Neolink founders blaze a trail for supply chain improvement

Neolink founders blaze a trail for supply chain improvement

Neolink founders Christopher Makhoul (left).and Sean Crook (right).

Bootstrapped and burgeoning, Sydney-based freight forwarding trailblazer Neolink may have its roots in servicing SMEs but over the past two years has caught the attention of large, ASX-listed companies enticed by its blend of automated tech and a single point of contact model that favours relationship building. 

"Every time we pitch we will always hear, ‘we’ve never seen anything like this before’ - it's just constantly the feedback we get," says Sean Crook, who alongside co-founder Christopher Makhoul won the coveted Trailblazer title at the 2022 Sydney Young Entrepreneur Awards

And it isn't the technology itself that is prompting these reactions, as the pair don't pretend to be reinventing the wheel. Rather, they are using best-of-breed products from across the globe, and applying them in ways they believe is a winning formula for customer service, even in an environment where disruptions and negativity are the norm.

Makhoul says the company has three key points of difference, the first being the fact each customer has one Neolink staff member dealing with their business, learning about it intricately rather than having the client passed around through multiple departments where individuals may not be up to speed on the bigger picture.

"They're effectively an extension of your business so you get to form that relationship," he explains.

"With the single point of contact model, that one person has to be versed across the entire process, from the commercials and quoting and invoicing to freight and customs right through to doing end delivery. They learn all the facets of the supply chain which develops their skillsets and keeps them engaged in the business.

"A lot of the big companies are departmentalised, and in that situation staff become so drained by the monotonous and mundane work that they’re doing over and over again."

The second aspect is live shipment tracking through the Neolink website, incorporating "some of the latest digital tech from around the world, especially being pioneered out of America".

"We've invested heavily in that...the tracking is so detailed, our customers can see to a GPS point live where their shipment is around the globe," Makhoul says.

"The third key point of difference is how we manage our customers’ supply chains. Most freight forwarders, the way they approach a shipment reactive, saying ‘okay guys, when you’re shipment’s ready, reach out and we’ll get it moving for you’.

"We go that extra step. When you raise that purchase order with a factory abroad, loop us in then, we’ll chase it down for you, we’ll forward it to our origin partner or origin agent in that country, we’ll get them to chase it down on your behalf, we'll make sure that the ready date that the factory is telling them is exactly what you're anticipating."

He says this allows Neolink to pre-book space on vessels with more anticipation versus last-minute call-ups that are so common in the shipping industry.

"We’re going to the shipping lines with a lot of early data and saying to them, 'this is what we're going to have coming up in three, four or five weeks’ time'. They appreciate that and say ‘thanks, that’s great visibility Neolink, we’ll reserve your space for you and update your allocation accordingly because you've come to us so early’.

"The combination of those three things is the reason why I think we're killing it out there."

Crook claims the vast majority of freight forwarders don't get involved at the factory level, while Neolink has the added benefit of offering warehousing services which also yield more insightful data.

"If the warehouse starts to stock up and it’s not pulling through as much because, let’s say Black Friday doesn't go as well as planned and all the factory orders are building up in the system, we can hold the bookings if we know the inventory is not depleting at the same rate," he says.

"So the supply chain becomes a lot more efficient and the technology is doing a lot of the heavy lifting. We have it all in one place centralised for our customers from the moment they've got an order through to a delivery of an item to a customer."

It all began at a barbeque

As mates from school, the idea for Neolink was first conceived by the entrepreneurs-to-be over a couple of beers at a barbeque.

While Makhoul had been studying Business and Commerce at university, he got tired of working as a barista and found a job as an import-export clerk at Port Botany.

"I thought let’s give it a crack. I got there and I was working at a freight depot on the ground with guys unpacking containers, quarantine, customs and I worked my way up through there," he says.

"I then worked for the likes of The Iconic, setting up their warehouse, then moving into freight forwarding, getting exposure with customer service and then ultimately sales and business development before I finally took the plunge with Sean."

Before the business was founded, Crook was working at beer company Lion and was looking for some guidance from Makhoul about how the import process worked as part of a launch he was doing for Kirin.

"I had huge delays on brand launches that I was doing on Kirin – ironically we’re actually working with one of those suppliers now, they’re a customer of ours," Crook adds.

Crook was surprised to see processes were undertaken with manila folders and ticking off boxes on physical pieces of paper.

"He asked if there was anyone doing it differently, and that’s when we looked at WiseTech (ASX: WTC) and CargoWise. Many were using CargoWise at the time, but at a very preliminary level," says Makhoul.

He notes the prevailing message from freight forwarders at the time regarding the software was 'don't click on that', don’t go into that screen, it costs money', or 'we don’t use that part of the software'.

"Given that we started investigating and came up with a business plan on how to truly leverage it properly," he says.

"We thought if we build a business from the ground up and don't inherit any of this luggage that a lot of the old school freight forwarders have, can we leverage that system and that software to do things much more efficiently than everybody else?"

It was at that time as well that the pair - who recently also won the Sydney Young Entrepreneur Awards Professional Services category - determined to stick to their specialties and not attempt software development.

