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Wednesday, 2 May 2012

The new protectionism - EPA

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I met with a client today who is a major shipper of earthmoving, mining and construction machinery. Apart from the usual conversation about freight rates, shipping lines and quarantine compliance, our conversation turned to the EPA(Environmental Protection Authority) rules around diesel engines that powers equipment.

While I think we agree that reducing emissions is desirable and important, the hypocrisy and lack of fairness starts when you have different EPA agencies around the world producing their own rules on what engines will comply for their country. This has resulted in manufacturers building multiple engine types depending on what rules apply in the country the machine is destined for. There are differing "tiers" of engines for various countries.

Most manufacturers have realised that in the name of saving the environment, they can conveniently use this EPA legislation to protect their markets from imported machinery which may be fitted with engines that do not comply. They are building machines so that once exported, they can never come back or be sold into other markets with different EPA compliance requirements.

When I studied as a customs broker and freight forwarder there was a world trade agreement called GATT. The General Agreement on Tariffs and Trade. GATT existed as the World Trade Organisation tried to moderate and control protectionism to keep trade relatively fair. 

Protectionist policy is essentially countries using import duties and tariffs to protect their local manufacturers and markets from cheaper imports. As globalisation and free trade agreements between countries gained momentum GATT was abandoned and protectionism has fallen out of favor and is now considered archaic and politically incorrect. As an aside, try telling that to workers in the western world who are losing their jobs in manufacturing to Asian competitors right now though! This might be a somewhat wild idea but protectionism, in this current tough global economy, might even make a come back as countries try and save whole industries and jobs. It would also raise government revenue to pay down sovereign debt. Anyway perhaps there is a future blog in that topic for another day!  

During the conversation with my client today I said to him that clever manufacturers are leveraging EPA rules as effectively "protectionism" under a different name. He agreed. Therefore EPA rules are already impacting "fair trade" and will gradually and ultimately lead to less global trade of heavy machinery unless something changes. In the old days of GATT, someone would have been shouting "not fair" and the WTO would be stepping in but who would dare do this now and then be seen to not be environmentally responsible? 

So what would be environmentally responsible then? To me there should only be one standard of engine produced. That being the one with the lowest emissions. Why bother even building anything else? Forget the rest. That's what environmental responsibility looks like to me. Now I am just a humble shipping bloke, not an engineer or mechanic, and I suspect differing fuel quality in some places may present a challenge to this idea. I don't know but the whole planet breathes the same air ultimately so this situation seems ridiculous and irresponsible to me.

This reminds me of another absurd situation in the name of protecting the environment in my own country, Australia. Here the Department of Environment and Heritage is wanting to ensure that air conditioning gas in machinery is of a type that is non-ozone depleting. Fair enough but this caused the department to institute an import permit regime on all imported machinery and vehicles that have air conditioners. As yet most countries don't even have any rules on this so consequently many machines air conditioners are still filled with ozone depleting gases. 

To avoid having to apply for import permits nearly all of our clients elect to get their supplier to evacuate the gas overseas before the machine is loaded on the ship to Australia. This takes me back too a point already made in this blog that the whole planet is sharing the same air ultimately so this is stupid. 

My company has pointed out to the department that effectively the import permit system is actually counter-productive not only for Australia, but the ozone layer no matter what country you live in. The response:- "That's okay, here in Australia we are doing the right thing and the rest of the world needs to catch up". Meantime somewhere in the world more ozone depleting gases are getting released into the same atmosphere we all share.

The sooner the whole world converges on truly uniform standards on EPA rules the better off global trade and the environment we live in will be.

All for now,

Brad Skelton

The Shipping Bloke

Sunday, 29 April 2012

Would you live and work in a shipping container?

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Since containerisation started in the shipping industry in 1956, the question has exisited of what to do with them when they are no longer fit for the rigors the sea throws at them? The average container has a life span on the ocean of between fifteen and twenty years and potentially much longer than that back on dry land.

Well, how would you like to use them for your home or office?

They are cheap ($1000-$3000 each depending on the age, type and condition), easy and cost effective to transport to site or re-locate, stackable, secure, incredibly durable, fast to errect with minimal foundations required, easy to plumb, easy to wire and are eco-friendly and can actually look ok.

Alright.....I only said "ok" not "great". There are now dedicated architects for shipping container buildings doing some incredible things with them. Offices, multi-storey hotels, homes, cafes can all be successfully built from them.








I can visualise the funky beach house in the future for the Skelton clan already. Maybe...

All for now,

Brad Skelton

The Shipping Bloke

Saturday, 14 April 2012

Staggering overcapacity in the global shipping fleet.

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I recently received a commentary from Ferrier Hodgson with some amazing facts I thought I'd share on the global shipping fleet and cargo volumes.

In January 2011 there were 103,392 cargo ships operating globally. This number of ships grew an amazing 54% from 2005 in order to meet a pre-GFC high demand.

In this period the number of container ships grew by 83% and bulk carrier numbers grew by 63%. The growth in shipping capacity completed outstripped the growth in seaborne cargo which for the same period was only up 27% to 8879 million tonnes and.....the global fleet is still growing. About 16% more new ships are being added in 2012 from orders placed by ship owners years ago.

A massive imbalance in supply and demand in shipping has been created. Bulk carriers have been the worst affected with current charter rates dropping to the lowest levels in about 30 years.

The value of ships has dropped by about 30% which is causing financiers to get nervous about their security position.

For shippers and freight forwarders this situation is mostly benefiting them. It is leading to some very keen freight rates in some trade lanes as a result of carriers lowering their profit margins in an attempt to maintain or capture greater cargo volume.

