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Tuesday 11 February 2014

How far off is the Circular Economy?

So what is a circular economy I hear you ask?

The best way to explain a circular economy is to look at our current linear economy. Our economy today is mainly driven through taking in material from the ground, manufacturing something, and ultimately that material or product, gets thrown away.While the world is progressively recycling more, with a circular economy you go further in that you design products to be regenerative. Therefore you design a car for re-manufacture, dis-assembly and de-componentisation. A circular economy allows for the materials that sit within the global economy that currently get thrown away to go back in. 
Economically this will involve everything from different financing of those products and materials to different business models. Do we sell the product...or...do people pay per use of the product or those materials for the period of time they have possession of it?
This short YouTube clip illustrates the concept nicely.

Commodity prices have been trending up for a long time and most are becoming increasingly scarce. Adopting circular economy principles radically changes the rules of production and manufacturing costs. Environmental impact would also be reduced. The gains for us all are potentially be enormous.
There are so many exciting changes happening as global competition gains more momentum. We are seeing new industries spring up and many old economy businesses fall by the wayside. For any company to have a long term future it's senior management must be scanning the horizon to ensure that they are not only competitive at home but globally competitive. 
Adoption of modern thinking such as circular economy principles will certainly be another contributor to long term viability of businesses and sustainability.
What can you do in your business to move toward this and what opportunities do you see?
All for now,

Friday 31 January 2014

Crack down has started on RoRo carriers for alleged unfair practices

It seems that the Japan Fair Trade Commission and the US Federal Maritime Commission have finally acted against carriers alleged to be engaged in unfair practices that have violated antitrust laws.

Personally I am very pleased to see the authorities getting tough. My clients and I have been on the receiving end of these types of practices on the USA to Oceania trade lane where one carrier always tried to force 100% commitments of cargo to them in shipping contracts. This obviously closes out competition and is unfair. My USA based lawyers advised that this practice runs foul of both US and European Union competition law but nonetheless they held their stance.

WW, K Line, Nissan Motor Car Carrier, NYK, Eukor and MOL have all been under scrutiny by regulators.

Wallenius Wilhelmsen(WW) has been fined US$33 million for alleged unfair practices in the Japan to Europe trade lane.


K Line has provisioned for a JPY5.7bn fine from the Japan Fair Trade Commission this year. To put the size of this fine into perspective their forecast profit to March 31 this year is JPY16bn.
Hopefully fairer competition and better rates will result from this crack down on carriers.
All for now,

Friday 24 January 2014

How would your cargo fair on a ship in stormy seas like this?


I think this Youtube clip says it all...

I was recently told about this company by my friend, +Verne Harnish  .Thanks to services offered by +Fleetweather Inc shipowners now have resources available to help avoid bad weather at sea.


FleetWeather is a professional marine weather consulting firm that provides a service to the shipping industry to help route vessels away from heavy weather. Their team of marine meteorologists and ship routers gather information to inform vessels of the quickest and safest route to take to their next port. Whilst many companies continue to shift more to automation and providing stand-alone software offerings, FleetWeather continues to deliver a combined solution of technology and analysts, while maintaining a high emphasis on quality service, customized offerings and client successes. With some things you just can't beat the human element.


This innovative service provides insight and critical intelligence, giving global shipping leaders the ability to manage changing conditions, opportunities and complex decisions resulting in improved safety, increased profits through improved vessel performance and reduced operating costs and fuel consumption.


Above all...this service means less cargo claims and lower environmental impact from shipping disasters. To clients of +Depth Logistics this is what matters to them.


All for now,

+Brad Skelton 

Monday 6 January 2014

Rolls Royce is predicting drone cargo ships will be operating within a decade.

I recently blogged about Amazon working toward octocopter drones to deliver orders to customers within 30mins from the time of order. At the time of writing this blog I didn't realise that Rolls Royce , who is a major supplier to the maritime industry, are on a similar path with unmanned drone cargo ships likely to become a reality in less than ten years.

Existing GPS, radar and visual controls make this is entirely possible. The main stumbling block is complex international rules governing shipping and environmental considerations in case of mishaps. For example there is a current requirement in international maritime law for another vessel to go to the aid of another. Perhaps drone ships could be exempted from this requirement?

Another potential impediment is navigating around other vessels at sea that might not have GPS navigation and anti-collision technology such as small fishing or recreational boats. This is currently done by radar and visual sighting of craft from the bridge of the vessel. It is likely that control rooms would be set up to monitor unmanned vessels and take remote control to deal with certain situations that may arise. Real time video feeds can go to the control room from cameras installed around the unmanned vessel so they can physically see what the vessel may be confronting.

There is a research project already running called "MUNIN" which stands for "Maritime Unmanned Navigation through Intelligent Networks. Learn more about Munin.

The MUNIN concept of unmanned vessel operation
The current thinking is that ships would be only be manned as they navigate departure and arrival of ports and their associated channels. Pilots roles would change to accomplish this where they would physically operate the vessel for these segments of the vessels voyage and then switch the vessel to remote and then get off the ship.

Operationally there are some significant gains commercially and environmentally. Vessels can steam more slowly thus using less fuel and creating less emissions. The reason they can steam more slowly is because is purely due to the fact that there is less pressure from the crew to get back to shore. The design of vessels can also change allowing more room for stowage of cargo as there will be no need for accommodation quarters and amenities for the crew. Obviously the ship owners would no longer have to pay the salary of crew as well.

