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004 - What it Takes to Move Priceless Fine Art with John O'Halloran
105 Plays7 years ago
PROFILES
SUPPLY CHAIN CONVERSATIONS
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EPISODE 4 WHAT IT TAKES TO MOVE MULTIMILLION DOLLAR PIECES OF FINE ART WITH JOHN O’HALLORAN
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Welcome to Episode 4 of Profiles, a podcast centered around supply chain conversations hosted by Brian Glick, founder and CEO of Chain.io.
Our guest this week is John O’Halloran, President of the Fine Arts and Security Group at Masterpiece International Ltd. John brings an interesting twist to the supply chain industry through his experiences moving multimillion dollar, and sometimes priceless fine art.
“It’s a very niche business that we do; not a lot of people know about it. People go to museums and galleries and they see artwork on the wall and they don’t think about how it got there…”
Listen in as Brian and John discuss:
- How John got into the logistics business specifically working with fine art supply chains
- What is unique about fine art logistics
- The difficulties in finding the right kind of staff for this supply chain niche
- Advice for people coming into this industry that John wishes he had known when he started
- Some of today’s supply chain challenges
- Challenges with carriers or working with airlines to keep things moving
- How much of what John does overlaps with a traditional freight forwarder, and how much is isolated and unique
- What’s next for Masterpiece International Ltd.
- The next wave of challenges for which the supply chain industry needs to prepare
Links and resources mentioned in the show:
- Turtle Unltd. (art crate discussed during show)
- Masterpiece International Ltd.
Subscribe to the podcast in iTunes or wherever you get your podcasts so that you’re updated when we post a new episode!
Take care, and until next time,
Brian Glick
chain.io
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Transcript
Courier and Shipping Process Overview
00:00:02
Speaker
If a museum lends a painting overseas, we arrange a courier ticket for them. They go on the same plane as the freight. Our truck delivers to the airport right before the flight's supposed to leave with enough time to palletize it. There's someone waiting on the other side to pick it up right away, deliver it to the museum. So we have a very, very low margin for error.
Introduction to Chain.io Profiles Series
00:00:23
Speaker
Welcome to Profiles by Chain.io. I'm Brian Glick, Chain.io's founder and CEO.
00:00:29
Speaker
Over the coming weeks and years, we'll feature the partners and customers who make up the Chanayon network. We'll focus on learning about the individuals within these companies and how they've helped build the organizations that drive our network. Together, we'll learn what drew them to the industry, why they made it such a big part of their lives, and where they see us all going in the future.
John O'Halloran's Career in Art Logistics
00:00:52
Speaker
On today's show, we've got John O'Halloran,
00:00:55
Speaker
John is the president of the Fine Arts and Security Group at Masterpiece International based in New York. This is a pretty cool episode as we're going to learn about a really unique part of the logistics business moving multimillion dollar and even hundreds of millions of dollars in fine art around the world. John's got some great stories and I really hope you enjoy the episode. So without further
00:01:23
Speaker
Welcome, John, and thanks for joining us today.
00:01:27
Speaker
So let's dive in. Why don't you tell us a little bit about how you got into supply chain and logistics? I know it's a pretty unique story. Yeah, it was a little bit roundabout. I kind of backed into it a little bit in that I was out of college, I was a finance major, and I was on Wall Street working on the commodities exchange. And I didn't want to do that anymore. And when I decided to leave, the guy I was working with asked me what I was doing. And I said, I don't know. He said, well, we got a buddy of mine just opened a company right next door that, you know, they go out to the airport, they try to stop forklifts from going through Picassos when
00:01:57
Speaker
they ship paintings and I thought well that sounds relatively interesting let me give it a try for a little while and I'll see if I like it and until I figure something out that I want to do and 28 years later I'm still with the company. What inspired you to stay for 28 years?
