November 2009 Newsletter
CII Aids In Rushing Relief Suplies To Samoa
Consolidators International has rushed emergency aid to
tsunami-stricken Samoa and American Samoa after huge,
destructive waves washed ashore with 15 feet swells
inundating the island’s shore line. Dozens of people
died, hundreds were injured and the destruction of
property was in the many millions. Under the direction
of Tony Feist, CII’s vice president of our Tuna Support
Division, container loads of new clothing were shipped
to Samoa to replace clothing lost to thousands of people
in the tsunami following the 8.0 earthquake.
As Tony explained, “we have an obligation to the people
of Samoa. Our concern is not only for fellow human
beings, many of whom have lost everything, but with CII
as an active participant in the Samoan economy, we felt
an even greater desire to help.” During the past year,
CII has become a major supplier of equipment and parts
for the Samoan tuna business, the largest civilian
industry on the Island. Tony reports that many of the
canneries, almost all of which are located near the
berths where the tuna boats dock, have been crippled.
The livelihood of many Samoans has disappeared until the
canneries can be up and running again. CII also is
aiding in the effrort to re-equip the canneries so
production can be resumed as quickly as possible.
"...CII’s humanitarian and
business efforts are
helping to revitalize the
Samoan economy."
CII has enlisted the aid of many of our customers in
this emergency. E-mails, faxes and telephone calls have
been made to customers to join the effort in supplying
the kinds of clothing needed by a population living in a
warm, humid climate. Items like T-shirts, shorts and
thongs have been collected, all of which are brand new.
CII is not accepting used clothing because of health and
sanitary reasons.
It is not often that humanitarian and business interests
merge. With the Samoan situation beginning to improve
after the destructive tsunami, CII’s humanitarian and
business efforts are helping to revitalize the Samoan
economy.
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CII Begins Screening Program For Forwarders
Our company has begun screening cargo under a TSAmandated
program whereby 50 per cent of all freight carried in the
bellies of passenger aircraft must be examined. We have
undertaken this program primarily for the benefit of smaller and
mid-sized forwarders who can save time and money when utilizing
CII’s TSAapproved system. We emphasize customer confidentiality;
a confidentiality that will be adhered to rigidly. Our equipment
has been thoroughly tested, and we now have a trained staff to
operate and monitor the program. The equipment is massive,
taking up a secure, sealed off section of the CII warehouse in
Los Angeles. It consists of an X-Ray machine and an explosive
trade detector. The X-Ray machine is capable of of examining
large wooden skids with a weight capacity on their rollers of
4,000 to 6,000 lbs. The explosive trade detector is a portable
device that is rubbed on cargo and picks up any known,
“problematic” compounds.
"While our equipment is
geared to serve the entire
freight industry, we are
emphasizing the smaller to
mid-sized consolidator..."
We realize there has been some controversy about this program
within the air freight community, but for the moment it is the
law of the land. It must be adhered to. While our equipment is
geared to serve the entire freight industry, we are emphasizing
the smaller to mid-sized consolidator who too often is the
“forgotten man” in government calculations.
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A Return To Business As Usual—Unlikely
The deep recession, which has “officially” ended in the opinion
of most economists, has brought industrial, political and
societal changes which were considered unthinkable just a few
years ago. Let’s leave the political and societal changes to the
journalism pundits and the writers who record our social habits.
Let’s take a look at some of the changes in the world of
business. Business as usual is out, new business thinking is in.
The recession has forced new thinking in boardrooms around the
U.S. Perhaps the most striking trend is the determination of
management at companies large and small that business as usual
no longer is valid. The rapid economic growth of the past few
years, fueled by mountains of debt, is just a memory. Management
has been hurt not only in the pocketbook. The downturn in the
world economy has been so profound, it has changed the confident
thinking of management who once were certain they knew all the
answers.
Well, as events have proven, they don’t. Nowhere is the change
more far-reaching than in the global transportation business.
Assumptions once taken for granted now are out the window.
Outsourcing, once the undisputed linchpin of corporate thinking,
is being re-evaluated as never before. A growing number of
businessmen are yearning to come home; to move their
manufacturing operations closer to their customers so they can
react more quickly to changes in customer desires and tastes. If
this trend continues, a dramatic effect on global trade patterns
will occur. Supply chain strategies will change. A 10,000-mile
supply chain no longer will seem a minor obstacle but an
impediment to fast changing market conditions. These strategies
will change quickly to satisfy an increasingly fickle consumer.
Who wants to be a continent away in a rapidly changing world?
"A 10,000-mile supply chain
no longer will seem a minor
obstacle but an impediment
to fast changing market
conditions."