The downside is that some ship owners are in a very precarious financial position and cannot withstand much more stress from ongoing operating losses and devalutions of their fleet. Most carriers are continuing to adopt cost cutting measures by dropping port calls and steaming more slowly to save fuel costs.

A consolidation of operators looks inevitable unless cargo volumes really pick up soon. With a lethargic global economy in general, I can't see that sort of growth in trade happening for a while.

All for now,

Brad Skelton

The Shipping Bloke

Tuesday, 19 April 2011

Sir Richard Branson's, Virgin Oceanic, and Maersk Line join forces to go down. Waaaay down!

(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

To boldly go where no man has gone before, Virgin and Maersk Lines are sponsoring the Virgin Oceanic Expedition. The goal is to have Sir Richard Branson and Chris Welsh, an American sailor, pilot the "DeepFlight Challenger" to the very bottom of all of the worlds five oceans over a period of two years. 

The deepest dive they hope to achieve will occur in the Mariana Trench in the Pacific Ocean and will take the specially designed submarine down 11,034 metres(36,000 feet) feet into the trench and then they plan to fly along the trench floor for six miles. Incredible!

They depart from Seattle later this year and have a scientific mission as well to explore and collect samples from the greatest depths of the planet Earth's oceans.

To help you appreciate the depth of these dives you can view an animation of this bold undertaking by clicking here.

Undoubtedly these dives will make world news however I will update you on their progress from time to time in my blog.

All for now,
Brad Skelton
The Shipping Bloke



Sir Richard Branson's, Virgin Oceanic, and Maersk Line join forces to go down. Waaaay down!

(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

To boldly go where no man has gone before, Virgin and Maersk Lines are sponsoring the Virgin Oceanic Expedition. The goal is to have Sir Richard Branson and Chris Welsh, an American sailor, pilot the "DeepFlight Challenger" to the very bottom of all of the worlds five oceans over a period of two years. 

The deepest dive they hope to achieve will occur in the Mariana Trench in the Pacific Ocean and will take the specially designed submarine down 11,034 metres(36,000 feet) feet into the trench and then they plan to fly along the trench floor for six miles. Incredible!

They depart from Seattle later this year and have a scientific mission as well to explore and collect samples from the greatest depths of the planet Earth's oceans.

To help you appreciate the depth of these dives you can view an animation of this bold undertaking by clicking here.

Undoubtedly these dives will make world news however I will update you on their progress from time to time in my blog.

All for now,
Brad Skelton
The Shipping Bloke



Monday, 18 April 2011

Check out JUMPSHIFT !

(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

One of my friends and mentors, Alan Anderson, has just co-authored a book with Michael Sherlock who was one of the founders of Brumby's in Australia. The book is called "JUMPSHIFT" and it is packed with ideas, tools and resources to help any business owner or manager create alignment and direction for their business and team.

I particularly love their ideas about staff members who have what they call "the owners eye". By this they mean people that approach every aspect of their role with the company in the same manner as if they owned the business themselves. Alan and Michael contend that these are the people you really need to reward very well and promote and retain.

I wholeheartedly agree and reading the book prompted me to think about who on my team has "the owners eye". Then I asked myself "Am I looking after them well enough?". To be blunt, those that don't have the owners eye, can go down the road to our competitors if they like and become their problem. They are usually the same team members that you constantly have to ride to comply our customer service standards and company procedures anyway thus taking up precious manangement time and energy. The team members that have it, I am making sure that they know they are sincerely appreciated and valued. Those people are like part of the family almost. JUMPSHIFT has reminded me that having and developing the right team and a high performance culture is EVERYTHING.

This is one example of the type of thinking and great experience that Alan and Michael share. All of their ideas can be easily and quickly applied by anyone.

JUMPSHIFT is a fun, light and informative read.  You can order JUMPSHIFT direct from their website HERE . Alan and Michael are also supporters of Care Australia so $2 from the sale of each book goes to this wonderful charity and serves as a testament to the good blokes that they both are.

If you would like to be personally connected to the authors then leave a comment on this blog and I am sure they will respond.

All for now,
Brad Skelton
The Shipping Bloke

Check out JUMPSHIFT !

(You are getting this note because you subscribed to The Shipping Blokes Blog by Brad Skelton)

One of my friends and mentors, Alan Anderson, has just co-authored a book with Michael Sherlock who was one of the founders of Brumby's in Australia. The book is called "JUMPSHIFT" and it is packed with ideas, tools and resources to help any business owner or manager create alignment and direction for their business and team.

I particularly love their ideas about staff members who have what they call "the owners eye". By this they mean people that approach every aspect of their role with the company in the same manner as if they owned the business themselves. Alan and Michael contend that these are the people you really need to reward very well and promote and retain.

I wholeheartedly agree and reading the book prompted me to think about who on my team has "the owners eye". Then I asked myself "Am I looking after them well enough?". To be blunt, those that don't have the owners eye, can go down the road to our competitors if they like and become their problem. They are usually the same team members that you constantly have to ride to comply our customer service standards and company procedures anyway thus taking up precious manangement time and energy. The team members that have it, I am making sure that they know they are sincerely appreciated and valued. Those people are like part of the family almost. JUMPSHIFT has reminded me that having and developing the right team and a high performance culture is EVERYTHING.

This is one example of the type of thinking and great experience that Alan and Michael share. All of their ideas can be easily and quickly applied by anyone.

JUMPSHIFT is a fun, light and informative read.  You can order JUMPSHIFT direct from their website HERE . Alan and Michael are also supporters of Care Australia so $2 from the sale of each book goes to this wonderful charity and serves as a testament to the good blokes that they both are.

If you would like to be personally connected to the authors then leave a comment on this blog and I am sure they will respond.

All for now,
Brad Skelton
The Shipping Bloke