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December 2005 Newsletter
Reflecting Back On 2005
As 2005 winds down, inevitably one begins
reflecting on what the past year has wrought.
After almost thirteen years at the helm of CII,
in this rough and tumble industry, and five
years into the new millennium, I have been
giving a great deal of thought to just what
qualities has kept CII moving forward. Why we
have progressed in spite of a rapidly changing
cargo environment and very stiff competition.
I am convinced that success in our business,
and probably in any business serving the
public, is old fashioned service by dedicated
people who genuinely believe the customer is
the most important person on earth. CII, from
the moment we opened our doors in 1993, was
determined to make international wholesaling a
quality business in which our customers would
have complete confidence. No “here today, gone
tomorrow,” which had been the philosophy of
too many failed wholesalers.
"I am convinced that success in our business,
and probably in any business serving the
public, is old fashioned service by dedicated
people who genuinely believe the customer is
the most important person on earth."
We could not have progressed from a three
person staff in 1993 with zero revenues to $15
million today and 20 trained, dedicated full
time professionals, without a service
philosophy that begins and ends with the
customer. Our people make the difference.
Peter Lamy, my strong right arm, was a day one
colleague. Mike Castro came along a few years
later and there is no better operations
person. Our senior operations team was
complemented by Ronen Donde who joined us
three years ago. Catalina Topete, the fourth
employee hired, is still with us although now
on a part time basis because of her family
situation. Alice Hsaio, a ten-year veteran and
former CFO, now heads our Asian operations
from Taiwan Starting with one small room at
8900 Bellanca, CII has expanded into Atlanta,
JFK, Auckland and Taiwan. While we still are
headquartered at the same address, CII has
taken over the entire building to house our
growing staff. Our telephone number and fax
remain the same. We are providing the same
services, even using many of the same carriers
that we elected to support back in 1993. CII
always has striven to provide consistency and
integrity of service. None on our team, no
matter how difficult a shipment has become,
ever deviates from telling the customer
exactly what the situation is.
You can fool a customer only once. Being
truthful is our bottom line. It is the
cornerstone of every relationship. Our pricing
is consistent. We believe in being fair to our
customers. I, Peter, Mike and Ronen do not
play favorites. Every customer is given the
same consideration.
The basis of our rate structure is to be fair
to every one of our more than 400 forwarder
customers. In all of our almost thirteen
years, CII never has provided one customer
with an advantage over another.
Sure, our electronic capabilities are on par
with the most advanced companies in our
business. We have an “interactive website.” We
provide electronic tracking, tracing and
retrieval. But one constant fact remains. Our
forwarder customers overwhelmingly still want
to deal with us on a one on one basis using
the “old fashioned” telephone. That is why our
office is a constant cacophony of ringing
telephones. And we personally answer each
call. None of these faceless answering
machines with innumerable options that takes
about five minutes just to wade through. And
after listening to those interminable choices,
you find that you have to leave a message
anyway!
None of that for CII. There always will be a
real, human voice answering your call.
Are our operations set in stone? Of course
not. We always are tweaking our operations to
improve service. We are determined to raise
our service standards not only in 2006 but in
the years beyond.
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China Costs Increasing
Our outspoken comments re China, recently
published in a number of business and trade
magazines, that American and indeed world
industry shouldn’t put all their production
eggs in the China basket has generated many
comments—pro and con. My belief that U.S.
companies are making a huge mistake in tying
almost all their production operations to
one nation has never been stronger, based on
recent developments in the China economy.
What if our Congress increased the U.S.
minimum wage by almost 30 per cent in one
giant step? The National Association of
Manufacturers and other business groups
would be foaming at the mouth. Well, the
Chinese recently increased their minimal
wage levels by that percentage.
Admittedly, Chinese wages are but a fraction
of U.S. pay scales, but the trend is up.
Workers’ salaries have continued to climb
and employees no longer wish to live in one
room dormitories and have their lives
dictated by the State. They no longer want
to ride to work on bicycles, but want to
drive a car like their fellow workers in
America. The Chinese government, not wishing
to foment unrest by its 250 million working
staff, perhaps reluctantly, is responding to
their desires.
Geography also is working against cheap,
cheap costs U.S. manufacturers expect in
China. The Chinese government has decided
there simply are too many factories in
coastal areas such as the Pearl River Delta
(50,000 plants there churn out electronic
products followed by soft goods makers like
apparel and toys). They want plant owners to
expand construction of factories well inland
where a work force is readily available and
there is less housing and traffic
congestion. While land and labor are
certainly available far from China’s coast,
the ability to move efficiently raw
materials in and finished products out still
does not exist. Yet, the Chinese government
is forcing the move and we must never forget
that in China, what the government wants,
the government gets.
