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Royal Cargo: Helping Shape the Future of PH Logistics

The Philippines boasts of an array of natural resources that has enticed countless tourism ventures and garnered robust economic development in recent years.

But more than the beaches, the rich raw materials, and the hardworking workforce, what the country can really be proud about is its strategic location situated at the heart of a busy, rumbling logistics crossroads.

According to reports, the Philippine freight and logistics market is expected to reach a market value of USD 60.22 billion by the year 2023- all thanks to bullish multi-national and local logistics companies at the forefront of this exponential growth.

One such company making strides in the booming industry is Filipino multi-national company (FMC) Royal Cargo, Inc., which, in recent years, has steadily risen from the ranks and is now the largest turnkey end-to-end logistics provider in the Philippines.

FROM HUMBLE BEGINNINGS TO LOGISTICS ROYALTY

During its inception 40 years ago, Royal Cargo was founded originally by a Filipino and owned by a German company which had to deal with adversity early on in order to enjoy what it can boast of now: a front-runner in specialized logistics solutions for international and local clients.

But what success Royal Cargo savors today can’t be highlighted without mention of the many assiduous men and women who have worked behind the scenes to bring Royal Cargo onto the pedestal where it is right now.

The name that crops up most importantly in FMC’s list of secrets behind its success, is Royal Cargo’s Group CEO Michael K. Raeuber, who along with substantial knowledge base and inviting mind towards innovations in the logistics industry, says treating your people well would incur longterm loyalty that would catapult any business model to great heights, much similar to how they did.

THE MAN BEHIND THE SCENES

“As Albert Einstein said 80% perspiration and 20% inspiration. Hard work and vision is our main ingredient for success,” said Raeuber in an email to Manila Standard when asked how they plan to sustain and spur further growth.

                                      RCI Group CEO Michael K. Raeuber
 

And when it comes to hard work and vision, there’s really no lacking in that area for this amiable exec.

In fact, he was the recipient of the Jones Lang Lasalle (JLL) Expatriate Executive of the Year title at the Asia CEO Awards in 2015. The award is given to a non-Filipino who achieved success while overseeing a business enterprise within the Philippines.

“(It takes) measurable and visible success, ethical behavior in business and a heart for your people, most of all your staff,” said Raeuber.

“Also, love of your job, challenges of the game, and your environment (is essential),” he added as the feat required awardees to have made a strong contribution to the development of the country’s economic capabilities- and Raeuber definitely fit the mold.

But the meteoric ascent of the company wasn’t without turbulence from lift off, so to speak.

 

SLOW START

“We encountered labor issues in the early stages which included a failed venture into food processing, which was killed by the wrongly reported presence of bird flu in the Philippines,” explained the CEO, adding that the NPA-led destruction of some of their equipment in a hostage situation in Mindanao were some of the early birth pains of the MNC.

Having started as a representative of the German forwarding company Hermann Ludwig back in 1975, Raeuber then formed Royal Cargo Corporation three years later as a joint venture with the same company.

“This cooperation continued for about 25 years even after Hermann Ludwig was sold to Calberson/Geodis,” he explained.

RENEWED VIGOR

“In early 2001, I left the management of Royal Cargo for five years in the hands of my partner Elmer Sarmiento and my second son Christian Kurt Raeuber after we sold parts of the Royal Cargo business to Deutsche Post/ DHL and invested to proceeds back in a JV with Deutsche Post,” he added.

After five more years, Raeuber then sold his shareholding in this venture and returned to managing Royal Cargo Inc., together with a team of loyal managers and staff, led by Mr. Sarmiento and augmented by his sons Andrew and Sebastian Raeuber.

“Upon my return, we aggressively expanded into other, mostly Asian, locations making us the only truly Philippine-owned Logistics multinational logistics company,” he said.

At the same time, they are “heavily invested in infrastructure and equipment in the Philippines and developed many different services, both of which are now the backbone of our success.”

Currently, RCI is adept in providing specialized, cost-effective and high quality logistics solutions in terms of: (1) Clinical research and development (with owned equipment and facilities), (2) domestic and international freight forwarding, (3) projects and heavy lift, (4) customs brokerage, (5) erection and installation, (6) liquid transportation, (7) warehousing and distribution, (8) shipping agencies and trucking services, as well as (9) business process outsourcing.

Moreover, Royal Cargo now operates in 14 countries and likewise has 13 global offices in the U.K., U.S.A., China, Hong Kong, Singapore, Cambodia, Vietnam, Malaysia, Indonesia, Thailand, Guam, Palau, and Taiwan.

LITTLE TWEAKS

“This industry is exciting in itself and never boring. Being in a solutions business, we do not sell a “commodity,” but the design and deliver results meeting the expectations of customers getting cargo to where and when it is needed,” said Raeuber, who is motivated to continue having an active role in the company even after four decades.

But despite turning every stone and knowing seemingly all the tricks of the trade, the CEO says there are still challenges that need hurdling.

“The challenge really is motivating people to work as a team while yet assuming responsibilities, even liabilities,” he said. “It’s challenging but very rewarding when successfully done.”

According to Raeuber, the biggest accomplishment for him was surviving in a very competitive environment and developing strategies which answered the demands and requirements of their customers.

In truth, he was primarily engaged in a P1.2 billion expansion translating into the construction of a warehouse and cold storage facility along Plaridel Bypass Road in Bulacan to complement their existing logistics facility in southern Luzon.

The project also resulted in the purchase of a vessel for domestic freight operations, as well as massive cranes for heavy lift and erection services.

CUT ABOVE THE REST

RCI offers differentiated services based on massive investment, says Raeuber, and while they have significant competition, he feels that these companies can’t follow Royal Cargo on value of investments done and the accumulated experiences and know-how of their people.

“We have to think about beyond the services we now provide, even if we are already much differentiated from our direct competitors,” explains the CEO in baring the other leverages the company has over the other logistics providers.

“We compete with our local knowledge as well as regional presence and meanwhile similar size of doing business. In the Philippines, our company is meanwhile bigger in many aspects than most foreign competitors,” he said.

VISION FOR THE FUTURE

Asked what preparations they have planned to address the growing demand in domestic logistical services especially now that the Philippines and the whole of ASEAN gears up for its vision for the year 2020.

The Group CEO claims to be a pioneer of logistics/freight forwarding in the Philippines, but more than that, he likes to be remembered as a fair and compassionate leader- one who has paved the way for Royal Cargo to tread the past 40 years with much success and the next four decades and beyond.

“We are not afraid of the future and will help shape it,” he vowed.

Topics: Philippine freight and logistics , Royal Cargo , Inc , Michael K. Raeuber ,
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