00:02:11
Speaker
Well, it's a very niche business that we do. Not a lot of people know about it. People go to museums and galleries and they see artwork on the wall. They don't really think about how it got there. And that intrigued me at first. And plus, it sort of fit my personality and my working style. It's very...
00:02:28
Speaker
There's a lot of interesting people you meet. It's logistics and it's shipping, but you're working with museums and galleries. There's international travel. For me, I'm fairly decent at doing two things at once and prioritizing and juggling, and that's part of the primary skills you need in this job just because of the fast-paced nature of what we do.
00:02:52
Speaker
I thought it just fit me really well. And you know, I stayed because it was a small company when I started. It was seven people and now we're 250. So I got kind of in at the ground floor and I was part of the growth of the company over the last 28 years. And you know, it's treated me real well. So I stayed. So who was a big influence over that 28 years who really kind of helped shape your career?
Mentorship and Learning in Fine Art Logistics
00:03:13
Speaker
Well, our founder David Epstein of our company, he was really my mentor. And Dave Cohen, our co-founder also, these guys already had years and years of experience in the business. And they really pushed me along and taught me what I know today. And between now, David and David have been in the industry for over 40 years. It's just constant learning. And what we do isn't
00:03:38
Speaker
Overly cerebral, let's say, but it's complicated. There's a lot of details and it's a learning experience every day. And you know, with those guys still here, even with the recent sale of our company, I'm still learning from them every day. So what are some of those things that are different for those of us who are used to moving cartons of t-shirts or cartons of iPhones?
Challenges of Art Transport: Fragility and Value
00:03:56
Speaker
What makes fine art logistics fine art logistics?
00:04:02
Speaker
Well, you know, mostly the fragility and the value of the objects that we're shipping. You know, we have multiple divisions at Masterpiece where we're shipping museum exhibitions, gallery shipments, consignments, private clients, auction houses, art fairs and things like that.
00:04:18
Speaker
But the common theme is you have these precious, sometimes priceless objects that need protection through a very hectic supply chain. And our level of detail and knowledge is how to protect it through that. Our company is set up to sort of embed ourselves in the supply chain to have a system of checks and balances to make sure that the freight is handled properly. It gets on the flight it needs to get on right away. It's met at each location. We have eyes on through the entire supply chain.
00:04:47
Speaker
And we're also experts at dealing with government agencies and all the tricks of the trade to make sure things get in and out of customs internationally without any delay. You can't really have a $50 million painting sitting at the airport overnight because you didn't do the customs entry, right? I can imagine not. So I would think that it's difficult to hire in this space even more so than general freight because of kind of having to have the right personality or the right level of trust with your staff.
Hiring Challenges in Art Logistics
00:05:15
Speaker
What are some of the challenges you guys have there?
00:05:17
Speaker
Well, yeah, it is difficult. And this is one of the things that we look for when we hire staff is, like I mentioned before, the ability to multitask and to prioritize. And it's really a customer service and relationship business. Yet at the same time, you need logistical chops as well and understanding supply chains and things like that. But it's also a very detailed business.
00:05:40
Speaker
So for us, you know, you need patience. People come in, they could have logistics background or fine art background, but what we do is so unique and so niche that you just have to sort of do it. And nothing is very difficult to grasp, but there's so many minute details. And even though we sort of do the same shipments day in and day out, they're always different. There's always some sort of small detail.
00:06:02
Speaker
that makes this particular shipment unique, whether it's the size of the painting, the fragility, if it's a sculpture, if it has to go ocean freight or air freight, the size of aircrafts. It really is a learning process. You need patience and time in order to really get that. And I think in this day and age, it's hard to find people sometimes that want to sit down and learn a trade really and stay with it for a long time to become an expert at it. So what do you wish you knew
00:06:28
Speaker
at the beginning of kind of getting into this industry that you'd want to share with people who are starting out today? Well, first off, I wish I knew when I started industry how to pronounce a lot of the artist's names that got me in trouble early on at Masterpiece in that I was really not an art history guy one way or the other. So I ran over to NYU and took one of those art history from, you know, DaVinci to Warhol over four weeks just so I could figure out how to speak to the clients of things. But, you know, I wish I sort of knew
00:06:57
Speaker
where the industry would be going down the road. One of the biggest challenges we face today is the current freight forwarding industry we live in with small packages and a really tight supply chain with tons of freight moving at fast pace all the time with all the online purchases and things like that.
