Prime Link boss reveals his preferred truck makes
Jaideep Surendra explains how he decides whether to buy new or used
Prime Link’s Jaideep Surendra sits down with James Morgan to discuss the factors that logistics companies consider when deciding on whether to buy new or used vehicles
When it comes to fleet size, UAE-based logistics company Prime Link is not yet amongst the region’s largest operators. Once the firm takes delivery of its latest Tata Prima 4x2 tractor heads later this month, its total vehicle cohort will stand at just under 100; a number that, whilst far from insignificant, is not yet at the same level as the Middle East’s 1,000-strong mega-fleets.
Of course, size isn’t everything, and concentrating on numbers alone can cause one to miss the bigger picture. Prime Link might not boast a behemoth of a fleet just yet, but its rate of growth has been nothing short of remarkable. Through a variety of truck acquisitions – both new and second hand – the company has doubled the size of its fleet from 40 to 87 trucks and pickups since the start of 2014.
To find out more about the secret behind Prime Link’s rapidly expanding fleet size, PMV travelled to the firm’s Bur Dubai headquarters to get some face time with managing director, Jaideep Surendra.
“Ramadan is generally a quieter month for us, but we’ve had a very good year so far with fast growth,” he began.
“In the near future, our fleet will have doubled in size since the beginning of the year,” Surendra added.
Of course, this expansion hasn’t happened accidentally. The decision to purchase additional trucks has been taken by Surendra and his colleagues both in reaction to, and in anticipation of, demand.
“We’ve signed up a lot of new clients recently,” explained Surendra. “Moreover, a number of our existing clients have grown quite quickly during the last couple of months. In order to cope with this extra business, we’ve implemented some changes around the office that will help to improve things. This strategy seems to be working; clients are happy with both our service and productivity.”
This unprecedented rate of growth has taken place against the tide of the UAE’s logistics market, according to Surendra. It is one thing to expand when the total market is growing, but the Prime Link boss said that business has been slow for many of his competitors.
“Not everybody is enjoying the same luck that we’re having,” he told PMV. “I think our success is due to factors such as our sales process, our operational efficiency, and our market reputation.
“We’ve also increased staff numbers in certain key areas, but not in all. Just because our fleet size has doubled since the beginning of the year doesn’t mean that we’ve doubled the size of our workforce. We identified some efficiency issues in certain divisions, and we have been working to improve in these areas. We’ve made significant progress and we’re continuing to do so. I think that in another month, we will have achieved our goal in this respect,” said Surendra.
In the final quarter of 2013, Prime Link became the first GCC operator to place an order for Tata’s Prima 4x2 tractor heads. So far, the company has taken delivery of 16 of these models, and Surendra is expecting a further 10 units to be delivered later this month.
“The Prima models were supposed to arrive in July, but there has been a slight delay,” he revealed.
“However, when they do arrive, we have no plans to sell any of our other vehicles for the time being. Our total fleet size will grow to around 85 units,” Surendra added.
When Prime Link finally takes delivery of the 10 absent Primas, the company’s truck cohort will stand at 72 units. However, the decision to purchase tractor heads brand new from the Indian manufacturer represents somewhat of a departure from the norm for Surendra and his colleagues.
“Traditionally in this marketplace, people buy used trucks,” he explained. “Prime Link is no exception. Since the end of 2013, we have purchased 26 new Prima units, but we have probably procured an additional nine second-hand trucks as well.
“Decisions such as whether to buy additional trucks, and whether to opt for new or used, are always taken jointly at Prime Link. We’ve purchased a number of Tata Novus models since 2007. They have performed well; we haven’t experienced any maintenance issues and their reliability has been quite good. These factors influenced our decision to order the latest Prima units.
“Tata had been telling us about the new Prima trucks for about a year. We evaluated the situation and decided to pull the trigger towards the end of 2013. So far, these units have worked well for us. The level of support offered by Tata has also been quite good,” Surendra commented.
Tata is not the only manufacturer to be represented within Prime Link’s fleet. The firm also runs a number of Mercedes-Benz and Volvo units, but these were all sourced from the second-hand market. Surendra contends that whilst the total cost of ownership (TCO) argument might hold water with certain operators, the numbers simply don’t add up when it comes to Prime Link’s activities.
“We do not purchase Volvo or Mercedes-Benz units new; they’re simply too expensive for us,” he said. “A new Tata truck is in the region of 40% cheaper than its comparable European counterpart.
“I think that if you’re keeping a truck for 20 years, the manufacturers might have a valid argument in terms of TCO. However, if you consider the matter on a purely financial basis over shorter periods of time, then no; definitely not. Most depreciation takes place during the first seven to 10 years of a truck’s life,” explained Surendra.
