Not just a company, a neighbour

APM Terminals is investing USD 750 million to turn Callao, Peru into a world-class multi-purpose port. By involving the community and employees in the process, it has created a shared feeling of responsibility that it expects will make it a long-term success.

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Callao is Peru’s most important port, handling 80% of the country’s trade. APM Terminals Callao is a multi-purpose terminal and handles everything from containers, grain and minerals to cars, machines and more. Photo: John Churchill

Among the lawyers and other suits gathered on 1 July 2011 to inaugurate the first day of operations at APM Terminals Callao, the Bishop of Callao was as important as anyone.

“There was a lot of tension around our arrival. It was a government port for all its history, so a lot was going to change,” says Henrik Kristensen, Managing Director of the terminal from 2011 until September 2014.

“The Bishop knew the issues, the neighbourhood. I wanted to send a message to the community and also our employees that even though we want to run fast and efficiently with this project, we will also do it the right way.”

Opening the terminal gates

Seeking collaborators to help make the terminal a success, Kristensen started right outside the gates in the neighbourhood of Puerto Nuevo. It is Callao’s oldest and poorest neighbourhood, characterised by the tiny recycled wood and cement homes and the high crime rate. Besides local fishing, the primary employers here are the port and construction, but most residents here are unemployed.

“If you don’t know someone here, it’s not a good idea to walk around,” says Eugenio Cordoba, a public worker and politician from the nearby Bellavista district who knows many of the 12,000 families that live here.

He says the people in Puerto Nuevo expected no contact from APM Terminals, so were struck by the company’s openness when they moved in. Removing the permanent police presence in front of the terminal gate and hoisting a giant banner that read ‘Proud to be in ­Callao’ were eyebrow-raising gestures.

“We are a people business. It is not only cranes, machines and big ships; there are people sitting in all of them,” says Kristensen. “We have 1,500 people working in the port and another 4,000 coming in and out every day. If we don’t reach out to them and try to be part of the community and take some responsibility, we simply won’t be as successful.”

Gathering the masses

In those first few months, Kristensen and his team identified important stakeholders in the region – the Bishop, the police, politicians, schools, the fishermen, customers and business leaders – and began visiting them and inviting them in for meetings to hear their thoughts and to share the ambitions and plans for a ‘puerto de clase mundial’.

“We have 1,500 people working in the port and another 4,000 coming in and out every day. If we don’t reach out to them and try to be part of the community and take some responsibility, we simply won’t be as successful.”
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Henrik Kristensen - Managing Director, APM Terminals Callao

The open door policy allowed APM Terminals to create a network and find a place in the community as a cooperative partner. In Puerto Nuevo, community leaders identified nutrition, education and crime as the big issues. APM Terminals bought an oven for Puerto Nuevo’s first and only bakery; started and now monitors a nutrition and health programme at the Puerto Nuevo nursery and primary school, benefiting 250 children and their families and, most visible of all, provided funding for several fast-response police outposts in Callao.

Building common ground

For the hundreds of stevedores that were accustomed to working in the public terminal, the changes brought by APM Terminals came quickly. A collective bargaining agreement was established within weeks – the first in 20 years for the stevedores – creating security for both sides and helping to build a relationship of respect between stevedores and employees in the yard. 

A family safety day soon after the start-up brought the families of port workers inside the port gates for the first time ever. “The economics are crucial of course, but what really impressed me was that they invited the families of the workers in to see their spouse’s workplace,” says Enrique Cornejo, Peru’s then Minister of Transport. 

“It was an important gesture to the community, and I know from talking to some of the port workers that it instilled a measure of pride in their work.” 

The mandatory safety equipment and training, drug testing as well as expectations for strict adherence to rules created some conflicts initially according to ­Kristensen, but has long since created something else.

“Stevedores are important to every port. Without them, nothing gets done. Yet we also need them to work within our system and meet our standards, especially for safety,” says Carlos Teixeira, Safety Manager in APM Terminals Callao. 

“I think many of them are proud to work here now.They recognise they are important to the success of this terminal, to their port.” 

100 days to make an impression

“We launched a lot of initiatives in those first weeks and months to build confidence and trust inside and outside the terminal,” says Kristensen. “It’s not the handful of expats that have come here that are making this project happen. We accomplish nothing if our locals don’t accept and embrace what we’re doing here.”

According to Kristensen, one of the most important initiatives they started was “Cuenta Conmigo” (Count on Me). All employees were asked to come up with ideas to improve the business in their areas of work. In the business world, it’s known as Process Excellence (PEX) or Continuous Improvement. 

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A collective bargaining agreement for stevedores – the first they had witnessed in 20 years – created security for both sides and a relationship of respect in the yard.

In the first week, more than 800 ideas came which generated USD 3.8 million in segment results in 2013, and nearly USD 2.5 million segment results so far in 2014. 
One example of the input came from two electricians, who implemented an idea to enable the use of the grain storage silo during the terminal’s major civil works. Most thought it was not possible, and yet it resulted in over USD 300,000 in unplanned revenue in 2014. 
“The project is meant to get everyone thinking, to ­empower them to hunt for solutions in their area of expertise,” says Daniel Jover, Head of the Continuous ­Improvement initiative in APMT Callao.

Each time an idea turns into a tangible result for the terminal, the owners of the idea ring a bell in the main terminal office and colleagues gather to listen to the origin of the idea and the result.

“The recognition is an important part of it, getting to share an achievement. It gives energy to the individuals, their colleagues and their teams,” says Jover.

A handover and a transition

In September, after three years as Managing Director of the terminal, Henrik Kristensen was rotated to the APM ­Terminals headquarters in The Hague, Netherlands. He was replaced by Dallas Hampton, former Managing ­Director of the company’s terminals in Apapa, Nigeria and Kaohsiung, Taiwan.

Thinking back on the days leading up to the official handover of the terminal in July 2011, Kristensen remembers a senior executive from APM Terminals taking him aside. Sensing the pressure that Kristensen and his team were facing to operate and expand the terminal, the executive emphasised the larger, long-term context.

“If the port stops, Peru stops. But he said to me ‘Henrik, you’re not only taking over this port, which is so important to this country. It is also your job to show the people who we are, what kind of company APM Terminals is and what kind of neighbour and partner we are going to be for the next 30 years’.”

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