The release of EY’s first FAIM Financial Assessment report confirms the precarious position of some moving companies. Maarten van Zutphen, CANI Management & Consultancy, says this, on top of the pandemic, should provide the impetus for the industry to make far-reaching and positive change
Most moving businesses were ‘doing OK’ over the past few years; they didn’t feel any true urgency to change. Movers accepted late payment terms, low margins, as well as a certain level of mistrust by some RMCs, which allowed auditing companies into the day-to-day relationships between moving companies and corporate counterparts, giving them their slice of the relo cake.
Shipments are getting smaller, margins are getting smaller – yet we are still running a unique business, right? The world of global mobility cannot do without us… or can it? We will accept mediocrity in technology; we accept the fact that a move coordinator can only run 300-350 international files a year and, OK, we’ll continue to lower prices, hungry as we are for revenue. We will get cheaper, unqualified labour in to do the physical work, and we know that this combination of efforts, at least, will keep us alive, until tomorrow. Or will it?
This brings us back to the crucial question: do we need to change? To which, the answer is yes. OK, we’ll put it on the agenda for tomorrow. Business as usual.
No. It’s time to pull the emergency stop.
The COVID-19 crisis has stopped us in our tracks, and the emergency red lights are flashing. Most, if not all, of the moving companies across the world have been affected and shaken to the core. Most companies have been forced to take a long hard look into their business models, knowing that (further) procrastination will sign their death certificate. Again, timing is everything.
FIDI, already acutely aware that the moving business should care for and be monitored for its true financial health, started the FAIM Financial Assessment pilot process two years ago.
As part of the FAIM Supervisory Committee (FSC) from 2016 to 2018, I had the pleasure to work with professionals such as John Prooij, FIDI’s Project Manager Quality and Risk, FIDI’s Jesse van Sas and my fellow FSC colleagues, to prepare for the Affiliates to vote for it, as a part of the FAIM 3.2 requirements. Now, EY has published its report on the 2019 FAIM Financial Assessment results.
After a long career in the moving industry, I started my own business just a few months ago. Having a mission to connect the people and companies in the industry with the corporate environment, and build the right bridges, I found this newborn ‘baby’ incredibly valuable.
What did I learn from the report? That while most companies are doing reasonably, the margins and the liquidity situation pose a significant threat to the business overall. Especially when taking into account that the industry is now facing a challenge it never faced before. When you benchmark the business against other businesses, reality bites.
Moving companies offer valuable and sensitive services. As well as providing safe and on-time transport of precious belongings, they also need to ensure this keeps families safe from viruses (and possibly other diseases, too). It should come at the right price, so companies can continue to develop, grow, build or buy better IT solutions – giving increased value to the global mobility chain.
This first Financial Assessment report by EY clearly shows that the moving business needs to keep this baby alive, and give it a chance to teach the industry where it truly stands, so better and more informed business decisions can be made.
On a personal note, as an independent consultant to corporate customers and moving and relocation companies, I am happy to have an additional tool to build new bridges in the global mobility industry.
I would love to see the moving industry outgrow the current fragmented situation and grow closer to RMCs and corporate customers. Our relo world would benefit from a more cohesive approach – after all, we are all eating from the same cake.
We adapt to ‘new normals’, take the opportunities to move ourselves to true action; we will make the necessary changes and get it all fixed. Right?
The 2019 Financial Assessment report by EY can be downloaded at https://www.fidi.org/2019-faim-fa-report-ey