What's Ahead For 2004? For its January, 2004 issue, the Journal of Commerce asked CII for thoughts on what developments will occur next year in our industry. I would like to share some of these predictions with readers of our Newsletter. If our views indeed become reality, these developments will materially change the ways in which our industry operates. Here are two major predictions: There will be a growing tendency by the airlines to turn over a substantial portion of their cargo operations to outside General Sales & Handling Agents. This change in airline culture is indeed profound as carriers, proud of their leading role in civil aviation, traditionally have retained all sales, marketing and handling operations "in house." The reasons for change, however, are equally compelling. Both domestic and international airfreight volume has remained essentially flat during the past three years. Yet, costs continue their inexorable rise. Because of a world wide abundance of cargo lift, freight revenues will continue to remain flat in 2004 with rates, except in isolated cases, unable to rise. As a result of this cost squeeze, we expect more of cargo handling activities to be closed down by the carriers and turned over to independent freight handling agents. Little wonder this trend is strengthening when it costs an airline $65 to process one airway bill, often a greater amount than the rate charged for the shipment! Another major trend next year is the growing reluctance by airlines to handle directly small shipments by forwarders. The most pervading task airline financial types face is not figuring out "new supply chain strategies" but chasing down the huge number of forwarders with small debts who have allowed bills to be stretched considerably past 45 days. Ironically, while airlines increasingly are unwilling to handle small Shipments, the average weight of air cargo has decreased 50 per cent during the past decade. Today, the vast number of shipments is under 100 kgs. We believe "forwarders' forwarders" or wholesalers like CII will benefit directly from this trend. Unlike the airlines with their huge accounting staffs and cumbersome collection techniques, CII is geared to handling small and unprofitable (to the carriers) shipments. Accounting and administrative costs at CII are far better adapted to keeping track of receivables and assembling small shipments into a single consolidation for presentation to the airlines. We believe the above trends will grow and intensify during next year and beyond. Back to Top

Goodbye Emery, Hello Menlo Logistics To airfreight veterans, Emery Air Freight was a hallowed name. Founded in 1946 by John Emery, Sr., who created the U.S. Navy's transportation system called QUIKTRANS during World War II, Emery became synonymous with the phrase "air freight" for many years. Like Fred Smith thirty years later, Emery broke new ground in transportation. With the postwar development of airfreight, Emery was the pioneer and leader in our industry and was one of the "nifty fifty" stocks on the NYSE in the seventies. After Emery, Sr. retired, his son, John Emery, Jr., took the reins and grew the business from $80 million in revenues to $1.2 billion. At that point in the late eighties, the now defunct CF acquired Emery. Unfortunately, the rest is sad history. CF disappeared off the face of the earth last year. Many claim CF's disappearance was the result of indigestion caused by the huge losses its subsidiary Emery was racking up in the early nineties. When CF acquired Emery, John Emery, Jr. was heard to say, "Nothing good can come of a forwarder trying to become an airline." How right he was! With CNF, things went from bad to worse. To try and "save" the situation, CNF executives did what many of their colleagues attempted to do in U.S. business--not change the inefficient and cumbersome operations of the company but change its name. They decided to use the name of their 3PL company, Menlo Logistics. This was the banner name for the operating company that was not connected to CNF's regional LTL trucking organization. It was only time before the Emery name was dropped altogether and replaced with Menlo Logistics. To promote the name change and get the transportation world accustomed to the idea, Emery Worldwide vehicles also were plastered with the name, "Menlo Logistics." What moron was responsible for the name change? Perhaps he was Enamored by the town of Menlo Park, south of San Francisco, where CF was headquarters. The name change decision, to me, is like Ferrari, now the owner of Maserati, deciding to drop its name in favor of a mix of Ferrari and Maserati--Maserarri! Except for the town of Menlo Park, the word Menlo has no meaning and doesn't even sound like an English word! One thing for sure--the name change is a big negative. It hardly conjures up any image of excellence like the name Emery did for decades. Let's give a big raspberry for those high priced executives at CNF. Those idiots from their ivory tower in Northern California must have been smoking some of that world famous Santa Cruz Mountain weed when they made their decision for change. Mark my words; by one small cosmetic act, they have relegated a once mighty company to an also ran. Back to Top

