Group president Lars Säfverström has been with GAC for over two decades, and occupied the president’s office for nine of those years. He went to sea in 1967, aged just 15 and has remained in the shipping industry ever since. From master mariner to GAC president, his credentials for running the global shipping, marine and logistics giant are hard to surpass.
GAC has recently celebrated its 50th year in the Gulf and despite diversification into warehousing, 3PL service provision and the logistics business, the firm has kept the shipping and marine services element at its very heart. Born as a direct result of the need to provide Gulf businesses with sea freight solutions, the company began operations in Kuwait, back in 1956.
We are asked if we can manage crewing issues, spare parts logistics, and associated marine services. Being able to deliver on these requests is really rewarding.
“In the 1950s, when Kuwait was beginning to grow and be built, two Kuwaiti gentlemen came to Sweden to purchase cement,” begins Säfverström. “But because there was no infrastructure, no major commercial ports at the time, they also wanted somebody to help them unload at the other end.”
The founder, Bengt Lindwall, responded by sending people to Kuwait and essentially GAC, or Gulf Agency Company, as it was then, was in business. GAC has grown to represent the interests of over 3500 principals and attend to over 30,000 vessels annually.
Prior to Dubai, the international headquarters was located in Athens. After a quarter of a century in Greece Safverstrom played an instrumental role in the move to Dubai. Moving to the UAE was made simpler by what he asserts was an international warmth to the organisation and people of GAC.
“The Swedish nationality had a certain reputation, whether it was right or wrong I don’t know, but we had a reputation that made it quite easy for us to approach different cultures, religions and political situations. I think we were regarded as neutral.”
Drawing parallels with Dubai, Säfverström thinks it’s now the combination of talent from all over the world that is driving the company to new heights.
“With everything becoming more and more international or global, we are certainly not a Swedish company. Our corporate culture is the GAC culture, which has been influenced by our Swedish heritage, but is now a mix of a number of countries and nationalities.”
Despite the roaring success of the region, and the Dubai free zones in particular, he remembers having to overcome preconceptions and fears that Dubai was too isolated to run a truly international business.
“One of the worries I had about moving the head office was that we might be perceived as a local Dubai company. The perception is still, I’m afraid, that you can’t sit here in the middle of the desert and have a global outlook on business.”
Communications and perceptions of the Middle East have developed a great deal since the 1986 move, and Safverstrom is confident that locating the business here was a huge step in the right direction.
“If you are based out of a free zone I think you achieve the best of both worlds; you have a local business that is quite sizeable here and then you conduct your global business out of a free zone, and that works very well.”
The business model has undergone significant change in its bid to remain not just competitive, but also a leading force in the sector. “On the shipping side, seven or eight years ago we started working a hub concept,” explains Säfverström. The initiative was conceived to remove the duplication of effort undertaken by customers. “It’s designed so that a ship owner can consolidate his shipping agency functions. Instead of appointing GAC in one port, Inchcape in another, someone else in a third, we said why not appoint GAC as your regional agent? We’ll take care of all your services in the region and we will give you one person to contact.”
Agency relationships are built on a basis of trust and reliability, so initially shipping lines were reluctant to leave tried and tested partners. However, the simplicity obviously appealed and principles began flocking to the regional solution. “After a couple of years the hub concept took off, and now consolidation is a no brainer,” he smiles.
When the hub concept was in its infancy, Chevron (now Chevron Shipping Company) was among GAC’s Middle East principals. At that time it had more than 500 agents around the world. Chevron took a bold decision to consolidate down to 10, and GAC was one of them, then it went down to six, and still GAC survived the cull. “Then they went down to two and we were one of them, five years ago they took the decision to have only one and that is us. We remain Chevron Shipping’s global service provider for shipping services and agency work,” says Säfverström.
The advantages go beyond simplicity and a single point of call. The hub concept yields significant commercial gains for shipping lines. “Chevron Shipping has saved a lot of money by using one agent, and for us it’s made our volumes grow and our processes smarter,” he enthuses.
The company network now consists of four regional hubs, and extends to over 230 offices in 40 countries.
We don’t compete with anyone with the ability to combine those three business areas, and that’s what makes us unique.
On top of overhauling the business model, GAC has remained ahead of the competition in ensuring its fleet of service vessels has grown to accommodate the increased vessel traffic in the region, particularly across the busy shipping lanes off the UAE coast and in the Gulf of Oman.
Rescue and emergency mobilisation is offered, but more commonly the expansion has been driven by the desire to meet the requirements of superintendents, cargo inspectors, class surveyors, and delivery of ship spares. The fleet of modern high-speed launches operate from bases strategically appointed in Dubai, Fujairah, Ras Al Khaimah, Sharjah’s Khorfakkan and Muscat.
“We do so much more with customers through this hub concept. We are primarily approached as an agent, but they soon realise and take advantage of the marine services and logistics,” he says.
“We are asked if we can manage crewing issues, spare parts logistics, and associated marine services. Being able to deliver on these requests is really rewarding.” In order to deliver such satisfaction to customers, Safverstrom asserts that a great deal of travel is involved to maintain and build on client relationships. “I travel about 200 days a year and many of us are doing the same.”
Despite clocking up innumerable air miles to meet customers, he realises the hub concept has it’s limitations. “The flip side is that you cannot work in every port, in every place around the world. We can’t be everywhere, but we have associates and relationships, so as GAC we remain responsible for what they are doing.”
The increasing specialisation across the Arabian Gulf by logistics and 3PL providers is obviously crowding a once sparse market, however the group president feels that GAC has the right combination of market sectors to provide stiff competition to the recent movers into the market.
“There are competitors on both a global scale and working locally in the specialist Middle Eastern logistics, marine services and ship agency services,” he enthuses. But – and this is our strategy, we don’t compete with anyone with the ability to combine those three business areas, and that’s what makes us unique.”
The integration of these services is clearly what Säfverström sees as the group’s main strength, and is something he has been passionately trying to ingrain into the GAC culture. “I have been fighting for four years now for this strategic outlook so people understand that instead of carrying out each business activity independently, we should look at where they meet and overlap and form a truly unique product.”
In searching for this prize, potential clients are often met by a team of GAC employees to view a cross-section of the organisation. “Because the service offering is so broad, one salesman meeting one client, is good enough now, but not necessarily good enough for the future,” he muses.
Whilst new business is important, the president’s main aim is to do more work with existing clients through deeper interaction wherever possible instead of chasing ever more new clients.
As shipping lines come to see the benefits of consolidating service requirements it will become increasingly common for end users to deal with a dwindling number of providers. As an innovator of the concept GAC finds itself positioned to take full advantage of the zeitgeist.
“I can understand some people seeing our corporate culture as a bit traditional and set in the ways, but it’s a winning formula,” concludes Säfverström.
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