Marcio Dias: ‘Craft USA causes a bit of a seismic storm in the market’
At the end of a meeting that sealed the launch of Craft USA, in early November, Marcio Dias was invited to sit in a chair, in front of a group of people. It was a way to fit him in the photo, an informal record of the meeting, but also to recognize his role in the project. Craft director for seven years, after twelve at Hamburg Süd and four at TNT Express, in the last few months Marcio has been leading the most daring step of the company in its history. “This is not a big step only for Craft. It is a big step for our market in South America”, acknowledges the executive. For almost thirty years in activity, Marcio Dias has had the same age as Craft in his foreign transport career. Read below the interview with the sponsor of Craft USA, and find out what lies ahead.
How was Craft USA born, a project which you lead? I am positive that even before my arrival, seven years ago, this “dream” of operating in the USA already existed. Over time, this idea has matured and the resolution, built. The final decision was recently driven, in fact, by FCL, and through LatinPRO, a procurement center for sea and inland freight that belongs to Craft in the United States. With the advance of LatinPRO in the full container, and with LCL seeing the market saturated in South America, it didn’t make sense to have only FCL in the American market. LatinPRO opened the door to the USA and made us think about setting up a larger framework, since we would already have a structural cost anyway.
Is this the most daring step for Craft? Of all that I saw in my seven years of Craft, I have no doubt. And I will say more. That this is not a big step only for Craft. It is a big step for our South American market, because the NVOCC sector, due to its alliances and its need for alignment between countries, will undergo some important changes. I have already received calls from several countries about it. For our universe, it is somewhat of a seismic storm we foresee.
Why taking this step this year, in the midst of a pandemic? It was a very tough decision. But the pandemic for us, as it happens, was the case of the crisis that creates opportunities. In March, at the beginning of the quarantine, we held a board meeting, in which Marcellus, our founding CEO, asked, “What next?” We knew it would be a different year, never seen before, and that we should be prepared for a difficult scenario with major financial impacts. After March came May, which was a terrible month. June, not so much. In July, we started to increase and today, even below the budget, we reached numbers that we did not think were possible at the beginning of the crisis. We are part of a fortunate group, and it is clear that this happened with a lot of work and dedication from our people. In the last few months, we have seen companies go under, brands disappear, partnerships fall apart, a wave of debts.
Has keeping the team together benefited Craft in the midst of the pandemic? Totally. We are not a company based on fixed assets. This means that, without the right people, we are not going anywhere. I can’t get enough of calling Craft a family, because, at a time when great competitors were in the process of massive downsizing, already due to the crisis, Craft kept the whole team together. We went against the current, which was our success and our prize. We protected our families, we brought everyone into a spirit of cooperation. Today, with the crisis more controlled and the gradual return of volumes, it became clear to us that the strength of this recovery came from our people.
Does this vision of business guided by people also guide Craft USA? No doubt. All of Craft is people oriented. The US project only got off the drawing board because we are convinced that we have found the right people. The project will be directed in the USA by Bruno Crelier, who knows the region well, lived there for a long time, is acculturated, we gained a lot of time on the learning curve with him. Bruno has three important skills: he knows the market, he knows people and he knows our DNA. It will be up to him to choose vendors, carry on the relationship with carriers, and run Craft USA together with LatinPRO, always supported by the board in Brazil, which has names of experience, such as Jorge Freitas, Priscilla Bueno and Marcus Coelho, with a vast knowledge of market and Craft in their baggage. In addition, we also brought in high-caliber professionals from the American market to the table to always ensure the local mindset.
“Our dream is to end 2022 with Craft USA as big as Craft
Argentina or Craft Chile, in terms of business and revenue”
Does Bruno also lead LatinPRO? Yes, and very supported by Brazil. This is an important point, because everything was born from LatinPRO. Our expectation is that he will invest 50% of his time in each company to make each one a success. LatinPRO also came from a dream, a dream that was idealized long before my arrival, when Marcellus, in partnership with three other Brazilian companies, opened a procurement center in Asia, WSL. It was a disruptive moment, because creating an association in a closed market would mean, for the carriers, that we could buy freight better, given the volume negotiated, because we would be buying in “block”. So, today, when you take the volume from Asia to the East Coast South America, you see that we are the biggest buyers of freight, not just Craft, but the association as a whole. Unity is strength. You consolidate volume and create better conditions. And, in the slack season, we grew in importance because we supplied shipping companies with much needed regular cargo, in times of difficulty.
Has WSL inspired LatinPRO? That’s right. With the success of years of WSL, we understood that we could replicate the project in the USA, adding the domestic part, which is a key pain point, since we are with the right people, representing other companies and people in the procurement business.
