Ocean containership transportation is going through some real tough times. Some blame the problem on the fact that there are too many imports pouring into our country and too few exports flowing out of it. But that kind of problem has a way of working itself out.
I'm not discounting the serious operational hassles that are created by this imbalance of trade, but I think an even more serious problem lies with how companies are being managed during these times.A few years ago I wrote an article in which I predicted just what is happening in our industry today. I stated back then that I was not a prophet, just a shipper. I saw competition forcing rates downward, and I was worried that it was happening too rapidly. Many carriers were in financial trouble.
The straws that were bending if not breaking the camel's back were the rates in the Far East. In fact, at that time it was difficult to get containers to these ports fast enough. It was a great time for shippers, and we were all heros - especially when the carriers started a rate war.
The cost of space on a container from Taiwan to the West Coast was especially low. As a shipper, I naturally had to take advantage of this situation. After all, that was what I was paid for.
The results? Many carriers went out of business and others gave up serving these trade routes, leaving only a few carriers still out there. But what is even more amazing, the carriers that have remained are still carrying on this trade war. Sooner or later, however, the carriers will see the folly of this. Their rates will rise and they will get back all that they have lost to date - and more - much, much more.
But that's a future story. Right now the remaining carriers are in a serious cash position. So what do they do? Well, most businesses today are very complex because of mergers and takeovers. As a result of this, the managers running industry today are, in the main, accountants and lawyers. They see their first order of business to cut expenses, shave off the fat, and get rid of the so-called highly paid employees.
They usually start with the marketing department. To handle sales calls they bring in young and inexperienced help, cut salaries, replace experienced personnel with new people that they hope will receive on-the-job training. The net result: business gets worse. By the time this new help starts functioning in the market a lot of carriers find themselves in trouble.
Not everyone is running their business this way. Some smart U.S. carriers and Far East carriers have been grabbing up this talent, and it is paying off for them handsomely. Unfortunately, a great deal of these trained people with five, 10 and 15 years experience are going to other industries that are reaping a bonanza of trained talent, to the detriment of the transportation industry.
Can this situation be turned around? Yes, if the remaining carriers move fast. These are my recommendations based on a lifetime in the trade.
Try to get back as many of the experienced personnel as possible.
Loosen up the spending for the marketing department. They are the first-line soldiers. They bring in the business.
Make sure the operations personnel are aware that they have to service the marketing people, and cooperate with them fully. Teamwork is important here.
Know your accounts. No sales reps should call on accounts unless they do research on them thoroughly. Know what commodities they move - trade routes, and rates.
Where feasible, have operations people accompany the reps on sales calls. Their presence has a tremendous impact on the customer and may be the deciding factor in getting his cargo.
Promote from within. This boosts the moral of personnel who have remained loyal in these trying times.
Have personnel in foreign ports make a careful survey of all potential business opportunities. New commodities are coming on the market very rapidly.
Do marketing surveys of domestic markets. A lot of cargo is up for grabs and many marketing people are not aware of this situation.
Marketing people should get to know the people they are contacting for business and should try to approach them on a more personal basis. People like to give business to friends.
Last but not least is my advice to top management. It is of utmost importance that the upper echelon be visible. Get around more. Stop staying off in the shadows. I realize it may be difficult for accountants and lawyers to spend more time socializing with accounts, but this business was built by individual contact, and if it is to come back to its prominence it will be up to those on top to begin understanding the business.