SAFE HAR­BOUR

Why David Muir de­cided to tran­si­tion CC Con­tain­ers to a new fleet struc­ture

Australian Transport News - - Front Page - WORDS RUZA ZIVKUSIC-AFTASI

The man­ag­ing di­rec­tor po­si­tion within CC Con­tain­ers (CCC) looked pretty en­tic­ing to Muir, who at the time worked as Vic­to­rian Govern­ment’s trans­port, lo­gis­tics and sup­ply chain se­nior in­dus­try ad­vi­sor for four years.

It was a chance for him to get back to the core of trans­port and lo­gis­tics – some­thing he had been do­ing for nearly 30 years. Lit­tle did he know that CCC would be at the cen­tre of box-han­dling fraud.

Muir, who was still warm­ing up his seat, saw for­mer di­rec­tors and em­ploy­ees found guilty of en­gag­ing in a va­ri­ety of frauds and de­ceit­ful con­duct by a judge of the Supreme Court of Vic­to­ria in a civil trial. Fa­ther and son team Kain and Kevin Chong, both di­rec­tors, were re­spon­si­ble for all op­er­a­tions through­out Aus­tralia and New Zealand when they, to­gether with the com­pany’s op­er­a­tions man­ager Christo­pher Neal and em­ployee Des­mond Lee, were found guilty of con­duct­ing fraud.

The scam was un­masked when one of their cus­tomers, APL, com­plained in early 2010 that it had been falsely charged for move­ments of ship­ping con­tain­ers. This led to an in­ves­ti­ga­tion by the Aus­tralian arm of in­ter­na­tional box car­rier Mediter­ranean Ship­ping Com­pany (MSCA) and CCC.

MSCA be­gan op­er­at­ing in Aus­tralia in 1989

us­ing the ser­vices of what was termed ‘CCC Old’ in the le­gal case to re­pair, main­tain and store empty ship­ping con­tain­ers in Mel­bourne, which was con­trolled by the Chongs. In 2007, as part of its global strat­egy to con­trol costs, MSC looked at ac­quir­ing con­tainer de­pots around the world, in­clud­ing in Aus­tralia. As part of that strat­egy, MSCA ac­quired in­ter­est in the busi­ness con­ducted by CCC Old in 2008, with a new com­pany es­tab­lished to pur­chase and op­er­ate the busi­ness, now known as CCC.

MSCA held 75 per cent of the shares in CCC with the rest held by the Chongs. MSCA ac­quired the re­main­ing 25 per cent of in­ter­est in CCC in 2009, with Kevin and Chong con­tin­u­ing to work in the busi­ness un­til mid-2010. The five dif­fer­ent al­leged frauds were re­pair fraud, con­tainer move­ment fraud, trans­port fraud, diesel fraud and con­tainer sale fraud.

The ship­ping con­tainer busi­ness was op­er­ated out of Al­tona, Mel­bourne, at the time of its pur­chase by CCC. A year later, it moved to its cur­rent ad­dress in Port of Mel­bourne.

Empty con­tain­ers are sent to the CCC con­tainer de­pot where they’re sur­veyed for main­te­nance and re­pair be­fore be­ing stored at the de­pot un­til they are needed. MSC and MSCA were the main tar­gets of re­pair fraud as MSCA was Chongs’ largest cus­tomer.

MESSY BUSI­NESS

Muir was brought in to fix up a busi­ness he thought should have been in a good con­di­tion.

“I knew I had a chal­lenge when I started; I started in May but the fraud wasn’t un­cov­ered un­til Novem­ber; there was a dif­fi­cult pe­riod from Novem­ber through to early 2011 with some dark days but we came through them,” Muir says.

He was un­aware of the scam when he ac­cepted the po­si­tion, say­ing he’s “de­vel­oped some skillsets” he never had be­fore join­ing the com­pany.

“I had never come across cor­po­rate fraud to that level but ev­ery­thing else I pretty much knew and that’s why they re­cruited me here – be­cause I had the knowl­edge to sta­bilise the busi­ness and grow it,” Muir adds.

“No one was aware of what was hap­pen­ing but the busi­ness knew – MSC knew it should have been per­form­ing bet­ter and based on its ex­pe­ri­ence of de­pots all around the world it had its own KPIs and mea­sures that would sug­gest it was un­der­per­form­ing.

