Moving goods in a global economy is a highly synchronized effort. From the outside looking in, the technology, capacity and communication it takes to move products from nation to nation, state to state and ultimately to the retail consumer seem close to impossible to people outside the business. However, veterans in the field of importing and exporting know that through well-defined processes, strategic locations and a network of highly professional transportation and logistics partners, an otherwise daunting dance can be turned into seamless choreography.
FAPS Inc., originally incorporated as Foreign Auto Preparation Service, was founded in 1956 by John LoBue and has set the industry standard in vehicle importing and exporting preparation. Today, it contracts with major automotive manufacturers in the United States, Europe, Asia and Latin America to coordinate the importing and exporting of pre-delivery of vehicles as a logistical hub and key supply chain entity in the shipment of vehicles to their final retail destinations. As the vehicles travel through its 600,000-square-foot processing centers and auto marine terminal at the Port of Newark, N.J., FAPS offers several value-added services using a skilled ILA union labor workforce to ensure the vehicles are showroom-ready.
“The core services we provide are twofold,” explains Gary Love, vice president. “For imports, we provide accessorization and quality assurance. These vehicles have been built abroad and are coming to the states. We contract with automakers, and consider ourselves an extension of their factory. We go through quality inspection processes and may or may not add a variety of accessories – Bluetooth, DVD, navigation, HVAC components, spoilers, and pinstripes – whatever the automaker wants to add. It’s then delivered by truck or rail to the dealership. August LoBue, co-owner with his brother Gary LoBue, often captures the company’s motto in the words of their father: ‘Give the customer what they want, the way they want, when they want It.’
“The export operations are a bit reversed,” Love continues. “These vehicles move to our facility to be converted to meet various government regulations around the world – the Middle East requirements being very different from that of Chile and Chile being very differing from that of China, etc.”
FAPS also has a third line of business in regional logistics. It receives vehicles on behalf of the manufacturers from car rental fleets and restores and ships the cars to be sold at auctions around the country. The company entered this market in the mid-’80s and though it’s a smaller portion of the FAPS operation, Love affirms that it certainly plays a part in the company’s overall success.
“If all we did was import or export, our business would not have grown to the level that it has,” Love says. “Because this business is dynamic and has ever-changing cycles – currency and foreign exchange rates change and manufacturers move factories – having imports, exports and regional business will oftentimes offset one another. If imports are down, exports are up. For example, ten years ago, it was 90 percent import to 10 percent export. Now its 80/20.”
High Capacity – High Velocity
Business diversification has certainly played its part in the company’s success. But for an operation that processed 432,000 vehicles at its 2008 pre-recession peak, and projects to move 350,000 this year, that diversity and capacity must coincide with a “T’s” crossed and “I’s” dotted type attention of operational detail. The dance stage has many moving components included the loading and unloading of more than 300 PCC/PCTC marine vessels annually, management of thousands of rail cars and tens of thousands of vehicles being unloaded and loaded onto rail and coordination of hundreds of thousands of vehicle-related parts and accessories.
FAPS releases 800 to 1,000 exported and imported vehicles each day. From the start of the recession, the company has regained sales at 4 to 5 percent each year and expects the positive trend to continue. To process its current volume, meet future demand and still turn a profit, it must be efficient.
“We work very closely with our logistic partners, and I use that term partner very matter of factly because we are all in the supply chain and the overall efficiency of the supply chain is only as good as the partners connected,” Love says.
Using electronic data interchange (EDI), FAPS is able to track when and from where vehicles are being imported to its facility. It turns around and uses the same EDI technology to communicate with trucking and railroad companies, letting them know when and where they can pick up vehicles to deliver them to auto dealerships.
Attaining and maintaining maximum velocity and throughput is a constant goal of the organization.
Location, Location, Location
The Port Authority of New York & New Jersey manages the largest port of the U.S. Eastern Seaboard and third-largest in the nation. “Our customers benefit from our strategic location,” Love explains. “Port Newark, N.J., is one of the most cost-efficient ports to operate from, whether it’s importing or exporting. But another important part to this location is that we are close to where the population and where the GDP is – our proximity to the marketplace saves millions in inland transportation cost and results in less emissions thus a net carbon footprint reduction for our customers.”
The majority of its imports are shipped strictly by truck within a 250-mile radius. However 25 percent of its outbound travels 300 miles or more from its Port of Newark home. Those vehicles are railed from FAPS’s 48-spot marine on dock auto rail terminal (MODART) via its rail partners CSXT and Norfolk Southern. On the exporting side, vehicles coming by rail from facilities such as Ford’s Chicago plant are unloaded, creating empty multi-levels and an opportunity for synergy since the empty railcars can be reloaded with imported vehicles en route to auto dealerships in the Midwest.
Ready for Growth
FAPS’s location will continue to play a key role in its viability, especially if new markets begin to open up as Love predicts. If China is able to produce a North American-NHTSA approved vehicle in the next three to five years, Love says it could create another surge in automobile imports. This historical pattern would follow the trend of imports from Japan in the mid 1950s and from South Korea in the late 1980s whose combined successes in North America forever changed the automotive industry.
In the same timeframe, Mexico – which ships 85 percent of its automotive production to the United States and Canada – will see a boost in production of more than one million vehicles annually from companies such as Honda, Mazda, Volkswagen and Nissan, which have announced plans to build new plants to increase production.
This boost will spur manufacturers to use alternative shipping methods such as short-sea, where product travels from the Gulf of Mexico to coastal states such as New Jersey. The move to short-sea shipping will also free up rail lines, which is good news since Love explains that rail lines are already seeing a shortage in the rail car network.
If FAPS can capture this potential new business, it will be for the same reasons it attracts business today. “Our customers, when they come to us, they have a confidence that is backed by our previous performance,” Love says.