00:07:17
Speaker
have a niche product where we really need everything to slow down and take care is really difficult in this environment. And had I known where that was going, we could have been quicker to react. Right now, we created an entire security group that just stays at the airport and manages the freight through the supply chain. We're an on-airport service company to make sure that
00:07:39
Speaker
things are moving safely and securely. And that was something that probably I didn't foresee happening and being so important down the road 20 years ago when there was plenty of space on planes and we didn't have the internet shipping thousands and thousands of boxes overnight every day and clogging everything up. It's been a large challenge. It would have been nice to be able to know that from the get-go that this is where we were going and prepare a little bit quicker for it. Are there particular challenges with sort of the carriers or things that you have to do with the airlines to make sure that
00:08:09
Speaker
that things stay moving when they're, I know even if I have to go pick up a single carton at an airport, it's often a little bit of a scary situation. So how do you guys deal
Impact of Airline Logistics on Art Shipping
00:08:21
Speaker
with that? Well, things have changed drastically in the airline industry. Back in the day, if we wanted to ship a painting to Japan, we call Japan Airlines. We bring the freight to the Japan Airlines building. There's a Japan Airlines manager that knows us and helps us. And you've got a lot of service out of the airlines.
00:08:38
Speaker
These days, most of the airlines subcontract the handling to local cargo handling companies that are just used to moving tons and tons of freights through the building. And with full aircrafts, full ocean freight, I mean, the supply chain is just stock full of packages and things like that now. Masterpiece being an international logistics company has to be on the ground in the airports. We have to be embedded in the operation.
00:09:03
Speaker
guiding handlers through the process of safely loading a valuable painting onto a pallet and getting it onto an aircraft, and we have to be there on the other side in order to meet it. So we've realized that we could plan exhibitions or gallery shipments or art fairs for months like we normally do, but when it comes down to that one part where we have to do the shipping, if we lose control of there, all the work behind that is gone for naught.
00:09:27
Speaker
So we've really focused on ramping up the airport operation and making sure that we can control the supply chain from the beginning of the shipment all the way to the end. So I think one of the things people might find interesting is how much of what you guys do on a daily basis, would you consider
00:09:44
Speaker
overlap with a traditional freight forwarder and how much of it is just really isolated and unique? Well, you know, we have a couple sides of the business. So we have a full on freight forwarding international logistics business that is right in line with what we would expect for normal ocean and air freight forwarding. But on the art side that I run, you know, we have potential galleries, small gallery or private collector shipments that don't need the full service that a large museum exhibition would need per se.
00:10:13
Speaker
But for the majority of stuff we do, it's completely different. It's eyes on the entire way. We have field operators that are following trucks to the airport with security. We have access into the warehouses of the airlines around the country to keep an eye on the freight. If you're shipping a box of t-shirts overseas, you make a booking, you hope it goes out day one or day two and arrives day three or day four and it gets to where it's going at the end of the week. With us, we have trained
00:10:41
Speaker
art specialists, curators from the museums, preparators traveling with the freight. They have tickets on the airline. You know, they're going over. If a museum lends a painting overseas, we arrange a courier ticket for them. They go on the same plane as the freight. Our truck delivers to the airport right before the flight's supposed to leave with enough time to palletize it. There's someone waiting on the other side to pick it up right away, deliver it to the museum. So we have a very, very low margin for error.