“What it didn’t re­alise was who was caus­ing the in­ef­fi­cien­cies and cost is­sues within the busi­ness; it came as a com­plete sur­prise to

ev­ery­one when it was dis­cov­ered. It was an em­bar­rass­ment to the busi­ness and to a lot of our cus­tomers that were im­pacted in such a way.”

MSCA man­ag­ing di­rec­tor Kevin Clarke and Muir took it upon them­selves to in­form their cus­tomers of the fraud­u­lent ac­tiv­ity, say­ing many were thank­ful for their hon­est ap­proach.

“At a time when the fraud was un­fold­ing, you couldn’t dilly dally; these were dif­fi­cult times with le­gal is­sues fly­ing around the place – it had se­ri­ous out­comes linked to them,” Muir says.

“It’d be an un­der­state­ment that I was car­ry­ing a heavy load on my shoul­ders at the time – it was a dif­fi­cult time.

“It was quite stress­ful and I had some nasty stuff de­liv­ered at me as stuff was un­fold­ing but you push through with the con­fi­dence that what you’re do­ing is right with the sup­port of good com­pany be­hind you and a good le­gal team.”

Hav­ing held some se­nior po­si­tions in the coun­try’s lead­ing trans­port and lo­gis­tics com­pa­nies, along with his in­volve­ment in work­ing groups such as the Vic­to­rian Freight and Lo­gis­tics Coun­cil (VFLC), the Coun­cil of Aus­tralian Gov­ern­ments (COAG) and the Trans­port and Lo­gis­tics In­dus­try Round Ta­ble, Muir reached fel­low stake­hold­ers for sup­port.

“There were a cou­ple of peo­ple I needed at cer­tain times; you have to take a mo­ment and sit down with peo­ple and talk things through and get some ad­vice on dif­fer­ent strate­gies to ap­ply and, if not, just to bounce ideas off peo­ple be­cause it was a very dif­fi­cult time,” he says.

“With­out boast­ing, I came to the busi­ness with a good rep­u­ta­tion, fairly known in the in­dus­try, so we were able to get through it.”

As those at the cen­tre of fraud started leav­ing, Muir em­ployed new peo­ple to help strengthen the busi­ness. Ja­son Con­nor took the role of op­er­a­tions man­ager and An­gelina Crozier came in as fi­nan­cial con­troller. She is now CCC’s chief fi­nan­cial of­fi­cer. They were both brought in from MSCA.

“No one had any idea what was hap­pen­ing within the busi­ness, when it was dis­cov­ered it took a big im­pact in terms of the num­ber of em­ploy­ees that were dis­missed and those who stayed,” Muir says. “Most peo­ple in this in­dus­try were aware that some­thing had hap­pened in the busi­ness but we lost no cus­tomers – as a mat­ter of fact, we picked up a cus­tomer.

“Busi­ness has set­tled into a nice rhythm now; we have brought new, younger peo­ple in, so the busi­ness has re­cruited well and is pro­gress­ing well.”

RESETTING MORAL COM­PASS

While many em­ploy­ees were aware of fraud­u­lent ac­tiv­ity within the firm, some turned a blind eye to it, Muir ex­plains.

“When I came here, I sent a mes­sage that peo­ple had to re­set their moral com­pass; I did things dif­fer­ently,” he says. “I came out of big cor­po­rates and govern­ment and that type of be­hav­iour just isn’t ac­cept­able.

“Chang­ing the cul­ture was not dif­fi­cult be­cause a lot of them knew that what they were do­ing was wrong and they were more than happy to have some de­cent eth­i­cal stand­ings come back into the busi­ness,” he says.

“A few peo­ple left be­cause they felt a lit­tle bit, if not guilty, then silly for go­ing along with what was hap­pen­ing for so long and they felt a lit­tle bit em­bar­rassed.

“Un­for­tu­nately, when a few peo­ple do that at one time, it leaves a big op­er­a­tional gap within the busi­ness, so we had to do a bit of catch-up for a while; we re­cruited very hard and shuf­fled some peo­ple around.”

“We lost no cus­tomers – as a mat­ter of fact, we picked up a cus­tomer.”

OP­ER­A­TIONS

CCC han­dles up to 100,000 con­tain­ers each year and em­ploys sub­con­trac­tors to de­liver empty con­tain­ers. It also prefers to lease its as­sets, such as fork­lifts, as it’s eas­ier to keep up with new tech­nol­ogy through leased ma­chin­ery, Muir ex­plains.

