The margin didn't move because of one decision

I joined Ninja Van after leaving Aersure in 2021. Not long after, we did a quarterly review and the P&L showed 1.78%. I was shocked. I had been looking at margins north of 25% at Aersure. My first task after joining? Manage and handle customs clearance in The Philippines.

There I was, negotiating rates and pushing numbers. That was when I first saw the different game Ninja Van was playing. Margins were slimmer, rates were more aggressive, volume mattered. Volume was always important to me at Aersure too, but I protected my margins as much as I could.

I thought the problem was our clients. The type of clients we were handling just wasn't forgiving and we were at their mercy. From the first month in, I knew it was going to be a tough fight to build and improve the solution.

I was wrong about the clients, by the way. It took me six months to work that out, and it's the main reason I'm writing this.

Lever one: a customs process nobody else had

Okay, so margins are slim. That's not uncommon, and I think I was just shocked at what we were quoting clients given our cost. I understood the market was competitive and saturated with service providers in 2021. I didn't expect it to be that thin.

I worked with my partners in The Philippines tirelessly to get cost down. One of the solutions we found was to go around market practice and create a new clearance solution for e-commerce that would bring cost down and make operations more efficient at the same time.

So my partner and I got to work. I had done this before in Indonesia, working with the government on regulatory reforms for e-commerce, and I went at The Philippines the same way. We got a breakthrough: a pre-clearance arrangement and a new declaration method that let us process shipments before they landed instead of after. Not everything I had hoped for, but enough.

That took our clearance SLA from 8 to 12 hours down to 4 to 6. We were the first in the market to run it this way and we owned that edge for over 18 months. On the P&L it was worth about 4 to 5 points of margin on its own.

Lever two: streamline everything

Our customs clearance team wasn't just working with our partners, we were embedded inside their operations. That made us more effective at managing shipments and faster at the process itself. Steps that used to take one to two hours came down to 15 minutes. It is surprising what that does to productivity, and what it does to cost.

We reviewed every process and cut the redundancies that served no purpose. We carried that philosophy with us into everything the team touched afterwards.

The biggest thing it produced was our own domestic air freight team. The ask came down from commercial as a "can you look at this", I looked at the process, it made no sense, and I said why don't we own it. We went direct to the airlines instead of through an agent, took worse rates for a month until they came round, and ended up working with all three carriers at prices no local forwarder could touch. That's a story for another day, but it came from the same habit: look at the process, find the layer that shouldn't be there, take it out.

Lever three: refusing the price war

Here is the one that actually mattered most, and the one I got wrong first.

I always thought margins were low because of the clients. It wasn't until a few months of watching that I realised the real reason was that we were participating in the race to the bottom. Why the flipping flippers were we doing that? Volume. Revenue.

Okay, don't yell at me just yet. Businesses have priorities and sometimes that means sacrificing margin. That's fair. I supported the team as best I could when their aim was more wallet share and more volume. I didn't necessarily agree with it, but I supported it.

But we were actively participating in a price war that was damaging the business because we were accommodating every single move the client wanted us to make. We were pawns on a chessboard, and we were the sacrificial lamb unless we got the rates they asked for.

Never let a client pressure you into lowering prices, just because. It shows them your weakness and they will exploit it.

Clients can be ruthless. They saw our priorities for volume and revenue and took advantage of it. So I started filtering rate requests between my team and my partner. Most of them never reached him. I didn't give in all the time, and had I done so, we would have hit rock bottom and blown straight past it. I will die on this hill.

The customs process gave us the 4 to 5 points. Refusing the price war is what let us keep them, and it's what carried the rest of the way to 9%.

Month six, when it went backwards

Around month six or seven, the price war cut into whatever we had gained. The process improvements were real, the SLA was real, and the margin still dropped because every rate request that got through undid a piece of it. That was the stall. For a while I couldn't tell whether the first changes had run out of road or whether I just hadn't stopped the bleeding yet.

It was the second one. The fix was the filter, not another process change.

What it felt like working our way to 9%

By month eight or nine we were there. After many rounds of debate and negotiating, and countless operations revisions. It wasn't without cost.

It was painful, and it often meant Special Projects taking on functions we were never supposed to take on. Scanning, relabelling, things like that. None of it was our purview, but it was simpler and more efficient to just do it than to convince some other team to do a good job. Needless to say, this did not sit well with the rest of the organisation. We were labelled the rebellion, the outcasts, the rotten apples.

When you give a shit about what people think, you're doing an injustice to yourself.

I ran the team how I saw fit and the team did whatever they needed to get the job done.

If I walked into another sub-2% operation tomorrow

Always, always, always do this before you build anything:

1. Review the operations process end to end
2. Find the weak points
3. Understand who else is in the market and what they'll do when you get good
4. Then fix

I say that because I didn't do step three. I went straight into building the customs clearance operation without considering how the market would later turn everyone against each other. What I should have done was take the time to understand the competition, and when the time came, work with the authorities to build a more defensible ecosystem where everyone could survive and play nicer.

The margin didn't move because of one decision

It moved because a process got rebuilt, every layer that didn't need to exist got taken out, and somebody stood in the doorway and said no to the rate requests. Any one of those on its own would have been undone by the other two not happening.

Don't be afraid to ask the questions, or to stand up to the people you're not supposed to question. In business, that's not the thing you compromise on.