The city's newest supply-chain service provider, Blu Logistics, arrives downtown.
illustration by Yurkaimmortal | Dreamstime
South Main Street is home to upscale restaurants, fashion boutiques, and the staples of Memphis’ music culture. The stretch between Peabody and Union is populated by the likes of the Majestic Grille, Art on a Hot Tin Roof, the Center for Southern Folklore, and, perhaps slightly out of place, one logistics and transportation company that doesn’t mind the fact that the nearest thing to a railway is the Main Street Trolley.
Ask Paul Selvage, vice president of the newly rebranded Blu Logistics, and he’ll tell you he prefers the excitement of downtown to warehouse districts, though his Memphis office on the fifth floor of 119 South Main stays fairly quiet.
“One thing you notice in our Chicago office is the silence of phones not ringing,” says Selvage. “If the customer’s not calling that means they’re getting everything.”
The silence was a little eerie to Russell Grant, international accounts manager, who joined Blu Logistics in May. A Memphian with 18 years in the logistics industry, he says Selvage had to offer him some reassurances about the quiet.
But Selvage says that when things are done right the first time — when technology is fully utilized, when employees are properly trained, and when a company strategizes for a competitive future — there simply is no reason for a lot of chaos and panic.
“We’re downtown because we believe in downtown,” says Selvage, who opened the Memphis office in September. “We believe there will be a renewal. Cities are the soul of the area. A lot of the growth and the excitement in Memphis came from downtown.
“We don’t need to be at an airport,” he continues. “We don’t need to be at a warehouse. Our technology will feed us that data anyway. Right now my people are loading instructions from a warehouse in California. Do I need to be there?”
Blu Logistics, he says, will enter the Memphis market starting small — looking for small- to mid-size companies as clients and maintaining a small footprint. Currently there are only four employees working in the Memphis office, though one, Grant, is an in-house broker.
“That makes us fully integrated as far as the services we can provide,” says Grant. “Memphis is dubbed America’s distribution center. This is the fulcrum of transportation globally and domestically. As far as being neck-and-neck with our competitors, we have to have an edge. Our edge is technology.”
Specifically, Blu Logistics prides itself on an automated systems platform that alerts customers by email every time a shipment reaches a certain milestone along its route. Notices are sent each time a container changes mode of transportation or if a change in schedule is necessary.
Telephone calls are usually only made when the container is ready for pickup. Customers can also easily update who receives alerts via the Internet and can generate reports with a mouse click.
“We can’t make [boats and trains] go any faster or more efficiently,” says Selvage. “But all of the milestones the railways push out come into our database. We’ve linked up with the rail companies. Automatically, when a container is loaded, we know every stroke that goes on with that container.
“It saves tremendous time of telephone calls and the time of physically handling a shipment,” he continues. “It’s a total myth that technology will save you time; technology doesn’t save you time, it makes your boss give you more work for you to become more efficient. So if a client does call with a problem, you aren’t buried with the day-to-day, you’re more responsive.”
Blu Logistics was formerly known as Blue Cargo Group. Headquartered in Bogota, Colombia, the company started its South and Latin American operations in 1993 and now has offices in Peru, Ecuador, Panama, Mexico, and Costa Rica.
North American operations opened in 2009 with presences on both coasts, namely Los Angeles, Vancouver, and New Jersey, and its largest office in Chicago, with 34 employees.
Aside from the needs of natural growth between 2009 and the present, Selvage said the time was right to rapidly open operations in the Midwest and the Mid-South.
Along with the new Memphis office, a St. Louis office opened in October and an office in Indianapolis is almost ready to open.
The reasoning comes with a fairly bold prediction.
“We believe a lot of manufacturing will return to the United States, but the manufacturing bases will not be on the coasts,” says Selvage. “They will move back to the heartland, its traditional home. They moved out for cheap labor costs. Cheap labor costs do not exist in China now with the exchange rate mechanism and increased fuel prices and longer lead times. It doesn’t make a good business solution.”
China’s rising middle class and increasing fuel costs particularly affect the garment, home products, and furniture industries, which are Blu Logistics’ mainstays. They work with companies like Kenneth Cole and Hasbro, but also serve lifestyle companies that sell watches, luggage, and accessories, as well as automotive companies and even the barbecue industry.
“The garment industry is significant,” Selvage says. “We run two warehouses, 236,000 square feet in Los Angeles, which is exactly 8.4 miles away from the port, and 178,000 square feet of garment distribution 9.5 miles out of Port Elizabeth [New Jersey].”
Still, Blu Logistics is looking for small to mid-size clients in Memphis for now and will add employees as demand dictates.
“We’re not coming here to invest large amounts of money,” Selvage says. “We’re here to bring services and quality that there’s a need for. Our aim is to look for the smaller entrepreneurial companies, to have more of a one-on-one service level than with major internationals.”
The service component is still necessary above technological capabilities, Selvage says, because larger, oftentimes older companies have not invested in training and rely on aging mainframe systems rather than digital technology.
“We completely missed the digital revolution,” Selvage says. “We went high-tech immediately because we had no infrastructure to support the old technology. We’re using the Internet more than we’re using a mainframe.”
But who isn’t using the Internet more and more including instant alerts? Selvage says that the quality of the technology is dependent on the training of those using it.
“The problem with 90 percent of our industry is the physical lack of training on the systems that are generated by IT departments,” days Selvage. “The problem is not information or the technology level, it’s the implementation on a desk level. Some companies today do not value employee long-term relationships.”
For them that means putting employees through a rigorous logistics college where they learn the ins and outs of the trade as well as applicable laws and standards.
Beyond efficiency, though, the industry is still heavily dependent on market conditions.
“The market is in flux,” Selvage says. “The largest cost to a ship is its fuel. If fuel costs go up 20 percent, then you know where freight rates and costs of business are going.
“You can strategize that in two ways,” he continues. “You can go by market pricing and that will take you on the ups and downs. You can go with fixed pricing where the price may be slightly higher than the market, but the price will be fixed for a 12-month period. If you decide to do a year-to-year contract, then you will know your costs. Some don’t, they want to take advantage of market conditions.”
But one thing Selvage is sure of: It will always cost less to ship three days by boat from South America to New York than the 13 days it takes to ship from China to the California. In addition to manufacturing returning to the United States, Selvage sees the next big move in logistics occurring south of the border.
“One of the big areas of the world in terms of trade is Latin America,” Selvage says. “It’s right on our doorstep.”
For more information, go to bluecargousa.com.