“Pri­vate busi­nesses like to own their own as­sets but it puts stress in the bal­ance sheet. We don’t own any. That’s one of the roles I’ve done, I’ve tran­si­tioned the busi­ness from own­ing its own equip­ment to mov­ing to fully main­tained op­er­at­ing leases.

“In busi­ness like ours, we wear equip­ment out. Af­ter seven years the equip­ment is pretty fa­tigued and to get a sec­ond life out if it, it needs a big in­vest­ment in the ma­chine and by then the tech­nol­ogy has moved on any­way.

“So, from our per­spec­tive it’s smarter to just keep bring­ing in new machines and keep up with all the tech­no­log­i­cal ad­vances. The driv­ers like driv­ing new, mod­ern ma­chin­ery; it’s cer­tainly more ro­bust and more fuel ef­fi­cient and it’s self- di­ag­nos­ing if there are any prob­lems with it.”

CCC up­grades its fork­lifts ev­ery five to eight years. The com­pany had six B-dou­ble trucks upon Muir’s em­ploy­ment, which he found to be in­ap­pro­pri­ate for the empty con­tainer work.

“CCC might not own its own truck fleet, but we look to use sub­con­trac­tors who have trucks bet­ter suited to mov­ing empty con­tain­ers, so small sin­gle-axle prime movers with sin­gle-axle 40-foot skel trail­ers are the pre­dom­i­nate truck type used by most empty con­tainer park op­er­a­tors, although we are start­ing to see some in­vest­ments by down-sized su­per B-dou­ble style com­bi­na­tions to cart 2 x 40-foot con­tain­ers at a time,” Muir says.

“There were as­pi­ra­tions to move into other type of wharf-re­lated trans­port work which didn’t nec­es­sar­ily fit the busi­ness model we had here so I con­vinced MSC to sell them all and go with sub­con­trac­tors. We have got enough vol­ume to bring in our own trucks but that brings an­other level of com­plex­ity to the busi­ness that in­cludes man­ag­ing truck driv­ers and park­ing equip­ment up in the de­pot – but for what ben­e­fit? Not a great deal. We try and keep the busi­ness as sim­ple as pos­si­ble and we’ll just stick with the sim­ple busi­ness model.”

CCC also has its own on-site reefer me­chan­ics with fully equipped work­shops. The busi­ness of­fers trans­port ser­vices for full and empty con­tain­ers, spe­cial­is­ing in empty con­tainer bulk runs to and from the wharf on a 24/7 ba­sis.

Cur­rently ser­vic­ing ma­jor ship­ping lines, it tai­lors pack­ages to suit spe­cific busi­ness needs.

“The busi­ness is pretty sim­ple; it’s just an empty box in, we fix it and we send an empty box out. There’s noth­ing overly com­plex about the busi­ness, it’s just rep­e­ti­tion and mov­ing boxes through as quickly as pos­si­ble,” Muir says. “Ship­ping lines want to get their boxes out as quickly as they can, that’s their as­set, they work on as­set re­turns and they don’t like their boxes be­ing de­layed through empty con­tainer de­pots.”

FU­TURE PLANS

De­spite busi­ness be­ing less ‘ex­cit­ing’ nowa­days with con­tainer move­ment fraud days long gone, Muir says he has no plans on leav­ing the com­pany.

“It’s a very in­ter­est­ing busi­ness, very dif­fer­ent from the other cor­po­rates I’ve worked for and it’s still pri­vately owned,” he says.

“It’s a very flat struc­ture and I don’t have many lev­els above me. I re­port to the di­rec­tor of op­er­a­tions for land­side lo­gis­tics for the world and he re­ports to the owner.

“So it makes them very re­spon­sive. If you want to get some­thing done you just ask and they’ll say yes or no, there’s no lengthy cor­po­rate process you have to go through, you just have to deal with the time de­lay.

“Be­cause you haven’t got the multi lay­ers above you, you’re not nec­es­sar­ily teach­ing and ed­u­cat­ing ev­ery­one above you why you want some­thing which could be half the bat­tle when you’re mak­ing a re­quest that has to go up through cor­po­rate hi­er­ar­chy that’s got many steps.

“When you’re deal­ing with some­one who’s re­spon­si­ble for lo­gis­tics around the world, he’s gen­er­ally got a good idea of what’s go­ing on ev­ery­where.”

Be­low: CC Con­tain­ers of­fers trans­port ser­vices for full and empty con­tain­ers Op­po­site: CCC man­ag­ing di­rec­tor David Muir

Above: CCC man­aged to keep all of its cus­tomers in the midst of a fraud storm

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