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Saturday, April 10, 2010

What happened to "My word, is my bond"?

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For centuries in shipping, a person or company's word has been something that can be relied upon absolutely. It is an industry foundation stone but I fear it is getting lost. A reputation for honouring your word is hard earned but easy to lose. It's not rocket science. Simply do what you say you will do and it keeps customers happily coming back.

So lets relate that to some of the worlds major RoRo and container lines right now. Sadly many still have substantial portions of their fleets mothballed and out of service and are losing money due to declines in cargo volumes with the GFC. It's a bad predicament the industry is in yet short shipment of cargo is on the rise again even when shipping capacity massively outweighs cargo volumes. For a shipping line to give a booking confirmation on a particular vessel to move cargo is in effect to give their word or a promise to perform.

Recently one good client of mine with a RoRo carrier suffered three consecutive short shipments in a row for his bulldozer. To be clear, this was with bookings being CONFIRMED by the shipping line in writing and yet vessel after vessel his cargo was left behind. Similarly a client moving full container loads ex Europe had virtually the same experience. The commercial impacts on these clients was massive but the shipping lines didn't seem to care.

These occurences were commonplace just prior to the GFC rolling through as cargo volumes globally were at all time highs and there was a shortage of ships. Not that this excuses short shipments. Either way you look at it, the shipping line shouldn't accept the booking if they cannot be relied upon to upift the cargo AS BOOKED! It's their "word" after all.

Perhaps I am over-simplifying it but I don't think so. To my businessmind I'd be trying hard to deliver a damned good and above all reliable service and carrying everything I could to grow profits and revenues. Particularly in challenging business times.

Now I am sure that some executives of shipping lines are reading this blog and thinking Skelton just doesn't understand. "He's been around long enough to know it's about maximising the utilisation of the ships we have in service to make a profit. Sometimes this means we have to leave cargo behind." I realise delivering a profit is a business imperative but in some circumstances is it worth the long term cost of abandoning your word and thus losing customer focus?

Lets get back to basics. I think to abandon your word is short sighted. Long term success in business means taking long term views of the business relationships you enter into and realising there will be highs and lows but because you have given your word, you stick by your customer through thick and thin.

It's about being committed enough to the relationship to take the good with the bad. Lets not forget that many ship owners have enjoyed incredible boom times prior to the GFC. The likes of which had never been seen before.

So now times are pretty tough and some of these carriers, while delivering appalling booking reliability, are arrogant enough to still think they deserve and can demand 100% loyalty from shippers and forwarders while at the same time not offer anything in damages when they leave cargo behind. To be frank they don't deserve loyalty because they haven't earned it.

My customers have long memories for bad service and many of them will go out of their way to avoid and punish carriers who have inconvenienced and cost them money before. Right now with times being tough for them too, they are less forgiving than ever. We are fortunate that most of our customers are understanding enough to know that because we, as freight forwarders, don't own the ships we are reliant on the shipping lines to perform.

In previous blog posts I have referred to three great mates of mine that I get together with a few times a year to discuss business and life over a long lunch. One of the boys coined a phrase that resonated with us all and I think is relevant to share in light of peoples abilities to keep their word.

It is, "Tough times don't build character. They reveal character".

I invite you to comment on this blog and share any short shipment war stories you may have by going to http://www.theshippingbloke.com/ .If you are one of the offending shipping lines, then I am sure my readers would like to hear your perspective too.

All for now,

Brad Skelton

The Shipping Bloke

4 comments:

  1. As usual Brad is spot on. My word is my bond and having worked allbeit briefly for Brad know the culture he instills in his employees revolves around that.
    I "thought" I had retired from freight but after 9 months being involved in hospitality management rights 3 "ex" clients finally tracked me down and almost begged me to handle their freight, that was 2 years ago, and guess what I still do. I recently asked my largest fan why do you use me when you know I will charge you more than any of the forwarders based in Brisbane. His answer resonated with Brads heading for this this blog. Its simple "Chris when you say you will do something you do, in over 10 years of our association you have never let me down".
    I am proud of those comments and the email hangs in my office.

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  2. All very true, I experience it practically every day. Is it the arrogance of certain 'big' players in the market, is it the dedication and commitment of their staff? I think it is both. The mentality of people is not the same as it was 10-15 years ago, the mentality that people would do anything to service your requirements. On the one hand it is a good development if you are providing that dedicated service, there are many business opportunities out there. On the other hand, if you rely on services from a company who does not provide that service, you are caught in the middle. And unfortunately in certain types of industry (like Project Cargo and my Industry, Services related to dangerous goods transport) you do not have much choice but to use the services of those companies. If there is a choice, I definitely go with the one who provides the better service, even if costs are a bit higher. In our industry the costs for shipments arriving not in time is far greater than the higher rate we have to pay.

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  3. here is a comment from the carrier's side (one of the non-offending ones) :). I fully support Brad's comment. Carriers cannot ignore that shippers have long memories when it comes to service failures (whether in good or bad times). We (Rickmers Line) commit to 'my word is my bond', also in our Vision and Mission statement, and live that! We need to be transparent and honest, show tolerance and respect. Mistakes can happen but carriers should be open about it and provide options to get it fixed. If any of our clients experience something different, they can go directly to the President and CEO and definitely get a response. Keeping the word is also for carriers a key to a long-term success. By the way, shippers that have made experiences like Brad described should also seek legal advice. Carriers cannot get out of signed booking notes that easy and shippers have the right to claim for compensation.

    Greetings from Hamburg / Germany

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  4. I must say we have always had good experiences with Rickmers. It's great that Rickmers live their values. Too many companies have nice value statments but it has littel to do with how they approach their business/customers in reality.

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