U.S. manufacturers in China are facing a
double whammy. Higher costs from existing
operations as well as greater costs plus
supply bottlenecks as new inland plants
struggle to move their products to the coast
via inadequate rail and surface
transportation. I predict China sooner
rather than later no longer will be the
inexpensive happy hunting ground for U.S.
manufacturers.
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Gasoline Prices Finally Coming Down
 It
was touch and go for a few months. Gasoline
prices were at $3+ a gallon and seemingly
headed for the stratosphere. Then, prices
started to come down and now, while still high
by historic standards, are almost affordable
for many families.
Why the drop?
The big three oil companies, with their record
quarterly profits (Exxon in the third quarter
made more money than many countries’ entire
GDP) realized that greed and avarice no longer
would be viable. That is exactly what
happened, but we are not out of the woods just
yet. Over the years, the oil industry
gradually has consolidated. Who originally
were the “seven sisters” now have been reduced
to three. To show how ruthless these oil
barons have become, they deliberately fiddled
around with supply by limiting refinery
capacity and deliveries to the pump.
The problem with our politicians and indeed
around the world, is that they are gutless
wonders. They’ll cut money for food stamps and
Medicaid in a minute, but let the oil industry
show its displeasure, and almost all of our
Senators and Congressmen fall over each other
to do their bidding. Through generous
donations to political campaigns and luxurious
overseas trips, etc., oil companies have our
elected representatives in their hip pockets.
As the infamous Leona Helmsley once famously
remarked, “only the little people pay taxes.”
Oil companies have enjoyed all sorts of tax
breaks because of the socalled costs of
exploration and extraction.
The price at the pump currently is in a free
fall because “Big Oil” wants to head off any
serious investigations of their practices. If
investigations were to occur, the Sherman Anti
Trust Act could be applied and the oil
companies would be broken up once again. Wall
Street would hate that, as it would destroy
stockholder value. I say, to hell with
stockholder value. Transportation, oil and
food are too important commodities to be
continually manipulated by a greedy, uncaring
section of our society.
"They’ll cut money for food stamps and
Medicaid in a minute, but let the oil industry
show its displeasure, and almost all of our
Senators and Congressmen fall over each other
to do their bidding."
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Do We Need
RFID?
 Wal-Mart,
the octopus of the retail business, is again
making life miserable for its transport
vendors. Because of its power, the entire
logistics business could well be affected.
Wal-Mart now is insisting that all of its
transport vendors install so-called
radio-frequency identification, or RFID, on
all of its millions of shipments. The fact
that installing this electronic gimmick
would cost its vendors millions is of little
concern to Wal-Mart. When asked if Wal-Mart
would pay for this “advance” in electronic
technology, they replied, “are you kidding?
We expect our vendors to pay for it.” Will
Wal-Mart agree to higher rates because of
the higher costs of RFID? Are you kidding?
There are many objections to RFID in
addition to a much higher cost than our
present system of bar code identification.
The technology still has a long way to go.
Transit from one RFID location to another
results in blind spots which destructs the
entire system. Also, it has been shown that
RFID is less efficient at managing inventory
than current methods. Yet, Wal-Mart keeps
insisting that all of its thousands of
vendors adopt RFID by the end of 2006 or
lose its business. What arrogance! This
latest action by Wal-Mart is another
instance of a power hungry corporation
dictating to an entire industry
that you play by my rules or you don’t play
at all. To make matters worse, Wal-Mart
continues to drive down rates despite the
huge development costs borne by the vendor.
Has Wal-Mart brought lower prices to the
consumer? Yes. But has Wal-Mart also driven
out of existence thousands of small
businesses and made itself an unassailable
power in the regions where their stores have
been established? The answer also is yes. It
is frightening that one company can exert so
much strength in our society.
"But has Wal-Mart also driven out of
existence thousands of small businesses and
made itself an unassailable power in the
regions where their stores have been
established?"
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Christmas 2005
 Once
again, the calendar pages have turned to
another Christmas season. How quickly the
year has gone by. During the past 12 months,
we have achieved victories and suffered
defeats. Our overwhelming thought is,
however, how lucky we are to be living in
this great country. How bountiful it is and
how generous our people are. Despite our
faults (and no one is perfect), who in
America would want to live anywhere else?
Christmas is a time to reflect on the joys
of living and to appreciate the advantages
we have. Christmas also is a time to forget
Mammon and to heed the words of the apostle
John, who wisely said, “with all thy
getting, get understanding.”
To our family and friends throughout
the world, the merriest of Christmases.
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Julian Keeling
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