For shippers drone cargo ships would translate into lower freight and charter rates. Of course not every type of vessel would be able to operate with this technology. In the short term bulk carriers and pure container ships would likely be enabled first.

Technology is impacting numerous industries and their are winners and losers but I am excited about the future and pleased to see the shipping industry actively embracing it.

All for now,

+Brad Skelton 

Monday 30 December 2013

Offshore outsourcing can and should be a source of innovation.

I think some people have an ill-informed view of what offshore outsourcing can do to help any business and perhaps are jaded by a poorly executed call centre experience. 

The days of only outsourcing the menial tasks are gone. The fact is that increasingly high end activities are being successfully offshored. Apart from helping you stay globally competitive it can be source of fresh thinking to gain an edge.

Offshoring R&D and innovation can have some amazing upside and some big companies such as Apple and Procter and Gamble are embracing it. Not only is it more cost effective but frequently there is greater opportunity to create and innovate from outside your company than from within it. The people on the outside are not necessarily bound by the thinking of long held ideas and dogmas of products, services, clients and markets. Furthermore different education systems and cultures create different approaches to problem solving which can lead to some major breakthroughs. The perspectives from offshore are very different and therein lies the ability to differentiate yourself from competitors.

From an internal management perspective any offshore team must be respected and treated 100% as equals to the team you have at home. They must have the same latitude to create, experiment, fail and develop ideas in a collaborative manner with the rest of the team no matter where they may be in the world. This little thing called the "Internet" makes this entirely possible.

The other aspect is that a failure of a concept developed offshore will cost you way less than the cost of a similar failure at home meaning you can afford to experiment and fail more and therefore learn more than your competitors can too!

At Depth Offshore we have some clients executing this aspect of their strategy well with a hybrid approach of team members both offshore and at home focusing and collaborating on new ideas. Currently most still keep their head of R&D at home and support this person with great people offshore but I can really see this changing as companies take a more global view of how they need to compete. For most industries you simply MUST MUST be thinking globally or pretty soon you will not be in the race.

I firmly believe that being open to external innovation is one of the keys to building a high performance business in this ever more competitive "us too" global economy.

Innovate, differentiate, get noticed or die!

All the best for a healthy, happy and prosperous 2014 and thanks for following, sharing and commenting on my blog.

+Brad Skelton 

Thursday 19 December 2013

Investment is flowing back into shipping with confidence reaching a 3 year high.

A November survey of ship owners has found their market confidence is the highest it has been since August 2010. Most owners are again optimistic and forecasting improving markets. The World Trade Organisation predicts growth in shipping volumes of 4.5% in 2014. The Baltic Index has pushed past 2000 for the first time since 2011 after bottoming in December 2008 at 663 points. All good news and these factors combined have most industry players feeling like we are in the early stages of a global shipping recovery.

Despite this positive sentiment many European banks are currently selling their shipping loan books to investment funds as the banks see them as problem areas of their portfolio. Admittedly some sectors of the shipping industry remain under extraordinary pressure and some loans are not performing.

Consequently private equity funds are buying loan books at discounts between 15 and 20% off their nominal value and are punting that recovery is finally underway and they can ride the market up and enjoy good returns.

Banks that have sold loan books to strengthen their own balance sheets include; Royal Bank of Scotland, Lloyds Banking Group, Commerzbank and HSH. US based private equity firms are the main buyers.

So what does this mean for shipping?

As confidence and demand returns ship values will rise again and so will freight rates. There are already reports that bulk carriers currently being built have changed hands at up to 25% gains.

On the other hand, if a recovery falters, then ship owners will have a different type of creditor to deal with in an investment fund rather than a bank. Fund managers are typically far less patient to get their returns than the banks have been if payments fall into arrears.

I think the bottom line is that improved confidence and financial returns in shipping is bringing investment back for the first time in about 5 years. That is a really positive thing for everyone in the industry and I think this investment trend is gaining momentum.

All for now,

+Brad Skelton 

Monday 2 December 2013

Drone delivery of your goods in less than 30 minutes via Amazon Prime Air

Here is another really cool example of how technology will continue to radically change business and our economy.

Amazon are working on delivery of their customers orders within 30 minutes via drone octocopters right from their warehouse to your door.

Check out this 1.19min YouTube clip demonstrating the concept.


This delivery method, assuming it gets aviation authority approval, will impact the road courier logistics industry massively. This will become the superior delivery method without doubt. Cheaper, faster, no driver, no traffic..no traffic jams....and more environmentally friendly too. If Depth Logistics were in the parcel courier field of logistics then I would scrambling to get my own fleet of octocopters ready to serve my clients before my client start buying their own. Maybe we should.....??

Think about the other potential applications of this delivery method to numerous industries. What about pizza delivery? Then again, would the downdraft from the rotors mean cold pizza on arrival? I'm kidding but the possibilities are incredible and exciting for any lightweight parcel needing delivery across town that is time sensitive. The medical and pharmaceutical industry is one.

I congratulate Amazon for the vision they have for their customers and the logistics service they hope to provide. This will be a definite game changer for another sector of the logistics industry.

All for now,