When did you understand that you should take LCL to the USA? It was necessary to create a backbone and, when you put that structure together, why not to scale it, why not to maximize it? In addition, as there are limitations of further organic growth in the LCL into South America, it would be necessary to expand. At some point, we would have to do that. If it wasn’t now, maybe in two or three years. With the crisis, we foresaw the opportunity. So, it was almost an alignment of planets, from Mars to Jupiter.
What are the first services to be launched? Craft USA starts with the South American countries that already have cargo to and from the USA. We also started in the Italy-USA and USA-Italy trade, due to the relationship with our partner, Euro Italian, who has been with us since the first day. The goal is to maintain the services we have today, from the USA to all South American countries, because we cannot forget that we had a solid partnership for more than fifteen years in the American market. Carotrans was a fantastic partner, we have a lot to thank. Keeping the services we offered together will be a great achievement, at the beginning. The US is a very big country, with many connections, so building boxes there is not the easiest thing. In addition, we will re-launch a service from Peru, Callao-Miami, and from Argentina, Buenos Aires-Miami. Miami is an important distribution center, with connections to different parts of the USA.
What is the strategy behind the relaunch of export services that are not active today? South American exports is a difficult market and, as we had a partner on the other side, Carotrans, it was even harder make it work. Craft understands, however, that you often do not win at exports, but will win at the imports there. It is only from the move from right to left pocket that, after all, ensure a positive result. This is the reason for the relaunch of the Callao-Miami and Buenos Aires-Miami routes and, soon, perhaps Callao-NY.
How was it to break a relationship of so many years with Carotrans? Very hard. Craft is not a company that creates relationships only with other companies. We are a company focused on people. So, although it is business, when parting ways we take into serious account the people involved. In addition, in the get go we are giving up significant revenue, which we have to pursue, we have to pursue this dream. It is a dream that we deeply believe in and for which we know that we will have to pay for a while, but we are certain that it will work, precisely because we look at the LatinPro and Craft project as one.
What can Craft USA offer that Craft-Carotrans did not have? People and, with them, customer service. We look for people on America who have the possibility to get acculturated at Craft, to fit into our DNA. That person who does the extra mile, who keeps that close touch with the customer until the end of the day, who doesn’t rest until issues are resolved, because the customer’s problem is also their problem. It is the building of relationships that leads us to great results.
Why offer trucking? Because the US is a country of continental dimension, with a massive internal cargo movement. We are confident that ocean freight from the USA to South America and from South America to the USA is practically a commodity, with little variation amongst the main competitors. Having internal transport is a big advantage. That’s why we created LatinPRO, a year ago: the idea was to buy trucking better to be more competitive. The exworks or last mile will be the name of the game.
“Our differential, without a doubt, is the people”
Do you believe that this launch will stimulate Craft Brasil and Latam? Certainly. For two reasons. Day-to-day people asked more of Carotrans, customer response time, operational support, because the American market is different. If we worked with any other partner, we would face the very same issues, I have no doubt. But, with Craft dynamics, our response time will be different, the affection with the customer will be different. This partnership between Craft and Craft will be the engine of our success.
What can we expect from Craft USA’s performance in 2021? We are aware that this is a difficult market. We are very ambitious and, at the same time, cautious. We analyzed demand, chances of growth. At LCL, we started off by just handling Craft cargo. Today, in Brazil-USA traffic, it is our customers who decide most of the business we transport. This means that most of the customers are managed by Craft, by relationship. It is a beautiful challenge, because Craft USA will not start as Carotrans operates today, making traffic with all of Europe and Asia. We will focus on South America, where we already have active customers and we already know the cargo. The idea is to go step by step, with LatinPRO as the icing on the cake, opening a market for us that can’t even begin to fathom today. The USA is a country that has, at least, ten times more volume than Brazil within the market of neutral NVOCCs. There is much ahead.
Due to the framework already put together, Craft USA starts with an important volume of TEUs, correct? Yes, and then leverage this volume through alignment with business partners. Today, Brazil represents more than 50% of Craft’s revenue. The United States, for us, is still very incipient, but the prospects are broad. Our dream is to close 2022 with Craft USA as big as Craft Argentina and Craft Chile, in terms of business and revenue, which are mature branches and market leaders in the main product.
What will you do as a sponsor of the American office? I was presented by the CEO, Marcellus. Together with my colleagues, I will coordinate all the activities. Of course, in a project of this magnitude, nobody does anything alone. We have several arms working hard to pave the way. Bruno Crelier, acting on American soil. Marcus Coelho, our CFO, dealing with financial issues, Vitor Moreira with pricing and system, Priscilla Bueno supporting coordination with Latam offices, in addition to the communication part, Jorge Freitas with management and full container matters, followed by a legion. In fact, if I don’t stop listing all the people who are participating in the process here, our list will be long. The most important thing is to thank everyone for believing and participating in this great step for our beloved company.