Assumptions, once taken for granted, must now be given careful
scrutiny. Just because Asian nations now are a powerhouse in
supplying global consumer and business needs, it is not a
certainty they will continue their dominance five, ten years
from now. Are costs in China as cheap today as they were ten or
even five years ago? Of course not. We have witnessed a sharp
decline in new outsourcing facilities in China and to a lesser
extent in other Asian countries as their costs have risen. The
big multi-national companies are not interested in a nation’s
welfare but in the cost of production wherever that might be.
China is no more sacred than any other nation. If costs rise to
an unsustainable level there, producers will show little concern
for millions of Chinese workers.
Manufacturers will move elsewhere where labor is cheaper, and
plentiful, and let the Chinese government worry about millions
of unemployed workers. Isn’t that what capitalism is all about?
Nothing is static. If the recession has proven anything, it has
shown the truth once again in that statement. The world moves
on. Management who ignores that lesson do so at their own peril.
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Does Our “Information Age” Generate Sales?
During President Obama’s speech last month to both
Houses of Congress on the subject of health care, one
Republican congressman was seen on TV intently focused
on his Blackberry rather than listening to the
President. Obviously, the congressman was more
interested in his Blackberry than in his President.
"Are
we oblivious to the fact
that air freight volume today
is no greater today than ten
years ago when the world
was much smaller—
despite all these
improvements in
technology?"
In our search for real time information, are we missing the
human element? Is the Blackberry more important than what is
going on around us? With air freight, that certainly seems to be
the case. Publications keep writing about “advances” in
technology, but are these advances helping cargo sales? The
press never answers that question. Are we so hypnotized by our
technical prowess, we have forgotten basic principles of
selling?
Are we oblivious to the fact that air freight volume today is no
greater today than ten years ago when the world was much
smaller—despite all these improvements in technology? What our
industry needs is not a new hand held device that shows movies,
but a new mindset. A mindset that is not afraid to wear out shoe
leather in searching for and landing new accounts. Even at the
height of air cargo’s share of the transport market, we never
obtained more than 4 per cent of all domestic and international
volume. This, after 60 years as an industry! Yes, the recession
seems to be ending. We’ll never fully join the recovery,
however, unless and until our people, from back office staff to
senior management, concentrates on selling air freight without
waiting for technological “marvels” to pull us out of our deep
downdraft.
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YRC Decides To Sell Out In China
A brief afterthought on how the China market is
changing, generally for the worse. About four years ago,
YRC ( the old Yellow Freight trucking firm) trumpeted to
the world that it was entering the China market with a
new trucking service.
This service would serve many of that country’s
principal cities. YRC invested millions in the project.
In a little noticed recent press release, YRC reported
that the company was attempting to sell its road
division because of “substantial losses.” No takers so
far.
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3PLs & Shippers Rate Each Other Very Differently
3PL executives never tire
of congratulating themselves on how indispensable they
are to the cargo industry; how they solve shippers’
problems with a wave of the hand and how transportation
would return to the stone age if not for their valiant
efforts. But how do shippers, their customers, rate 3PL
“logistic providers,” particularly in these perilous
times? Not very well. The majority of shippers consider
3PLs over priced and who under perform. The gap between
what 3PLs think of themselves and their customers’
thinking is growing wider as the transportation business
struggles to regain its lost momentum.
Shippers are re-evaluating relations with 3PLs as never
befoire. The 3PL traditional argument that their high
pricing is well worth the money because of supposed
superior skills and wide range of services increasingly
is met with Bronx cheers by shippers. Independent
surveys unequivocally are echoing this caustic view.
Shippers want price reductions and if their 3PLs won’t
accept this demand, out they go to be increasingly
replaced by “traditional” forwarders who can provide
just about all the services of a 3PL at a reduction in
cost. 3PLs are hearing that hated word, “renegotiation”
with their customers more often than they like because
renegotiation today almost always means lower fees.
Innovations in supply chain systems are out the window
unless accompanied by sharp reduction in cost. “Can you
ship it for less?” is the mantra being heard in traffic
departments across the land. The two sides are talking
about entirely different logistics objectives. While 3PL
executives keep talking about ideas for supply chain
improvements, their customers keep asking the
uncomfortable question, “what will it cost?” Many
shippers are twisting the knife by asserting that many
3PLs don’t live up to their initial promises of service.
“We’ve been had” is a common complaint at many traffic
departments.
"Shippers want price
reductions and if
their 3PLs won’t
accept this demand,
out they go to be
increasingly replaced by
“traditional” forwarders who
can provide just about all the
services of a 3PL at a
reduction in cost."
Will confidence return in 3PLs among
shippers as the economy gradually improves? Don’t bet on it. One
of the few positive developments in this downturn is, like the
emperor, 3PLs have no clothes.
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Julian
Keeling
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