Wednesday, 28 May 2014

Saturday, 17 May 2014

How does global business flow now? A MUST READ if you are in business.

In this blog I have been regularly talking about global business changing rapidly and how the internet and modern transportation methods have impacted the landscape of competition for numerous industries. Distance does not matter anymore!

If your overhead structure and prices are not GLOBALLY competitive you better get your skates on and make them so before the freight train runs you over.

To say it again, regardless of international borders, overseas competitors are now able to take you and your company on at home and are doing so. 

I follow the McKinsey Global Institute and this month they released a research report with some stats that you cannot afford to ignore. 

Here they are:
-There was a $26 trillion flow of goods, services and finance in 2012 which is equivalent to 36% of global GDP.
-By 2025 it is estimated that cross border business flow will reach $85 trillion.
-Global GDP will grow by an estimated $450 billion each year.
-18x increase in internet traffic from 2005 to 2012.
-90% of commercial sellers on eBay export their goods to other countries vs 25% of traditional businesses.
-500% increase in Skype call minutes since 2008
-In 2012 China accounted for 12% of global trade in goods which was up from 2% in 1990.
-In 2012 emerging economies accounted for 38% of the total cross-border flow of goods, services and finance which was up from 14% in 1990.

These confirm the trend I have been writing about in this blog for quite some time now about how global competition is developing.

All of the businesses I am growing in Depth Industries are geared to help companies stay globally competitive by accessing the goods and services that will help them not only survive, but prosper in this landscape of truly international competition.

Time to face the brutal fact. International competition is commoditising goods and services more than ever before in history and whether you like it or not price is increasingly the driver in the decision making process.

Are you globally competitive and chasing down international markets? If not, why not?! There are some great opportunities if you are rigged the right way.

I'd like to help you develop a strategy for your business and would welcome you contacting me.

All for now,

+Brad Skelton 

Tuesday, 6 May 2014

Is marine cargo insurance essential?

I was talking to a Depth Logistics client yesterday who has asked us to ship a container of parts for her.

As is our standard operating procedure, I asked her whether she had marine insurance cover for the shipment? She told me that they wouldn't worry on this shipment as it wasn't big enough...or in translation to me, not worth enough that if it were lost or damaged there would be a serious financial impact on their company.

To most people it would seem commercially astute to save the small cost of an insurance premium where they believe the risk of loss or damage to their cargo is negligible. Sound logic if it were just the cargo that is at risk but it isn't!

Centuries of maritime law precedents have established an entirely different principle that make it important to have marine transit cover in place on even the seemingly small and low risk shipments. Shipping has numerous uncontrollable risks at sea and is inherently a high risk activity for any business.

Maritime law tends to side with the ship owner whether you like it or not. Most people don't realise that when they ship their cargo on any ship for a particular voyage then at law, they are considered to be in a joint venture for that voyage. What this means for shippers is that should the vessel get into distress, suffer a mishap, be forced to jettison cargo to save the ship, be lost at sea or hypothetically require salvage to remove it from a shipping channel then each shipper with cargo on board proportionately shares in these costs. That is the spirit of a joint venture after all and maritime law precedents support this regardless of fault or blame.



Therefore cargo even with a low value can end up costing the shipper a literal fortune for their share of costs incurred to deal with the mishap properly. In my career there was one occasion where a client had a single container on a ship that ran aground in a shipping channel. The vessel had to be cut up at sea and removed from the channel as it presented a risk to other vessels and the environment. My client got a bill in the region of $400,000 for their share of costs even though their cargo was worth only a fraction of this. Had they not taken been prudent enough to ask me to take out marine insurance for them this would have been a ruinous event for their company.

So you should ALWAYS ALWAYS ALWAYS...(have I shouted it enough?) ALWAYS have marine cargo insurance. It is false economy not to.

Feel free to contact me or my team if you would like some free advice on this critical aspect of shipping.

All for now,

+Brad Skelton