Australian federal budget 2014. Some suggestions from a humble shipping bloke.

On the 13 of May the new Australian Government hands down the Australian Federal Budget 2014. The speculation as to what will be in it seems bigger than ever in the media. While in no way do I consider myself an economist, at very best perhaps a bush economist, I'd like to enter the fray with a couple of suggestions for the Treasurer, Joe Hockey.

I think most Australians accept our country is now back in debt and it needs to be addressed. Generally I think we are prepared to take some pain rather than go the way of other countries whose debt grew to such an overwhelming level that their economies became dysfunctional. The Australian government must raise tax revenue, cut costs and help our exporters. Pure and simple.

With my background and qualifications in international trade and customs I think one area that government should use is with import duties. An increase in import duty of just 1 or 2%, on imported goods from countries that Australia does not have a free trade agreement with, would generate huge revenue and also help protect our local jobs and manufacturers who are rapidly disappearing with increasing global competition. Furthermore it would make imported goods slightly more expensive and hopefully slow imports down and thus improve our balance of payments. Such an increase to import duty is easy to apply and cheap to administer as Customs have the IT infrastructure to do this already.

Back in my college days, about 25 years ago, I wrote my final paper suggesting that protectionist policy had had it's day and we would see free trade between nations and trading blocks emerge. I was severely marked down on this at the time as my lecturer had a strong protectionist and differing view. Essentially what I predicted is what has come to pass though. 

I have not been a protectionist for all of my working life however I now think in the next 5-10 years we may go full circle and we will start implementing protectionist policy once again. I believe many other countries in the west will be forced to as they cannot compete with other other countries and keep their population employed. So as global competition is intensifying I am gradually becoming a protectionist conditional upon import duties imposed being kept to a bare minimum. In my mind an absolute maximum of 5% as we do not want our local industry to become complacent or reliant on import duty for survival.

The other area is GST. While I do not profess to know the finer points of Canadian taxation, it seems to me that the Canucks are doing it pretty well and adjust the rate of GST up or down accordingly to act as another economic lever. During the GFC they lowered their GST progressively from 9% to 5% where it is now which in effect helped stimulate the economy by making things cheaper.

In Australia the main and seemingly only lever we use is interest rates to slow down or to stimulate economy. Pretty crude approach in comparison to our Canadian mates who have very similar economy to ours with mining, tourism and agriculture being key drivers and two levers to pull economically. We should follow their lead.

Apart from that, help is on the way to our exporters. This month the government increased expenditure on Export Market Development Grants and simplified the process. A positive initiative that will certainly assist.

If only the AUD would weaken to sensible levels for our exporters then we'd be knocking down that foreign debt in no time.

I'm happy to take your call Mr Hockey if you'd like a few more suggestions...

All for now,

+Brad Skelton 

Floating nuclear power plants at sea

Since the earthquake and tsunami that hit the Fukushima nuclear power plant the industry has started looking at offshore alternatives that they believe will be much safer.

In fact, Russia is already building the first floating plant called the "Akademic Lomonosov"(pictured) which will be operating by 2016. This is essentially a vessel that will be docked at a wharf in Vilyuchinsk and will be connected to the local electricity grid and steam lines. The vessel can be easily mobilised in the event of a mishap away from the town.

Russian nuclear power concept

Akademic Lomonosov under construction

In the USA, MIT has another floating nuclear power plant concept that is thought will be tsunami and earthquake proof. The MIT design stations much bigger nuclear power plants much further offshore much like a floating oil platform. In the event of an incident it is further away from major population centres and there is also sea water available that could be used to cool rods and stop them melting down.

Despite major incidents like Fukushima and Chernobyl, it appears that nuclear power is here to stay and our oceans and shipping industry are about to start playing a role in meeting our energy needs.

All for now,

+Brad Skelton 

Cheaper Australian coastal shipping services ahead...finally!

Back in June 2012 I posted this blog about the then Federal Government's changes to shipping legislation that they somehow thought would revitalise shipping in Australia and lead to more coastal services. 

