Ian Waters, General Manager of OMNI, discusses the changing face of international moving.
By Ian Waters, General Manager of OMNI (Overseas Moving Network International)
It’s hard to say when the world of international relocation began to change. Could it have been as far back as the industrial revolution and the coming of the railways? When steam took over from sail, and cargo leaving from one port had a reasonable chance of reaching its destination, did it change international movements dramatically? Or did we have to wait until the development of the jet engine in the 1950s or the coming of containerised shipping a decade later for the watershed? In this article I wanted to look at the changing face of international relocation and reflect upon what we must all hope, is progress.
There can be little doubt that, just as with every other industry, the international moving and relocation industry is in a constant state of change: an unstoppable evolution. Historically change has taken place slowly with the pace quickening as we approach the present. In most areas of life, evolution in the last 20 years has been so rapid as to make it virtually indistinguishable from revolution.
Agent-to-agent, the birth of OMNI
The OMNI organisation was started in 1986 and so began its life at the start of a period of turbulence that, despite the undoubted influences of the immense developments in transport described above, was unprecedented. This was not a mere upgrading of the means of transport, it was a fundamental shift in the attitude of those moving, their reasons for doing so, and their expectations of the professionals they employed to help them.
International moving was always, by nature, a collaborative exercise. An origin agent negotiated with the client, obtained the contract, handled the packing and loading and appointed the carrier and the destination agent to provide transport and perform the delivery. It was simply called ‘The agent-to-agent principle’. That was when the world was a much simpler place. In those days the relationship between the origin and destination agents was critical: the better the understanding between them, the better the chances of a successful move and a happy customer. That, at least, remains largely unchanged.
In the early years corporations were happy to accept the duality of the relationship between origin and destination. However it wasn’t long before they demanded more. Some enterprising companies set up offices in other countries and so could offer a single-company service; a seemingly attractive proposition from the customer’s viewpoint without much foundation in practice: after all, nobody cares who owns the shares, what matters is the quality of the service.
To compete with these rapidly expanding multi-national organisations other companies, less concerned with world domination, formed alliances to compete.
In the 1980s there were two organisations in Europe with the role to facilitate this co-operation between origin and destination and give the outward appearance of offering a single-company service: Eurovan and CETI. They each competed for inter-European traffic and for members. The system worked well. But inevitably trade was not limited to Europe. Moving companies from other continents joined both organisations as a way of providing single-company moves themselves and keeping the looming and threatening power of the US Van Lines at bay. They, however, soon tired of having to belong to two competing networks and demanded that they join forces: So emerged OMNI.
Halfway house better?
It is somewhat ironic perhaps that the halfway house of forming a network of co-operating agents proved more effective in many ways than the multi-national model it was formed to resist. Multi-nationality makes perfect sense from a corporate point of view. The wisdom of keeping all the revenue from both sides, origin and destination, is without question if you look at each move in isolation. However as soon as a company opens in a new country it immediately transforms itself from a customer, supplying work to the companies in that country, to a competitor with the potential to take traffic from them. All co-operation and reciprocal traffic ceases. The best choice has never been obvious and varies with each organisation.
From the clients’ viewpoint there is a dilemma too. Is it better to choose a single-company supplier who has ultimate control but will ship to their own offices in every country irrespective of the level of service on offer; or ship within a network in which each company has a choice of using the partner best able to provide the service required?
The decision is not an easy one but OMNI made its choice from the outset. It would provide a network of the world’s finest companies who would build close relationships, exchange traffic, yet maintain an element of competition to control costs and ensure high quality. It is a model that has worked well and, largely, still does. But the world continues to change.
The relocation revolution
When OMNI first formed its network most of the world’s moving companies were just that: moving companies. Relocation was little more than a nascent concept and viewed by most moving companies as a bite too big to chew. Then came along the specialist Relocation Management Companies (RMC) with their big budgets, deep pockets and a menu of services – including house purchase, school and home finding services, cultural training and a host of others – that no moving company could hope to emulate. The moving service was destined to become a mere commodity purchased by procurement departments that had little regard for the intricacies of the art for the lowest price.
And to some extent that is exactly what happened. The American giant moving companies resisted but soon had to take the RMCs on at their own game. Others followed with company names changing to include ‘Relocation’ in their titles. Soon, even more than had been the case before, the global movement of personnel, and their effects, was controlled by a small number of relocation companies some of which had been born that way and some had metamorphosed from the world of moving. The rest of the moving industry played catch up, maintaining their independence as best they could but not realistically being able to maintain their businesses other than as agents for these all-powerful masters.
The attitude of the corporate customers changed at this time too. Who pulled and who pushed is debatable. Corporations realised that relocating a family abroad was more than just a process of filling a shipping container and booking a flight. An executive working in a foreign land who was worried about his family was unlikely to function properly. The cost of getting it wrong was too high. The relocation companies, therefore, flourished by centralising operations and providing a menu of ‘soft’ services that could be easily managed remotely.
Time has, of course, levelled the playing field a little. The recent financial crash hit the pure relocation companies very hard with their highly-geared businesses and reliance upon property investments. The moving-derived companies, however, faired better reinforced by their stable storage income and profitable diversifications.
The multi-continental dilemma
As described earlier, the agent-to-agent principle has always been a precarious one. Crown Worldwide was probably one of the first companies to bite the bullet and expand from its Asian home to other countries. But others, in an effort towards compromise, simply set up relocation DSP (Destination Service Provider) companies abroad. This allowed them to legitimately claim to provide a one-company service for their clients yet still contract local agents to provide the physical operation to maintain their agent-to-agent associations. It worked well but did have a feeling rather of ‘putting a finger’ in a metaphorical dam. Long-term it could only ever be a temporary solution. Other companies, such as Interdean, expanded within their own continent but resisted the temptation to venture much further.
Inevitable expansion
For the largest moving companies in the world, expansion is not so much a commercial desire as a commercial imperative. This has been graphically demonstrated recently by two companies, Santa Fe in Asia and Wridgways in Australia who became one just before Christmas. Both publicly-quoted companies, they had large market shares in their home markets and had little option but to look further afield to achieve continued growth. Had they stayed put, and the financial analysts decided that their growth prospects were poor, their share price would have collapsed. It’s a perfect example of the business adage ‘to stand still is to go backwards’. The companies had a choice with whom they built their alliance, but not that an alliance had to be built.
The OMNI position
OMNI currently has a rule that largely precludes member companies having businesses in more than one continent. This has been maintained steadfastly in homage to the agent-to-agent principles that the organisation was built upon and has served it well for so many years. But even here there is a concern that, just perhaps, the model isn’t right for the modern world. The subject will be discussed at the OMNI annual conference this May.
A shrinking world
The international moving industry has changed with the times; it is still changing. The information age has brought everywhere a little closer, more familiar, less forbidding. Today people are becoming accustomed to helping themselves; they are not so reliant on expert others. When, for example, was the last time you used a travel agent to book a flight? A few clicks on the Easyjet website and you can be at 35,000 ft in no time.
The moving industry is going the same way. It is now less reliant upon local knowledge to navigate through strange worlds. Today’s customers are more concerned, it seems, with centralisation, automation, trackability, 24/7 operation and globalisation. The moving industry is rising to the challenge.
Ian Waters, General Manager of OMNI