00:11:07
Speaker
We don't have the opportunity for an airline to say, well, the seven o'clock flight is booked. Let's put it on the nine o'clock flight. We have an entire ballet of services set up that wrap around that particular departure time. We have to change a ticket. We have to change a truck. I have to call France in the middle of the night. So it's much, much different for what we do. And that's why we're so specialized in that regard. It almost sounds like you're planning a set piece from an action movie every time you have to
00:11:36
Speaker
have to go move one of these pieces of art? It's sort of like that. For us, we have to make sure that everybody knows what we're doing, but not have too much information. We don't want to let them know we're moving a $200 million painting, but at the same time, we need to let the airlines and the handling companies know, look, this has to go on this flight at this particular time.
00:11:59
Speaker
tons and tons of pre-planning and checking with the airlines and getting there early and making sure things happen. We're a normal freight forwarder. They're happy to get there within three days. And since that's the majority of freight that moves, we're the outlier in the process. So we have to do a lot of groundwork to make sure that everybody's up to knowing what we're doing and why we're there.
Security and Safety in Art Logistics
00:12:19
Speaker
So I almost said heist movie there. And then I realized that was probably the worst possible analogy to use to someone in your business, isn't it?
00:12:27
Speaker
Well, luckily for us, art isn't very fensible in that regard. Certainly companies that are moving bullion and currency are much more in jewelry, are much more in tune with that. For us, the security is more along the lines of safety. We need to make sure that we have air ride and climate control trucks, that the airlines are handling it properly, that it's created properly and safely, and that it's not being tossed into an aircraft with the baggage like that. So for us, it's much more of a safety and security rather than
00:12:56
Speaker
preventing it from being stolen. So as a member of the chain IO network, I've had the luxury of kind of spending some time with your team and seeing how dominant you are in the art business from a market penetration standpoint and kind of that list of museums. But when you reach that point where you're really saturated in your industry, kind of where do you guys see yourselves growing from
Growth and Sustainability in Art Logistics
00:13:20
Speaker
here? What's what's kind of next?
00:13:22
Speaker
Well, you know, the museum and yeah, we have a large market share in the museum and in the US, but a majority of our business is also international. You know, we service the US museums here that put on large exhibitions, but you know, we also have a network of agents around the world that work with their local museums that we funnel business to and they funnel business to us. So there's always room to grow in the international market. It's very competitive. There's exhibitions, more exhibitions all around the world than there are in the US.
00:13:47
Speaker
We also have a growing gallery and art fair division. The gallery world, especially contemporary art, is exploding right now. There's the sales and the galleries are growing and consolidating. And we're servicing the Miami Basel Art Fair coming up this weekend. We have 67 art handlers going down. So there's a lot of growth on that end of it. But looking forward to the future, we're starting to get involved in an interesting project where we're going to be a US supplier of a reusable, sustainable art crate.
00:14:16
Speaker
Their normal art packaging is done in wooden crates, built specifically for these high value paintings that then after they're done half the time end up at a dumpster. And we're partnered up with a company in the Netherlands that for the last 20 years has been building and finalizing specifications for a reusable, recyclable art crate that's very flexible to use. We're excited about that. We think that's sort of the future of where all this is going. And there'll be some growth there and allow us to hopefully expand our market around the US a little bit in that area.
00:14:46
Speaker
Well, for those of you listening on iTunes or on your phones, make sure you do check out the show notes because I'm going to twist John's arm to get a picture of one of those crates because they are very, very cool looking. Absolutely. Excellent color scheme. So definitely have to check those out. What do you think is sort of a big challenge that you see coming up
Future Challenges in Art Logistics
00:15:12
Speaker
for the next few years. We talked about kind of what you wish you knew then, but what do you see as the next wave? Well, you know, one of the things that's happening around the US and internationally is, you know, security. I mean, right now, the way we manage information with GDPR regulations on the data side, with the way the airports are tightening up assets and things like that, I think our biggest challenge is going to be able to
00:15:33
Speaker
operate in this field with sort of the freedom we already have. I think the way things are going now, we're seeing this tightening up the supply chain and security around the airports and the ocean ports. And it's more of a challenge for us to get the access we need to service our clients.