I reported in that post that the new legislation was actually having the reverse affect as many ship owners ceased their Australian coastal shipping services. That legislation lead to them being burdened with additional government charges, increased salaries for foreign crew who had to be paid at Australian award rates and significantly more red tape and paperwork to deal with. The few carriers that still offered a service were forced to pass on these costs and rates were hiked making shipping some cargo by sea more expensive than road or rail.

The bottom line was that my clients businesses were burdened with additional transportation costs that they could ill afford and Australian shipping wasn't revitalised one iota and indeed it regressed in my opinion.

This month the new Liberal Government announced a review of this legislation and released this option paper entitled "Approaches to regulating Australian Coast Shipping".

Sensibly this options paper contemplates removing all regulation of coastal shipping and to actively minimise all industry burden and costs.

Depth Logistics' is already gearing up our Australian Coastal Shipping Service in preparedness for our clients directing more of their domestic cargo back to sea. Furthermore we will be making a submission firmly advocating, on behalf of our clients, the negative impacts the current legislation has had on them and explaining why it MUST go. If you would like any particular concern, idea or view you may have expressed on you or your companies behalf, then please either make a comment in this blog post or contact us.

Stay tuned to this blog or follow +Depth Logistics or +Brad Skelton on Google+ for updates as this review unfolds. 

Rest assured Depth's team and I will do everything we can to influence the right outcome for our clients and industry.

All for now,

+Brad Skelton 

Have you tuned out to advertising as well?

In this blog I have written about changes and restructuring of the way business is being done globally. Nearly every industry is being challenged in some way.

I believe advertising is no different and think that people are tuning out to traditional forms of advertising no matter what channel is delivering it. It is literally overwhelming how much our senses get assaulted by advertising these days as corporations try to be heard more loudly than their competitors.

The internet has changed the landscape. Once the power in any sales transaction rested mainly with the seller. Now the pendulum has swung and with the help of the internet and smartphones the buyer now has the power to immediately price check globally and verify facts to see which companies are telling them the truth. 

This YouTube clip illustrates perfectly why we are tuning out to traditional advertising.

Authenticity, transparency and a fair price is what earns a buyers trust, attention and spend. By the way, you don't sell anything unless there is a transfer of trust!

I also believe there is a change in consciousness of buyers and what corporate messaging and advertising they choose to listen too. And YES...this is increasingly a CHOICE and therefore further undermines the power of advertisers and big corporate. Social media is impacting this massively where customers CHOOSE to follow certain companies and brands online. Word of mouth is everything and today word of mouth is mostly online.

Even a tiny one person start company can be heard above big corporate advertising campaigns these days and frequently smaller businesses are immediately trusted more. Particularly by the Millennials who live on social media and forums for nearly all their needs.

So how can big corporate keep our attention? 

I think they need to get fair dinkum about embracing social entrepreneurial-ism and work out how they can make a difference to our community and planet. +Pepsi  is one big corporate who has done a great job of this with their Pepsi Refresh Project. In essence they diverted $20m in marketing spend toward ideas that could have a positive impact on the community. 

This not only did a lot of good, but the publicity, trust and advocacy this earned them far outstripped the return on investment they would have otherwise received through spending this money directly on more advertising noise.

All for now,

+Brad Skelton 

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,

+Brad Skelton 

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,

+Brad Skelton 

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 

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 

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 

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 

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,

+Brad Skelton 

The fastest ship in the world

The fastest ship in the world is the "Francisco" which is a 99 metre long vehicle and passenger ferry built by Incat in Hobart, Australia. She is capable of speeds of up to 58.1 knots or 107.6 km per hour with 150 cars and 1000 passengers on board.

The technology in the "Francisco" is amazing. She is a wave piercing catamaran and is powered by two GE gas turbines with modified Boeing 747 jet engines. The two engines combined produce 59,000 horsepower!

The primary fuel is LNG and Incat claim it to be the fastest, environmentally cleanest and most efficient high speed ferry in the world. The vessel will be operating between Buenos Aires and Montevideo. Below is a short YouTube clip about the ship.

