Many international freight forwarders in business today are large organizations, often owned by even bigger parents. But Puerto Rico’s E.T.H. Cargo Services represents something of a throwback to an earlier industry tradition: the family-owned operation.
E.T.H. was founded in 2001 by the father of Sascha Herzig, who serves today as the company’s president. It began with just a couple of employees and a hands-on approach to serving customers. The younger Herzig, who dreamed of life as a stockbroker on Wall Street, wasn’t one of them — not until he returned to Puerto Rico after college and discovered the appeal of a career in freight forwarding.
Like many a second-generation executive, Herzig was eager to honor his father’s legacy at the same time seeking to expand the company’s range of services. He transformed what was mostly an air-freight operation into one that also handled ocean shipments, by becoming a licensed non-vessel operating common carrier (NVO). And he carved out a specialty in handling pharmaceutical products, of which Puerto Rico was a major manufacturer.
Keeping up with the necessary regulatory requirements called for a big step forward in technological savvy. E.T.H. went looking for a partner to help manage filings with the Federal Maritime Commission and U.S. Customs and Border Protection, especially the latter’s Automated Manifest System (AMS). With pharma products in particular, there’s no room for error when it comes to ensuring compliance with a tangle of regulations and multiple government agencies.
Having reviewed half a dozen vendors of software for managing logistics, E.T.H. settled on Descartes, provider of a comprehensive technology platform with modules for routing, scheduling and tracking shipments; auditing and paying transportation invoices; accessing global trade data; and filing customs and security documents, among other processes. Herzig says he was drawn to the vendor’s “willingness to take the time to guide us through the new process of being compliant with FMC. They made us feel comfortable having them as a beginning partner.”
Descartes was no stranger to the type of business into which E.T.H. was venturing. Scott Sangster, the vendor’s vice president of global logistics service providers, says it was able to draw on decades of expertise in FMC compliance and tariff management, as well as AMS filings. It guided E.T.H. through the process of becoming an NVO, with all of the accompanying requirements for bonding and licensing.
For E.T.H., one thing led to another, and suddenly it found itself needing to arrange ocean shipments to Japan, in conformance with that country’s Advanced Filing Requirement (AFR). (Essentially, Japan’s version of AMS.) Again, Descartes stepped in to help guide the forwarder in completing the proper forms and documentation. “I had a huge worry that it would be a complicated situation,” says Herzig, “but Descartes made it seem simple.”
That fact that Descartes’ software resides in the cloud was also a selling point for E.T.H., which used to have a couple of 70-pound servers residing in the office. “If something broke down, we’d be shut down for the entire day,” recalls Herzig. “It’s quite comforting to know that should something happen, we can still access tariff filing with both FMC and Japan.”
Descartes also was able to provide E.T.H. with curated trade intelligence that the forwarder was otherwise unable to secure. Often customers weren’t forthcoming with details on the origin and destination of their shipments, making it tough for it to formulate a “best offer.” And it needed a better handle on what its competitors were doing.
The COVID-19 outbreak provided yet another opportunity for Descartes to offer services to E.T.H., this time in the form of its back-office freight forwarding system. The one that was running at E.T.H.’s office had been installed by Herzig’s father some nine years earlier, and wasn’t cloud-based. When Hurricane Maria hit Puerto Rico in 2017, that turned out to be advantageous for E.T.H., because the island ended up without internet access for more than six weeks. But the situation reversed itself with the coronavirus pandemic, which rendered the forwarder’s office mostly inaccessible, and made the idea of a system in the cloud suddenly attractive. “One of our steps for the near future is having a fully cloud-based system, within the next couple of years,” Herzig says.
The cloud is also proving to be an enticing tool for automating the management of E.T.H.’s service contracts, tariffs and other documents. Previously, they had been contained in heavy binders and had to be manually altered with each carrier update. As of early summer, E.T.H. was just weeks away from placing all of its rates and contracts in the cloud, via Descartes’ rate-management software.
Sangster says Descartes has dozens of additional products of which E.T.H. could avail itself in future, although the forwarder wants to embrace automation at a measured pace. “They’re not gutting the entire system all in one shot,” he says.
Nevertheless, Herzig sees huge opportunities for further automation and modernization of his family-owned business, as it expands both geographically and in its own service offerings. “Who knows the potential for the next five to 10 years?” he asks. “But I do want to go into the modern age.”
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