"It costs a lot of money to develop your own software. We’re not software guys, we’re not IT guys – I had used the CargoWise software, I told Sean ‘this is the bee’s knees but people aren’t using it properly. We’ve got to get the most out of it’," says Makhoul.

Crook emphasises they were both very lucky to have good mentors along the way, and realised very soon in the piece that they didn't want to raise capital to execute their goals.

"We liked the fact that we just answer to really ourselves. It’s not saying that we won’t do that [capital raising] in the future, but we love answering to ourselves," he says.

"We felt that if we sacrificed a lot at the beginning, which we did for the first two years, and reinvest all the profits, and we don’t take a salary for a couple of years and spend a lot of money on the systems, we could get it up to a level where we could be achieving the same product as the digital freight forwarders.

"I think now we’re reaping the rewards of that. We’re not thinking about the next raise, we're just focusing purely on what has made the business good to this point but also what we’re going to do into the future."

He highlights the company is not burning cash, and there is a strong sense of awareness around "what we're good at".

"We are not a technology business, and we’re very clear on that even directly with our customers. The people element of that is so critical," he says.

However, even as a bootstrapped company Neolink has ambitious growth plans on the horizon to 2027.

"It’s a $9 billion market and we’ll do $40 million turnover this year. We’re not even scratching the surface really of what the potential for the business is," Crook explains.

"We’re really focused on our front-end sales team and getting more customers on board. We know our system works, we know the results that it delivers relative to the market, so we're very confident that we've got that in the retention.

"I could see us getting by 2027 to a $150 million turnover business, 1 per cent market share roughly thereabouts, and I could see us having at least probably tripling the headcount from where we are today just purely in Australia," he says, adding the group currently has 24 employees who are helping more than 200 regular customers with imports and exports.

Makhoul also doesn't want to lose sight of the ethos of that original 'barbeque conversation', stepping away from the day-to-day to reflect on the longer-term vision with a willingness to change if necessary.

"We initially started started thinking logistics and distribution, but the logistics part was just so much more lucrative and we poured all our energy into that, so we're constantly pivoting where we want to be taking the business," he says.

"I think the next step for our business is to set up an overseas office where we can tap into all that origin work that occurs, and we can control it to better the service for our customers as well."

Crook says possible office openings in Asia, Europe and North America are all under the microscope, with the potential to establish a physical presence in one of those markets in 2024.

Supply chain outlook

Makhoul and Crook are optimistic about the resilience that has been built into supply chains during the pandemic, and spend considerable time trying to improve company processes and support mechanisms for staff who may cop abuse for matters that are out of their control.

"Assume it's going well, then there's no news, but if it doesn’t go well you just get hounded with negativity. The staff feel it it. It could be due to external forces such as when that ship the Evergiven blocked the Suez Canal or there’s a typhoon on the coast of China, or if there’s industrial disputes at the wharf," Makhoul says.

"The challenge for Sean and I moving forward is to keep leveraging a lot of the technology, staying true to what we're good at, but making sure the team is focused on the bigger picture, have support there when they’re dealing with a difficult customer who wants to blow their lid and keep navigating that."

Crook describes the current inflationary environment as a double-edged sword for the logistics industry.

"Because inflation is going up and consumer demand’s contracting, and you’ve got global manufacturing output on the PMI (Purchasing Managers Index) index is now falling, your supply chains are easing up a little bit," he says.

"We’ve seen a lot of downward pressure on freight rates, which as an importing nation it’s really important that that’s happened, but it’s also combined with the fact that because the rates are dropping so fast the shipping lines are basically trying to stop that fall.

"What they’re doing is what they call blank sailings, so they're not putting on services, they're refusing to call the port or they're on what they go-slows; if a vessel decides to slow down they can save 30 per cent of their fuel bill, which is really about 80 per cent of the operating costs of the big shipping container vessel."

He says the shipping lines have also released record numbers of new vessels onto the market in the last six months, but in sharp contrast to how the situation was two years ago, freight rates are now so low it is becoming much more difficult for the shippers to remain profitable.

"You’ve got to remember pre-COVID they [shipping lines] had a really bad three years, so a lot of their capital expenditure got contracted and they didn't invest in new vessels.

"What's happened is in the last two, three years is because a lot of the profits that they've been making, they have invested in a lot of infrastructure, in particular vessels.

"A lot of those vessels have started hitting the market at a time where inflation and demand has started to contract."

Crook says container volumes continue to rise which is promising, but in some industries he is noticing many more warehousing enquiries from businesses that are overflowing on their stock.

"Even customers where we would never do their warehousing - some fairly large, publicly-listed businesses - are coming to us us and asking us for additional warehouse space. That’s a bit of a concern," he says.

"One of those customers that’s asking for additional warehouse space is in food and beverage, we’ve got construction customers that are asking for additional warehouse space going into Christmas and projects might not be moving as quick.

"I know Black Friday is forecasted to be the biggest Black Friday we’ve ever had, so it’s a really interesting one because container volumes have also not dropped off. So it I think it depends on sector."

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