The technological advances in the maritime industry producing vessels with capabilities like the "Francisco" are game changers for the industry. Much like what the Concorde did for world air travel when they were first launched although fuel economy and environmental impact were not really a big consideration back then.

All for now,

+Brad Skelton 

Depth Logistics is a finalist for Freight Forwarder of the Year in the Australian Shipping and Maritime Awards

I am very proud to advise with less than a year of operations +Depth Logistics is receiving recognition from it's industry peers.

We have been told this week that the company is a finalist in not one, but two categories of the 2013 Australian Shipping and Maritime Awards!

Depth Logistics stands to win the "Freight Forwarder of the Year" category and +Jenny Ruffell Smith of our team is in the running to win the "New Generation" award.

The awards ceremony is Thursday the 21st of November in Melbourne and I'll make some Google+ posts to keep you updated as the night unfolds.

Thanks to our great team and everyone else who has supported the company and enabled us to create some innovative new shipping services, powerful logistics and technological resources that makes shipping easier for our clients.

Depth Logistics - The Art of Logistics Management and Technology

Please wish us luck!

All for now,

+Brad Skelton 

So why do we still need phone numbers?

All of my companies and I use Google Apps for Business as our communications platform. It gives us the full suite of Email, Instant Messenger, Hangouts(video conferencing) and Drive(cloud storage) and Google+ for social networking. It is cheaper than any other platform I am aware of to run and in our experience hangouts have proven to be far more reliable and easier to use than Skype and we can have up to ten of our team members around the world in a single Hangout simultaneously. The connectivity to our Android phones is seamless too.

Whether you personally prefer Google, Apple, Microsoft or others, the one thing that has become a common denominator among them all is that you set up an account that creates a unique personal ID or profile and gives you access to the online resources. The advantage Google+ has is that from this single platform you can initiate hangouts, IM and emails as well as access to numerous other Google based applications such as YouTube.

I believe applications like Hangouts and Apple's FaceTime are gradually taking over from phone calls. After all they are more personal if you choose to video conference than a phone call and cheaper too. They also go beyond international borders for no extra cost per minute. Not to mention you can share photos and other files which you can't do in a phone call. 

Instead of having a phone number and using the phone system to speak to someone you can use the internet and mobile data connections to do the same. So why do we need a personal phone number anymore when you have your profile or account ID that allows people to find you and then connect more easily than ever?

If you are not familiar with Hangouts, check this 1.23 minute YouTube clip out to see what I mean.

Retailers are suffering because in many categories of goods buying online now provides the superior consumer experience. Communications are the same. With modern smartphones enabling Hangouts, FaceTime and the like so cheaply and internationally, phone calls and texts no longer provide the superior communications experience. Increasingly mobile phone plans will be about the data plan you have and not the voice or text.

As for email...well if you really want feel old....the younger generation sees this as "old school"! Their main communication is done via their preferred social network.

All for now,

+Brad Skelton 

Super Typhoon Haiyan

Last Friday at 4.30am local time Super Typhoon Haiyan hit the Philippines. There are unconfirmed reports of up to 10,000 people dead and millions now homeless and currently without food and water. UNICEF estimate 4 million children are seriously impacted right now. 

A "super typhoon" is defined a by it's wind speeds. A typhoon with wind speeds over 241km per hour that are sustained for longer than a 1 minute in duration is classified as "super". Can you imagine the affect of sustained winds at this speed? Devastating!

Typhoon Haiyan from space

Haiyan hit the south of the Philippines hardest. Depth Offshore has it's team located in the north so I am relieved to report that everyone is okay there. Some of our team members have been unable to contact family and friends in the south since last Thursday as communications infrastructure has been wiped out.

The people in the Philippines need help to overcome this massive natural disaster.

There are numerous aid agencies with appeals running. Our team and associates outside the Philippines are going to support UNICEF and I urge anybody reading this blog post to do the same or make a donation to another reputable aid agency.

Here is a link to UNICEF's appeal page.

Please make a donation and share the link or this blog to friends and family. Thank you!

All for now,

+Brad Skelton