LOOKING AT LOGISTICS FROM BOTH SIDES NOW

LOOKING AT LOGISTICS FROM BOTH SIDES NOW

Over the past several months, I have spent much of my time traveling in Europe on a development project for my company. It has been a most fascinating experience - not just because Paris is not Fresno (sorry, Fresno), but even more because of the dramatic increase in my understanding of this business from the European perspective.

The basics of how the international transportation and logistics business works are clearly the same on both sides of the Atlantic.We follow most of the same business rules and regimes, such as Incoterms (for terms of sale) and the Hague/Visby and Warsaw rules for cargo liability. We use the same sizes of container (although curiously in metric Europe, these are measured as we do: in feet, not meters). Ocean carriers have antitrust immunity. And so on.

The companies engaged in the business are also the same carriers and forwarders familiar to us in the United States. Just as in the U.S. environment, there are numerous local and niche players in each country and regional market.

It is after these macro-level similarities that the differences begin to show, and in many cases they are dramatic. I'll try to illustrate just a few of them and, perhaps, will come back for more detailed discussion in future articles.

Take the logistics environment. We are quite accustomed here to dealing with customers - importers and exporters alike - who have made the business decision to take full control of all elements of the movement of their products through the supply chain. American importers buy on f.o.b. terms, and exporters sell on c.i.f. terms whenever possible.

This is very typically not the case in Europe, especially in the import marketplace. It is not at all unusual for European importers to have given control of this process to others; they often buy on c&f, c.i.f., or even LDP terms.

Even when purchasing under f.o.b. terms, control of transportation is often placed into the hands of nominated forwarders instead of the more common American practice of direct negotiation with carriers.

Another startling difference between business life here and there: There is no apparent ''negotiation season'' between importers, exporters, NVOCCs and ocean carriers.

For years in this country we have become used to the annual spectacle of rate-increase announcements, followed by a protracted period of heated negotiations. Perhaps I have missed something, but I have not detected the existence of this ritual in Europe.

I'm not certain of the reason, but suspect it is due to two main factors. One is European companies' tendency to leave transportation arrangements to others. More importantly, I think, is the fact that all such negotiations have always been confidential in Europe.

The annual rate-negotiation process in this country had always been performed, until last year's passage of Ocean Shipping Reform Act, in public. The results of these negotiations were then published for all to see.

Conferences and tariffs certainly exist in Europe, but the relations between a service provider and customer have always been confidential between them. It will be interesting to see if the new regime in the United States will reduce the annual frenzy. It won't be as much fun, or make for such interesting press, but maybe we will have learned something.

Looking at Europe and the United States from a somewhat broader basis, there's another important difference.

During the past seven months of travel I have visited England, France, Germany, Holland, Belgium, Spain, Italy and the four Nordic countries, Denmark, Sweden, Norway and Finland. That's 11 countries with (at least) 11 different languages.

With very few exceptions, each and every business meeting (and most every social one) has been conducted in one language, English. I speak French well enough to get along, which has come in handy, but even in France, English has been used more frequently.

This use of English has been not just a courtesy to me. My colleagues and others at these meetings have often been multi-national, and English is overwhelmingly the common business language regardless of where one is in Europe.

The point is that, in addition to their own language, most businesspeople I have encountered speak English more than well enough for both business and social contexts. In most cases, these same people also speak at least one other language equally well. So Europeans beat us badly in the language diversity department, with a lead so big we can never hope to catch up.

The overall business environment of Europe is amazingly different from that of the United States. Discounting regional differences here - which, while they can be substantial, do not generally require much adjustment from place to place - everyone is an American.

This picture is very different in Europe. Consider just a simple example. Most Americans would likely consider Denmark, Sweden, Norway and Finland to be Scandinavia and to be very similar in language, custom and culture.

Be careful. The Finns don't even consider themselves to be part of Scandinavia. They'll accept a label of Nordic, but they react quickly to correct the Scandinavia description. Their language is also totally different from their neighbors.

In conversation, nationals of any one of these four countries will be very quick to point out how they are so very different from people in the other three countries. A similar situation exists in language-divided Belgium, with French in the south and Flemish in the north.

So beware of falling into the error of ignoring these often strongly expressed differences.

That's far from all. But I'll save the rest for future columns.