THERE FIRST

Dominican Republic 2015 | TRANSPORT | VIP INTERVIEW

TBY talks to Alexander N. Schad, Executive President of Schad, on partnership with DHL and the need for better regulation.

In what sectors are Schad's services most required and what customers are you targeting?

Schad mainly serves the consumer goods, food and beverage, pharmaceuticals, technology, and telecommunications industries. Our motto is “get there first." So, for example, pharmaceuticals is an important sector for us because of the time-sensitive focus. We are also very active in the free zone manufacturing sector, which has a large component of medical device firms. In term of clients, we focus on multinationals and large national companies, mainly because these are the organizations that are more advanced in their logistics planning and are willing to outsource, understanding that they need to focus on their core business, and partner with logistics experts to handle the movement of inventory. The smaller companies still want to have their own warehouses, inventory, people, and operations.

What is the importance of your partnership with Deutsche Post DHL, and its role in the overall development of Schad?

DHL Global Forwarding has been our partner for more than 40 years. Branding-wise, it is important for us because DHL is the number-one logistics company in the world. However, more important than this is the network that DHL has. While Schad's presence is in the Dominican Republic, we have access to the offices of DHL everywhere in the world, permitting us to serve customers along the entire global supply chain, from origin all the way to the end consumer.

“DHL Global Forwarding has been our partner for more than 40 years."

What innovations and technologies is Schad using for its operations?

We are implementing automated warehouse management systems that are controlled by radio frequency, which gives us immediate data and inventory visibility. Within the transport sector, we have an in-house Transportation Management System that controls our 250 trucks while being monitored by GPS. This year we are also implementing a business process management system as well as an electronic document storage and retrieval system, which aims to improve our overall process efficiencies. Technology alone does not go very far without the accompanying procedural best practices. Our integrated management system certified in ISO 9000 and BASC guarantees that we implement correctly, while continually improving operations.

What have been the major milestones for Schad in 2014?

During 2014 we have consolidated our trucking network to provide daily coverage to all the municipalities of the Dominican Republic. Our logistics operation in the eastern part of the island was consolidated, now offering customs brokerage, warehousing, and distribution from our center in Punta Cana, mainly to serve the tourism sector. These services guarantee our customers same-day deliveries with over 99% accuracy. Looking to reduce risks, several projects were successfully completed ending with our Business Alliance for Secure Commerce certification.

In August 2013, SOFOS unveiled the Dominican Republic's biggest rooftop solar panel array, located at your logistics complex. What is the importance of this investment for the development of the energy sector in the Dominican Republic?

First of all, we feel very good that our green energy production is equivalent to the consumption of over 100 homes. It is also a sound economic decision earning a positive return on investment. The Dominican Republic has had a big problem for many years regarding electricity, with high costs, irregular production, and blackouts. We are heading in the right direction to improve that. We applaud the government decision to provide incentives to ensure more green energy is produced. Schad actually moved forward on a second such facility, which came online in July. The new project is in our truck terminal, and is about half the size of the first one.

What is Schad's growth strategy in the medium term?

Schad will continue growing together with its customers, who see value in outsourcing logistics processes to a trusted and experienced operator. We will continue consolidating all our existing offerings, providing more depth and geographic coverage. The objective is that consumers always find their preferred products on the store shelves and other points of sale, which is mainly a supply chain undertaking. Our company is building a large new warehouse complex along the main North-South cargo corridor, the Duarte Highway, at the intersection with a new perimeter road that is going to encircle the city of Santo Domingo, the first section of which should be ready by November 2014. The new road will enhance cargo transport and tourism as it will circumvent the traffic congestion and connect the two main cargo ports of Haina and Caucedo, as well as the Las Americas and Higuero Airport, without entering the city.

How would you assess the current condition of the logistics sector in the Dominican Republic and what is your view on the country's potential to become a future regional hub in the Caribbean?

I think, as a country, we have adequate and comparatively modern infrastructure, namely ports, airports, and roads. Established service providers such as airlines, ocean cargo liners, land transport companies, logistics operators, and warehousing companies offer multiple competitive services. The Dominican Republic just needs two more things, the first being the legal framework that will enable the country to become a hub. Under the current framework, it is too expensive and the process is too time consuming to import and export products as a transshipment hub. We are already working with the presidency and the customs authority on a new regulatory framework, which will enable us as a nation to become a competitive logistics hub, with multiple connections and capabilities, utilizing the full spectrum of logistics assets in all geographies of the country, rather than at just one port or airport. The opportunity is tremendous, with vast implications in transport cost reductions, foreign and local investments, connectivity, and so on. According to one study, it would create at least 3,000 direct jobs and 2,500 indirect jobs in the first two years. Secondly, regarding education, we still need quite a bit more development. There is a need for more in-depth specialized training in our industry. Currently, almost everyone in this sector learns on the job. The academic sector offering is a necessary ingredient for the competitiveness of the Dominican Republic.

The Dominican Association of Air and Maritime Cargo Agents (Adacam) and the Shipping Association of the Dominican Republic (ANRD) are considering the formation of a transportation logistics cluster as an international competitiveness tool. What is your view on that idea?

The logistics sector is currently not regulated under any one specific public ministry or authority. The responsibility is dispersed amongst the ministries of Public Works, Finance, Economy, Industry and Commerce, Agriculture, and Public Health, amongst others. There is the ensuing lack of coordination and nobody really understands the global picture well. The cluster is aiming to promote the creation of a national high-level private-public body where all the ministers get together with the main private sector association representatives every few months to develop strategy. At the meso and micro level, other committees would be formed to handle more operational issues. The aim is to make the import and export procedures more lean—the whole process, not just the government process.

Looking forward to 2015, what goals would you like to achieve?

In 2015 we would like to have the regional logistics center ready for the country and for our company. This is very important. Our customers are demanding this service. It fits our overall strategy to provide end-to-end global supply chain solutions. We started with only ocean transport over 90 years ago, then we added air, customs clearance, warehousing, and then trucking four years ago. And now we are going one step further; directly to the end customer, such as serving people ordering online on the internet. As a company, we plan to grow 20% every year for the next five years.

© The Business Year - October 2014