Buying new at the premium end of the market might not make sense for Prime Link from a financial point of view, but there’s no denying that brands such as Mercedes-Benz and Volvo offer quality products. This is clearly reflected by the fact that Surendra and his colleagues are willing to put their trust in the manufacturers’ 10-to-12-year-old trucks.
These vehicles have held their price because they are still capable of performing a valuable role for logistics operators. However, residual value, concedes Surendra, represents somewhat of a gamble in terms of his latest cohort of Prima 4x2 cabs.
“This is a bit of an unknown for the Tata units,” he said. “We don’t yet know what the eventual resale value is going to be for these trucks. Despite the inevitable depreciation, brands like Volvo, Mercedes-Benz, MAN, and Scania tend to offer pretty good resale values, to be honest.”
Unsurprisingly, the decision over whether to buy new or used is about striking the right balance. Manufacturers such as Tata cater to buyers who are willing to forego modern conveniences for a lower initial outlay. Even the most competitively priced truck maker, however, would struggle to match the price of one of its brand new vehicles with that of a 10-year-old model from a premium brand.
With this in mind, one of the main arguments for buying new is reliability, the theory being that extra money spent at the outset is recouped in maintenance costs over the lifetime of the vehicle. Not only are new trucks less likely to breakdown than those that have seen significant action, but they are also supported by the manufacturers and their dealers. Tata and its Dubai dealer, United Diesel, for example, are offering a three-year or 300,000km warranty on their Prima cabs; whichever comes first.
With this in mind, the victor in the battle between youth and experience is often decided by the market. A logistics firm must identify the purchase that makes the most sense within the context of its current circumstances. There are also perennial factors that all end users must take into account when deciding on which units to buy.
“Certain clients – not all, but some – stipulate that they must be represented by newer trucks,” explained Surendra. “This is a minority, but it is nevertheless important to some of our customers.
“Irrespective of client requirements, however, fuel efficiency and reliability are always key considerations. New
vehicles offer reliability regardless of brand. It’s the same with passenger vehicles; a new Toyota, for instance, is always going to be more reliable than a 20-year-old Mercedes-Benz.
“Conversely, when buying second hand, the availability of spare parts is an important consideration. In the UAE, parts availability is very good for Volvo and Mercedes-Benz trucks. I’m sure that this is also the case for Scania and MAN units; we just haven’t had any experience with these brands. When it comes to the used truck market, trying something new can sometimes represent a bit of a risk,” he said.
After a hectic six months, Surendra seems content to catch his breath before adding to his fleet. Although always willing to take on business, the Prime Link boss is clear about his strengths and the direction he wants it to take. Prime Link, for instance, is equipped to conduct clearing and forwarding at ports, but Surendra is in no doubt about where his company’s core skills lie.
“The clearing and forwarding sector is very competitive in the sense that there are a lot of companies that are providing great levels of service,” he explained. “Our service is certainly up to par, but it’s a challenge to remain price competitive. Everybody is offering a similar standard of service but at cut-throat prices.
“In the road haulage sector, however, service levels don’t tend to be as high across the board. Prime Link is able to provide a standard of service that is equal to, or better than, any of the other logistics providers operating in the UAE,” he asserted.
Surendra is also committed to retaining his company’s focus on the Emirates. Whilst Prime Link does offer GCC-wide distribution to its customers, the majority of the company’s business is conducted within the UAE, and the managing director wants it to stay that way.
“If a client wants the GCC as a service, we give it to him, but we mainly go out and pitch for the UAE,” he explained. “The majority of our customers – approximately 99% – are based in the Emirates. Consequently, I’d say that around 85% of our work takes place solely within the UAE’s borders.”
This clarity of vision, however, should not be mistaken for a lack of ambition. Not only has Prime Link doubled its fleet size since the beginning of 2014, but it has also branched out into Abu Dhabi’s ultra-secure logistics market.
“We’ve just launched a division to cater to customers working within high-security sectors such as oil and gas, and other areas related to the Critical Infrastructure and Coastal Protection Authority (CICPA),” revealed Surendra.
“Security passes represent the main challenge in this field. Dubai trucks cannot obtain them; they are only allocated to Abu Dhabi vehicles.
“A number of our clients have requested this type of service. We identified the need a couple of years ago; since then, we’ve been looking to partner with the right sponsor. We’re confident that we’ve found him, so it’s now just a matter of expanding our activities within this area. Once everything is running smoothly, we’ll really push into it,” Surendra concluded.