00:15:49
Speaker
And to me, that's one of the biggest challenges, especially when there's so much rate moving around the world now. And the airlines and the ocean ports and all that, they're just so busy handling stuff day to day. I think that's going to be one of our biggest challenges. And also, we're updating our systems to change the way a little bit that we process information in this new digital world. Back in the day, I could look out of my office and hear a din with typewriters clanging and phones ringing.
00:16:16
Speaker
and you knew what was happening now with email and with customs has gone completely electronic now and paperless files and things. It's a little bit of a change for the way we do business and we're adjusting our systems and adjusting our mindset into the way they do that to adapt to the new way information is being processed. I know our team here at Chain.io is assisting a bit on that project with
00:16:41
Speaker
sort of connecting your art-specific systems to your more general freight systems. And one of the things that I learned very quickly is that those systems you guys have built are really unique around. They look more like project management tools to me than they do freight tools. And that was kind of a really eye-opening thing for me, at least, was that you guys are much more project managers than just people building airway bills all day.
00:17:10
Speaker
Oh, absolutely. And that's one of the bigger challenges for us in hiring people is also understanding that we get a lot of applications from the logistics business. But we always say, even though the end result is to ship a painting or a sculpture from point A to point B, the actual freight forwarding part is a very small percentage of what we do on any given project, especially for a large museum exhibition with 300 loans coming internationally.
00:17:35
Speaker
into a museum. There's so much project coordination and planning from A to Z that it has to go in, you know, to your point about us hooking up our freight forwarding system with our art system. We're creating workflow processes that, of course, Chain.io is going to be integral to. And we realize as we're trying to rebuild these processes, how complicated they are and how complex they are and our challenges to make them as simple as possible, but capture all the unique details that we need to properly coordinate our projects.
00:18:04
Speaker
I'll share one, one little story from when we started working with you guys a few years ago was that we did testing on some data flows and some of my team and actually myself, I was involved a little bit in that project as you guys were one of our very early customers and we saw data coming across and we thought there were errors because it was, you know, quantity of one and value of $25 million.
00:18:28
Speaker
And we're like, somebody's got a decimal point wrong somewhere. And it turned out, no, that was the value of the painting that was moving. And that's when things got real for us, when we realized that that was what we were supporting.
00:18:44
Speaker
Well, and that is the part of it. I remember the first time we did a customs entry a year to go with $100 million value, and it got rejected, and customs couldn't quite understand it. Now that's a regular occurrence more often than not, the way values are going now. We had a quick story. We had an airline call me one day and say, did you just ship a small painting with a few hundred million dollar value on our plane? And I said, look, we don't declare value for shipments. We have priority cargo.
00:19:12
Speaker
Why do you need to know that? That's something we don't want people to know. It makes them nervous and they don't handle things properly. There's no need for them to know it. And the woman at the airline told me, well, when the value of the one crate exceeds the value of the aircraft, the airline needs to know that. And I thought that was rather interesting and funny. And that does happen a fair amount in what we do. And that's part of the key, is to make sure everything's handled safely and securely with a need to know information. You don't want to banter those values around on a regular basis.
00:19:39
Speaker
Well, I think if we go any deeper into that, we're going to have to start giving away some of your trade secrets. So maybe this is a good time to wrap up. Really appreciate having you on the show and you taking the time and it was really enjoyable talking to you. Sure. Thank you very much. I appreciate it. It was a lot of fun. So that's a wrap for this episode. Again, thank you to John for taking the time to share some of those really cool stories with us about a part of the business that a lot of us don't have experience in.
00:20:08
Speaker
Stay tuned on your podcast software of choice for next week when we'll be learning about some of the ins and outs of actually implementing transportation management software in the international business. It's a difficult task to get companies and people to change and we're going to hear all about that. Thanks again for listening.