mr Er joined the firm in 2005 as a documentation and operations executive in the import and export department.

'I had to work my way up to eventually take over from my father, but my job did not become easier after that.'

He let on that there were detractors who thought that 'I was too immature, did not have enough knowledge and experience and the firm might go bankrupt soon'.

Also, Mac-Nels constantly faced stiff competition from bigger players, while Mr Er strove to meet his network's, vendors' and customers' expectations.

From the late 1990s until 2004, the company's revenue plunged 40 per cent, compared with the 45 per cent sales growth seen from the 1970s until the mid-90s.

However, Mr Er was undeterred and focused on restructuring the company, thereby making it leaner.

'Together with my core team of managers, I learnt the importance of maximising each container's import and export loadability. Also, using consolidated containers is key to lowering the handling cost.'

Those efforts bore fruit when turnover rose 10 per cent in 2006, while profit went up 5 per cent. He attributed the turnaround in fortunes to winning over the young team of supervisors who 'came of age' and the support of branch directors and senior managers for his business plans.

There was also a change in strategy to focus on 'a few highly selected MNC customers and more SME customers as opposed to having a bigger base of MNC clientele'.

The reason is that 'all our direct competitors are eyeing a slice of the big boys market, and so we think there are more opportunities in the SME segment'.

Although the contract sizes from these customers may be smaller, Mr Er points out that the larger client pool more than makes up for it. A benefit of this, he notes, is risk diversification. A second layer of diversification comes from its extensive network of Singapore affiliates with their own regional business associates.

The broader part of the industry, he says, is now undergoing a consolidation phase where service providers are either acquiring or forming joint ventures with partners overseas.

To date, Mac-Nels has received three takeover offers, but has turned the suitors down.

However, the organisation has plans to acquire smaller players in the freight forwarding businesses in South-east Asia, India and the Middle East. Mac-Nels has set aside over US$3 million for this purpose.

In terms of niche services, Mac-Nels is one of a few players here that offer 'less than container load' (LCL) transport. This is a system of transportation used specially in international trade, where various shippers pool their boxed goods in the same container.

Companies like Mac-Nels then have to re-pack the goods shipped to Singapore into new containers - which can be twenty or forty-foot equivalent units (TEU or FEU) - before shipping them elsewhere.

Mr Er said that although margins are low for the LCL business, and the process is complicated with daily long-working nights, this makes it a niche segment and it accounts for 85 per cent of the firm's turnover.

Its other services include door-to-door forwarding and customs clearances.

He is upbeat about the industry's outlook, citing the strong export numbers from China and India to the US and Europe.

As Mac-Nels now has more than 10,000 customers worldwide, Mr Er believes the company will be immune to any economic slowdown in the United States.

Looking ahead, he hopes to 'consistently motivate and inspire my staff to greater heights through daily communication, problem-solving and improving our corporate culture'.

Its corporate objectives include growing its annual sales and profits organically, and offering excellent service to the freight forwarders, wholesale and retail industry by providing the right solutions needed.