ADM and Wagenborg, a successful combination

ADM is a global leader in human and animal nutrition and the world’s premier agriculture origination and processing company, with over 40.000 employees worldwide. ADM senior chartering manager Jagjit Bibra-Hertle is one of them. In the early ‘00s he worked for the German commodity trading firm Alfred C. Toepfer International, which handled most of the grain trading for ADM. “In 2014, ADM completed the acquisition of its remaining minority stake in Alfred C. Toepfer International, integrating Toepfer’s operations into its own. Earlier this year, ADM was recognized as one of the world’s most admired companies in the food production industry for the 12th year in a row by, Fortune Magazine”, tells Jagjit.

Jagjit continues: “Our chartering activities are executed from various chartering offices, such as in Singapore, Switzerland, Brazil, Mexico, USA and Germany, located near our customers, the suppliers, traders and receivers of the goods. In total ADM trades about 50 million tons of agriculture products worldwide. This volume is divided into parcel sizes from 1.000 ton to 75.000 tons. That is why we are working on the dry cargo side with a limited amount of prime ship owners, including Wagenborg.”

The first Wagenborg shipment for ADM was completed in 2005. Koos tells: “In 2005 I was in ‘Fiat city’ Torino, where I visited a grain-exhibition together with Jelle de Vries a full service supplier in the animal feed industry and Feedimpex, another customer. Here, I was introduced to Wolfgang Westphal of Toepfer International. Shortly after we came in contact again after we had closed a project cargo of wind mills from Spain to the US Gulf and were still looking for a return cargo.” Jagjit adds: “I remember our volume was too big for the Wagenborg vessels. However, by splitting this into smaller parcels - and thus matching the Wagenborg tonnage – we got a competitive price from Wagenborg. We decided on a first shipment of citrus pulp pellets from Florida to Ireland.”

A competitive price was not the only reason to choose for Wagenborg. Jagjit explains: “At ADM we are always looking for long- lasting relationships with our partners. Before doing business, we thoroughly screen a shipping company. We want to know - how committed is a ship owner to renovating and modernizing its fleet? How old are the vessels? Does the shipping company have the right vessels for our needs? Are the vessels open hatch and fully boxed with no understow?”

ADM does not separately evaluate a shipment after completion of a voyage. “After fixing our cargo, we hand this over to our execution team guys”, tells Jagjit. “If we don’t hear any complaints and everything goes smoothly, we consider this as a good thing. This is also the case with Wagenborg. We appreciate it when the shipment is executed in a professional and pro-active way, including when the shipment is on time, holds are clean and the crew is pro-active and helpful.”

After this successful first voyage, the business between ADM and Wagenborg started growing. Koos states: “We like to do something more for our customers. We believe that is how a relationship strengthens.” This resulted in a second voyage and a third one between the States and the Continent. Koos tells: “On this trade Hans (Kroon, director Wagenborg Shipping North America) and Jagjit worked closely together. Hans and Jagjit are both brokers with a similar attitude: clear, straight but fair and honest. This turned out to be a successful combination, even in the most challenging circumstances, such as the Alamosborg-situation end 2019. Now, 15 years later, together we execute various contracts both on deep sea and short sea.”

Although the last 15 years have proven to be favorable for both companies, challenges lie ahead in the future. “The market has changed significantly over the years for ADM”, explains Jagjit. “Over the course of the years, ADM has become very strategic in planning production volumes, targeting products for specific customers. Also, the introduction of the new sulphur regulation in 2020 affects the trade of ADM, especially in the deep sea segment. Initially VLSFO has been more expensive which in return has impacted the cost of transported goods. However we are confident that once the bunker supply chain logistics have normalized so will the price structure.” Koos reacts: “The price of VLSFO is indeed too high at the moment, but we are confident it will come down to where it should be.”

“How the world of ADM will look like within 10 years?”, questions Jagjit. “Of course, it’s hard to predict what exactly the future will look like. I expect chartering to become a more linear business. ADM is working to develop its strategic assets across the entire supply chain to continually improve our offerings to customers. Today, we are not only active in agricultural origination and processing, but we are also a leading company in the field of human and animal nutrition, with an industry leading portfolio of value-added products. We have an exciting pipeline of innovative solutions based on our unparalleled capabilities as we continue to meet needs for food, beverages, health, wellness and more. Our diversified portfolio helps manage risk.”

Meanwhile, Wagenborg CEO Egbert Vuursteen joins to say hello and reacts: “Wagenborg has been dealing with a similar situation. We have actively been reducing risks by expanding our contract portfolio. We would like to be less dependent on the market. This was one of the key targets for Koos and his business development team last year.”

Koos adds: “Another key topic on our agenda is data. We are working hard on improving our ERP-system. On a yearly basis we make about 5.000 voyages and 11.000 port calls, from which we can extract information. With this information we are improving our business processes, such as cargo generation, fixing, execution, ports/agency and bunkers. Before the summer we are planning to implement new bunker software.” Jagjit reacts: “Earlier we spoke about the bunkers. As you know, in Hamburg we have four people dedicated for bunker procurement for ADM. You are free to visit us and we look forward to sharing our experiences on this topic.” This invitation characterizes the good cooperation and drive of both Wagenborg and ADM to join forces and come to the best results together. Now and in the future.