U.S.-flag ro-ro carrier ARC has been awarded a major contract to provide global relocation services for the Department of Defense and U.S. Coast Guard.
The Global Household Goods Contract, valued at over $7 billion, was awarded to ARC this week by the U.S. Transportation Command. ARC is a subsidiary of Oslo, Norway-based Wallenius Wilhelmsen.
After an introductory setting up period, the contract will start in early 2021 with volumes gradually building by the end of the year. From 2022, the contract is estimated to provide revenues of more than USD 2 billion per year, Wallenius Wilhelmsen said in a statement.
Under the Global Household Goods Contract, a single commercial move manager is appointed to oversee activities that relate to the domestic and international movement and storage-in-transit of household goods. The contract is part of Department of Defense reform plan to improve the relocation for military families.
“US Service Members relocate every two or three years, something that can cause significant stress for a family. With Team ARC’s superior quality, deep experience and increased capacity, we aim to contribute to a positive moving experience,” says ARC CEO Eric Ebeling.
USTRANSCOM and ARC will spend the next nine months integrating IT systems and processes, with the first move under the contract planned for February 2021.
“The DOD is the largest consumer of household goods services—restructuring our relationship with industry in this manner lets us raise the standard of service for DOD families. ARC brings tremendous capability to the table and they’ve built an impressive coalition of industry leaders to generate the quality capacity this program requires,” said Rick Marsh, director of the Defense Personal Property Program at USTRANSCOM.
“Once we’ve transitioned into the contract, DOD families will see improved customer service and more professional processes and interactions with the movers that serve them. ARC will also introduce some pretty powerful digital tools—the kind of simple, modern tools we demand in every aspect of our personal lives, but that DOD cannot independently deliver to the moving process,” Marsh added.
Wallenius Wilhelmsen said margins from the contract will initially vary in the early years of the program due to start-up and transition periods, but it expects to be EBITDA positive post the nine-month transition.
“We expect margins in the next twenty-four months to be in the 0 to 2% range and to improve over time. We expect the contract to run for over nine years, if all options and awards are exercised,” said Wallenius Wilhelmsen.