FBJ 4 FREIGHT BUSINESS JOURNAL


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Issue 2 2015 - Freight Business Journal From the Editor


A British-based company – but owned by a Middle East investment company - tenders to run a railway in Saudi Arabia; a few days later it’s announced that the company is to be sold to a US-based firm that operates railways throughout the world. Freightliner’s new owners, Genesee & Wyoming, might sound like a mom and pop Stateside outfit but it has become a very multinational company with operations in Australia, Canada, north-west Europe and now, the UK. We live in an age where rail firms are bought and sold like counters in a board game. It’s not the first time that a UK rail company has been in US ownership – remember Wisconsin Central’s stewardship of EWS, which comprised the bulk of the former former British Rail freight operations, and which were eventually sold to Germany’s DB Schenker. It’s a strange old world to those of us who grew up with then unmovable monolith that was British Rail. Even Margaret Thatcher herself poo-pooed the idea of nationalising the railways and it was oſten said that the Major Government’s motivation for doing so was more political than practical. Politics aside, though, it certainly makes for a dynamic and exciting railway industry. That’s certainly not something that would have been said 30 years ago.


By Chris Lewis


Rumblings are coming across the Pond that the Federal Aviation Authority – which regulates airline operations within, to and from the US and which hence has a huge influence on the global industry – is getting interested in cargo safety again. It is poised to produce new standards for fireproofing of airfreight in bellyholds, and a preliminary report into the loss of a US-registered National Airlines 747 freighter at Bagram Airbase in Afghanistan it is also likely to take a strong interest in how effectively cargo is restrained in aircraſt holds. It has to be said that the humble airfreight container (or ULD, unit load device) has been taken for granted. Bashed about by handlers in a hurry, holed by forkliſts and with maintenance carried out on a patch up and repair basis, it’s perhaps surprising that haven’t been more accidents. Applying some professional standards in ULD care would not go amiss.


Are border becoming barriers again?


Plans to allow bodies like Trading Standards to hold goods at the frontier are alarming the trade, says Peter MacSwiney, chairman of freight industry soſtware specialist, ASM.


The objective of HM Revenue and Customs’ ‘One Government at the Border’ initiative is to fine-tune what goes on at the frontier and how multiple government agencies will link in with this. Currently, there are 17 different organisations that can stop freight at the frontier - and the trade is nervous as to how this is going to work. Because the frontier is a ‘pinch point’


many organisations believe they can check goods at the frontier. While the trade has no problem with providing data to other government departments to tell them what goods are, which may flag an interest or a need to examine goods, that’s a far cry from checks at the frontier. The frontier nowadays is geared towards getting goods through quickly; there is no space, opportunity or facilities for them to be held for a long time while an organisation decides whether or not it wants to come and have a look. The root of the problem lies in the fact that HMRC is the only government


department that has anything in its remit to facilitate trade; all the others are focused solely on enforcement and generally are not directly engaged with international trade organisations. The latest initiative is to allow Trading


Standards (TS), rather than HMRC, to release goods, or not, once it has reviewed the paperwork. There does not appear to be any service level agreements as to when this will happen and there has been no direct consultation between TS and the trade. In fairness to HMRC they have agreed to review the process, aſter a trial period, and have stated that they do not expect there to be an increase in the number of TS inspections. It will be interesting to see how this


pans out. In my experience, once you start giving Government departments more data they interfere more and want still more data whilst paying lip service to the concept of: “The more we know about a consignment or trader the fewer interventions we have to make.”


The freight forwarding gap Big


forwarders are fast outdistancing


themselves from their smaller competitors, writes Paul Kelly of specialist marketing consultancy, Actualis. Over the last decade the largest freight


forwarders recorded a combined growth by sales of 67.5%, representing an average


///OPINION


FBJ is the only UK and one of the few pan-European Multimodal newspapers. The comments we have received prove there is still room for a hard copy publication with the freighting industry. You don’t have to look at a screen all day!


FBJ boasts the most informative and authoritative source of information with unrivalled in-depth knowledge of the rapidly changing freight business environment.


As the definitive publication within the sea, air, road and rail freight sectors, each issue includes regular news and analysis, in-depth coverage discovering the business decisions behind the news stories, shipper and exporter reports, opinion, geographical features, political and environmental issues.


If you have any stories or letters which should be of interest or any feedback on FBJ, please contact our editor Chris Lewis - +44 (0)208 6450666 chris.lewis@fj-online.com


next issue >> circulation >>


Our next issue will include features on the UK North West, Italy and this year’s Multimodal preview. There


will also be our regular IT Section and news pages. For further details contact: John Saunders - +44 (0) 151 427 6800 john.saunders@fj-online.com


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sales of 67.5%, 20 times that of the smallest. And while the gap has narrowed during the downturn, larger forwarders are still growing 12 times as fast as the smallest and there’s no certainty that it won’t widen again as the economy picks up. In the most recent year, small forwarders contracted by -0.7% while large companies grew by 3.3%. Statistics show that the performance


gap cannot be entirely explained away by greater resources, mergers and acquisitions, or pricing tactics, although these are significant factors. Why are smaller forwarders persistently so far behind their larger competitors and can they do anything to close the gap? One obvious difference between large


and smaller forwarders is the former’s access to greater resources; the ability to deploy large sales-forces, or run expensive advertising campaigns, advantages that the smaller forwarder can never match. But in reality these capabilities are the preserve of only a handful in the market, with the majority deploying far more modest sales and marketing resources, so the gap must result from other factors. Factors that, perhaps unsurprisingly, have


historically ‘hamstrung’ the sector include customers driving down cost and the need to meet tight deadlines. This creates a ‘perfect storm’ of price differentiation and time-starved bosses - a siege mentality, a conviction that cost is the only issue that matters. This in turn has perpetuated the industry that has low self-esteem and which undervalues its strengths. This is also perfectly


growth rate which is more than 20 times that of small forwarders, according to company analysts Plimsolls Publishing. It’s the size of the growth rate gap, that’s so


important. Over the last decade the 50 largest freight forwarders recorded a combined growth by


illustrated by the lack of engagement with trade and professional bodies. Only 20 forwarding managing directors


are members


of the Chartered Institute of Logistics & Transport (CILT) and its professional


forums and interest groups are woefully under-represented compared with other sectors. The very institutions that could raise the profile of the sector, articulate the value it provides and start to diminish differentiation by cost, are starved of the active participation and leadership of the people that would benefit most. It is inconceivable that the majority of


the industry should leave the door open to the largest players to take the lion’s share of the market, but that is precisely what has happened in the forwarding sector. The inability of senior management to


embrace basic sales and marketing planning has leſt them competing on price, while the largest players are free to accelerate growth of their market share by simple brand building and positioning strategies. The performance gap will not close


until owners and managing directors of SME forwarders realise that they have the power to transform the way they grow their business, just by thinking and acting differently. l Actualis has joined forces with CILT


to highlight the performance gap and how forwarders can reduce it, with a workshop for Heathrow forwarders on 24 March, at the Holiday Inn, Sipson - ‘Grow your business 20 times faster’ will demonstrate how management can use existing resources and deploy the same strategies as large forwarders to drive their own superior business growth, by ensuring maximum value from their web presence, effective sales and marketing planning and by evaluating 20 free and low-cost promotional techniques. Other workshops will be


held around the country, reflecting local demand.


www.actualismarketing. com/CILT-sipson-event


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