CII’s New JFK Facility Satisfies A Real Need Three months ago, when Peter Lamy and I, with the support of our Australian partners, decided the time was ripe for the opening of an office at JFK, we never envisaged what a perfect moment it turned out to be. In our initial statement announcing the opening of the facility, we said that "CII was answering a critical need for small and mid-sized forwarders at JFK for reliable, hassle-free transportation at pricing comparable to what the 'big boys' pay with their far greater volume. "How correct our prediction was! Since our opening in September, dollar volume and shipment count has gone only one way--up. Our growth factor has been far greater than our most optimistic expectations. We are indeed lucky that CII has on board District Manager John Rosino. A veteran of the airfreight wars, John has set up the operation without a hitch. Every shipment handled by John has moved 100 per cent as promised. No wonder customers love him and that business is climbing steadily. It is common knowledge throughout the world that New Yorkers have a "show me" attitude. Well, John is "showing" them what an international wholesaler can do both in pricing and delivery. To most New Yorkers, California is in the fourth dimension, belonging on another planet. There are exceptions to the rule, of course, and CII is one of them. The general feeling around JFK is that good ol' Los Angeles company has become a real New Yorker. John, who said you were just a pretty face? Back to Top

China—A First Or Third World Country? winston Churchill once said that Russia was an "enigma wrapped up in a riddle hidden mystery." Well, the same could be said for China. Here is a nation with so many contrasts, the mind reels. Along its eastern seaboard are huge, modern cities with skyscrapers, freeways with accompanying traffic jams, five star hotels and restaurants, each of the millions of people with a cell phone and many with the latest picture phones. Just a few hundred miles to the west, however, is a rural countryside very much the same as hundreds of years ago where most of the more than 1 billion Chinese live. The face China turns to the world has changed appreciably in the past twenty-five years. If we remember any pictures of China a generation ago, it was that of a very austere country ruled by an uncompromising totalitarian government headed by a god-like figure. I still can visualize images of unsmiling silent people all dressed in the same drab green uniforms riding their old-fashioned bicycles in almost goose-step order. Fast forward to today. Italian motorists may have the image of being the most dangerous and even insane drivers on earth. Not anymore. The Chinese now have that honor. Every time I get into a Chinese taxi, I think the word "kamikaze" should be Chinese, not a Japanese word. Pedestrians are second-class citizens even at pedestrian crossings! The Rule of Law, so basic to western societies, still has not made an appearance in China. Copyright does not appear in any Chinese dictionary or in any Statute book. No one in China knows, nor pretends to know, what these words mean. Despite continual government assurances that Chinese law is sacred, no foreigner can conduct business fairly and squarely because pirating and cloning is part of everyday life. It is easier to pick up a pirated version of a Hollywood film or a Beatles CD on the streets of Shanghai than any other place on earth. And on and on it goes with the government's covert blessing. One day, however, the western world will wake up and declare enough is enough. The enormous gulf between the theoretical and the real exists in every segment of Chinese life. The Communist Party tells us that poverty has been abolished and that every Chinese should do his best to get rich. Each time I return to Shanghai, the hollowness of these statements becomes more apparent. I am dismayed at what I see walking the streets of Shanghai at night. And it's getting worse. Between the grandiose skyscrapers, young mothers with babies under their arms and small children are competing with the aged and infirmed to make a living by begging. It is so heart wrenching how they go about it. If a westerner capitulates and hands over a dollar, suddenly "out of the woodwork" comes a horde of other beggars all with hands outstretched and with piteous cries. The streets of Calcutta have nothing on Shanghai. From a moral and practical sense, I wish China would move forward as a fair-minded member of the free world. CII has a growing business in China which we hope will continue to prosper. Yet, if truth be told, I have more faith in India, the largest democracy on earth to start behaving as a global player. Perhaps it's my Anglo-Saxon heritage, but the fact that English is becoming the lingua franca of India makes me think of that nation as becoming the most powerful in Asia. Let's hope that China moves away from total self-indulgence and to a caring, free spirited nation and a true member of the world community. Back to Top