The Global Household Goods Contract (GHC) program is part of a plan by the U.S. Department of Defense (DOD) to enhance and improve the moving process for military personnel and their families. The overarching objective of this plan is to ensure that items are packed, shipped, and delivered in a timely and secure manner. Additionally, there’s a push to employ new technologies to enhance communication, expedite solutions for issues such as lost or damaged items, and foster investments by companies to improve the military’s moving process.
The contract, valued at $6.2 billion, was given to HomeSafe Alliance. This decision to choose a single group to oversee military moves worldwide means that service members and their families can expect a more straightforward experience from start to finish. This covers everything from setting up the move to dealing with any problems like lost or damaged items and filing claims for them.
The GHC would entrust the task of moving household goods to a strong network of moving companies and other important service providers, like storage, transportation, and delivery. This is a huge job, considering there are more than 300,000 household goods shipments each year, costing over $2 billion. The United States Transportation Command (TRANSCOM) would still oversee making sure everything goes smoothly.
“This is an opportunity to raise the standard for our families, attract quality capacity to the program, and introduce a level of accountability absent today. Once implemented, this contract will positively impact thousands of service members, civilian employees, and their families each year," said U.S. Air Force General Jacqueline Van Ovost, commander of U.S. Transportation Command.
HomeSafe Alliance will bring together a group of moving companies from various parts of the industry and manage both military moves and storage services. This will combine tasks that currently involve over 900 different commercial movers. The contractor will take complete responsibility for these moves, making the program more organized.
“Currently, over 900 entities can participate as direct contractors to DOD. With the advent of GHC in 2023, only a single contractor, called HomeSafe Alliance, will be the move manager for approximately 350,000 DOD shipments annually," said Charles White, president of the International Association of Movers, in an interview with Worldwide ERC® in January of this year.
“If the contract extends through its base period of three years and up to five option years, its total value could reach approximately $20 billion," White said. “This stands to make HomeSafe the largest household goods entity in the world and could potentially have a ripple effect across all aspects of moving and mobility."
This contract could change how moving works all around the world. Companies that help people move, especially if they work with the government, could get big benefits from teaming up with this contract.
The magnitude and breadth of the GHC could potentially reshape the approach of relocation companies to their operations as they vie for subcontracts under HomeAlliance and comparable government agreements.
This extensive contract is already causing a significant upheaval in how the DOD addresses moving processes. However, it’s important to consider how the GHC will influence the broader global mobility sector.
The Impacts of the Global Household Goods Contract on the Mobility Industry
In the autumn of 2023, a select number of domestic shipments will start within the GHC framework. This will be followed by a gradual inclusion of all domestic shipments by the summer of 2024. The schedule will then extend to international shipments, which are slated to commence in the fall of 2024, and steady implementation of all global shipments is expected to be complete by the summer of 2025.
This shift to the GHC may have substantial implications, especially for companies deeply involved in government contracts, notably within the moving and shipping sector. Within the global mobility industry, this shift bears significant weight due to the sheer scale of operations.
The DOD’s GHC contract may have both good and bad effects, depending on where you stand and how you look at it. It grants considerable authority to HomeSafe and its affiliated companies within the conglomerate. The contract will most likely improve the moving experiences of military personnel; however, its effect on moving companies remains uncertain.
While cautiously optimistic, mobility professionals have expressed uncertainty about the outcome of this significant change. The prolonged duration it has taken to initiate, coupled with the delays in implementation, hasn’t boded well for the industry.
“No industry likes uncertainty, and this change has been full of it. I also feel at least on paper that a single company controlling all of that tonnage could present issues," said Mark Greene, senior vice president at Arpin Group Inc.
Additionally, some have concerns about the potential implications of having a single company control such a massive volume. For some, the concern lies in the possibility that the size of the contract could grant the awardee considerable influence over the supply chain. While this might benefit the DOD, it could also bring about unanticipated effects on subcontracting companies.
The outcomes of this new contract are still to be seen, but it could potentially lead to a situation where “size matters." Mark Greene said, “I worry that only the largest of companies will be able to compete in the future as far as spend, technology, etc., and this could cause some smaller players to close or change focus."
The concentration of purchasing power usually exerts pressure on the supply chain, often disproportionately affecting the lower tiers. Consequently, some anticipate further industry consolidation in the next few years once the system is fully operational. Notably, companies historically reliant on military moving have expanded their service offerings to reduce reliance on a single revenue source.
“It’s been interesting to see companies that historically relied on military moving expand their service offering, as, strategically, they no longer want to be dependent on one primary source of revenue," said Ben Heller, CEO of PricePoint.
Some mobility professionals believe this contract will bring substantial value creation for corporate clients and improved moving experiences through the integration of a strengthened supply chain. Yet, there are concerns raised by some that disparities exist between the service standards and quality expectations of corporate mobility compared to military moving.
“The optimist in me believes that by having this much power and integration with a moving supply chain could create substantial value for corporate clients and better transferee moving experiences," Heller said. “The pessimist in me believes that service level and quality expectations of corporate mobility are misaligned with military moving."
Furthermore, the supply chain geared toward the military is tailored to specific locations with strategic military significance. The question of whether this framework can successfully adjust to accommodate the broader and nationwide demands of corporations remains uncertain.
“Mobility is notoriously slow to change, so even if a better solution is created, I don’t think we’re going to see a material impact in corporate mobility for five years," Heller said.
What to Expect as the GHC Is Implemented This Fall
The transition to the GHC has significant importance for businesses deeply involved in government contracts, especially in the moving and shipping sector. The contract’s impact could be profound due to its large-scale operations. The introduction of the GHC is met with both hope and caution, as it grants substantial authority to HomeSafe and its associated companies, potentially leading to better military moving experiences but also raising concerns about its broader effects on the industry.
As the contract’s influence on supply chains develops, the possibility of industry consolidation arises, with uncertain impacts on competition and diversity among industry players. The incorporation of advanced technology and the reshaping of service expectations also bring up discussions about potential changes in corporate and military mobility standards.
Ultimately, the GHC signifies a period of transformation, highlighting the challenges in aligning diverse industry needs and setting the stage for significant shifts in military and corporate mobility in the years to come.