Port company identifies more than USD 7 million in efficiencies through a ZBB redesign
A port company was facing a sustained decline in its volumes, driven by lower imports and exports and a highly competitive environment. With a high fixed-cost structure and inflexible variable costs, the decline in revenue had pushed the business into the red.
Compounding this situation was a management challenge: the company lacked sufficient visibility into the costs and profitability of each business unit. The challenge was to adapt operations to the new activity levels and restore profitability without compromising the terminal’s responsiveness.
Approach
At SummaPartners, we worked closely with our client to redesign their operating model using a Zero-Based Budgeting (ZBB) approach, starting from the actual needs of the operation rather than the existing structure.
First, we analyzed the cost base to understand how much it cost to operate and where the main gaps were concentrated. Based on that analysis, we rebuilt the terminal’s operating model and defined a structure aligned with the new demand conditions.
The work included:
Workforce sizing: We defined staffing needs by specialty and type of operation based on demand estimates
Activity-based costing: We developed a model to allocate personnel and equipment costs to different activities
Profitability by business line: We prepared income statements that provided insight into the contribution of each business line
Rate optimization: We reviewed the rate structure for services provided to shipping lines and for the container consolidation and deconsolidation (CFS, Container Freight Station) business
Business plan: We defined initiatives and goals aligned with the company’s objectives and budget
Impact
The redesign identified more than USD 7 MM in efficiencies and provided the client with a clear picture of the revenue, costs, and profitability of each business.
Building on that foundation, the company was able to align its cost structure with actual activity levels, optimize rates, and improve the profitability of the CFS business.
Beyond the savings, the project transformed how the operation was managed: instead of adjusting a legacy structure, the company began to scale resources and costs based on the demand and needs of each business.
Key Takeaway
Optimizing costs isn’t about cutting back. It’s about redesigning based on needs.
When the operational structure is built from the ground up with visibility into the profitability of each business, efficiencies cease to be isolated adjustments and become decisions that strengthen performance.
At SummaPartners, we help our clients redesign their operating models and cost structures with a focus on efficiency, profitability, and value creation.
If your company needs to adapt its cost structure to a new business reality or identify opportunities for efficiency, let’s talk.