50 years of successfully 'Spear'heading Logistics: FM Logistic
Who knew that the marriage between two persons (Claude Faure & Mireille Machet) will not only change their destinies but will lead to the creation of a French transport company 'Faure & Machet', now known as FM Logistic. After five decades, the family-owned business of FM Logistic has operations across three continents and 13 countries. With the acquisition of majority stakes in India-based Spear Logistics in March last year, FM Logistic boasts of 35 million square feet of warehousing space globally. The company has an ambitious growth strategy and aims to be one of the top three logistics players in India.
Rashmi Pradhan
The truth behind the success of France-based FM Logistic is key values of its founders, Edmond Faure, Claude Faure and Jean-Marie Machet. The philosophy of the company: Respect for others, keeping promises, team and entrepreneurial spirit, high performance, ethics and enthusiasm has been the driving force behind FM Logistic. Founded in 1967, FM Logistic currently has over 23,500 employees across the globe and posted a revenue of 1 billion euros in 2016.
It was in the 1960s, two brothers, Claude and Edmond Faure decided to launch their small wood transport company in France. At the same time, Jean-Marie Machet took the reins of his family-run transport business. The marriage of Mireille Machet and Claude Faure brought about a close professional relationship which led to the creation of 'Faure & Machet' transport company.
Realising the requirement of the customers, Faure & Machet came up with new high value-added services such as contract packaging that facilitate promotional campaigns of fast moving consumer goods in 1990s. The group took advantage of the opportunities that came up when the Eastern European markets opened, and became an international logistics pioneer in Russia and Central Europe. Following this success, in 1998, the group changed name to 'FM Logistic', while making sure it kept its family spirit.
In 2006, FM Logistic expanded its footprints to China, introducing a global supply chain solution, from the advice and design phase to management and implementation. In 2013 the group opened office in Brazil, a new continent with high-growth potential. At the same time, it increased its expertise in the logistics of fresh produce with the acquisition of a major player in the Russian market.
India acquisition In 2016, FM Logistic reinforced its geographical coverage by becoming majority (95 percent) shareholder of Spear Logistics, one of the leading Indian logistics companies. The shares were acquired from a private investor (Ambit Pragma) who had owned them since 2009. The two companies united their strengths with the aim to provide optimum services to their respective customers in India.
Spear Logistics, Indian subsidiary of FM Logistic has a workforce of over 3,000 people across 27 cities. With a significant footprint in India, Spear Logistics has 2.9 million square feet of warehousing space with over 75 warehouses. Spear is focused on key sectors in India like automobile, engineering, telecom, e-commerce etc.
Recalling the acquisition process, Jean-Christophe Machet, Global CEO, FM Logistic, said, “India is the biggest democracy in the world, it is not a country but a continent by itself. Three years ago, we made a decision to enter into the Indian market. This included two years of market research. It is key to be a Brazilian company in Brazil. Likewise, we need to be an Indian in India and hence we decided to enter into India through cooperation and acquisition of Spear Logistics. It was an ultimate choice in India as it is one of the top five logistics players in India. We are well-known logistics service provider in market by virtue of quality and professionalism. To ensure smooth operations and functioning of the company we decided to let a significant autonomy to the Indian management team.”
Talking about post acquisition scenario, Gautam Dembla, Managing Director – India, Spear Logistics, said, “While Spear Logistics has deep knowledge of the huge Indian market, its experienced team, its national footprint as well as its portfolio of customers including large national and international companies, FM Logistic brings to the cooperation its international capability, recognition, advanced working tools and latest technologies. Spear Logistics has experienced an impressive development over the past years and today is a benchmark player in the Indian market. Our motivated and committed team has helped us in the development of a national network of warehouses with blue chip customers, which are renewing their trust year after year.”
FM Logistic has pledged to invest 50 million euros within the next five years. Jean-Christophe revealed, “The main investments planned by FM Logistic/Spear Logistic in India will be creation of multi-client sites close to the main Indian cities, starting by Mumbai and Delhi. Investments in equipment of densification of storage, development of a new version of our WMS (warehouse management system) based on the state-of-art technologies; investments in innovation and technology. Human resources will be a key to our development in India. We will invest in training of our teams, managers and, we have created our internal school named ‘Spear Academy’.”
Vision The much-awaited GST is slated to have major impact on the logistics sector paving the way for large and complex warehouses. Government’s initiatives of ease of doing business coupled with GST reform will completely change the logistics network in India. Most manufacturers and sellers especially those in the FMCG and retail sectors will likely consolidate from currently having warehouses in every state to perhaps 12-15 distribution centres or warehouses. GST will also break interstate borders and the time it takes for goods to move. Dembla stated, “Spear is well prepared to take advantage of any opportunities that come with GST rollout. As a step in this direction we are setting up a large multi-user facility outside Mumbai.”
Spear Logistics is setting up multi-customer facility at Bhiwandi in Maharashtra. The new building which is under construction is spread across 252,000 square feet and will be operational by July 2017. In addition, Spear Logistics have signed a new contract with one of the biggest tractor manufacturers of India, for the management of after sales warehouse in Punjab (Hoshiarpur) with 50,000 square feet which will be operational by April 2017.
Stéphane Descarpentries, Director, Operations Asia, FM Logistic, added, “We expect to double our warehousing space in India in the next five years. The state of the art multi-customer facility in Bhiwandi will be first of its kind in India. In the long-run it will be mandatory to have multi-customer warehouse around big cities and have high fulfillment rate in trucks. Besides developing multi-customer facility, we will also develop dedicated warehouses (for example automotive and engineering products) where it is required to be close to the production centre.”
Informing about future plans of Spear Logistics, Dembla, informed, “We have very aggressive growth plans. We are currently in top 5 contract logistics companies in India and would want to be in the top 3 in next three years. In terms of revenue growth, we have already grown at a CAGR of 28 percent in last five years which is higher than that of contract logistic industry in India. We would like to continue this trend and with the additional focus on new industry verticals and new offering i.e. multi-customer facility. We aim to double our revenue in next three years. We will continue to develop Spear’s current key sectors. In parallel, we are already working to leverage FM Logistic’s global customers, especially in the FMCG, retail and consumer goods sectors.”
FM Logistic aims to be a preferred partner for its customer with a significant footprint in the country. The company is targeting a minimum of 15 percent of growth per year. In terms of manpower, India is the fourth largest market for FM Logistic and fifth largest country in terms of turnover after France, Russia, Poland, Italy and Spain. Spear Logistics and FM Logistic share similar values, centered on team spirit, entrepreneurship, operational excellence, innovation and proximity with customers. This alliance allowed the two companies to offer reliable services in warehousing and distribution to its customers.
