BOGART CREWED A CARGO - Global Trade Magazine
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  March 1st, 2012 | Written by

BOGART CREWED A CARGO

POETRY IN OCEAN
The USPS honors the U.S. Merchant Marine for service so courageous that FDR relaxed his ban on awarding medals to civilians.

Is it still necessary—69 years later—to issue a spoiler alert for Action in the North Atlantic, the 1943 movie starring Humphrey Bogart and Raymond Massey? Consider yourself warned.

 Action follows Bogart and Massey as officers in the World War II-era U.S. Merchant Marine. It’s classic Bogart: tempted by the promise of living comfortably ashore with his new wife, he nevertheless follows the call of duty: “We’ve been hanging around Axis ports for a long time, and we’ve seen what they do,” he tells the missus. “What we’ve seen ain’t nice. So we can’t sit around holding hands with all that going on.” Bogart and Massey sign on with the SS Seawitch, part of a death-defying convoy that will attempt to relieve our Russian allies in Murmansk. In the climactic scene, the convoy steams into a deadly metal pod of German U-boats. Our heroes use their very own Seawitch to ram and sink their German antagonists, and then practically drift into the harbor at Murmansk, damaged but proud. Grateful Russians cheer. Triumphant music swells. Credits roll.

We thought of Action in the North Atlantic when we ran across the U.S. Postal Service’s new stamp commemorating a Liberty ship like the one Bogart and Massey used to crush the Huns. The stamp is part of a series honoring the U.S. Merchant Marine, and also features “clipper ship,” “auxiliary steamship,” and “container ship”—this last one reportedly based on a photo of the R.J. Pfeiffer operated by the Matson Navigation Company and steaming eastward across the Pacific as we went to press.

“Since colonial times, America’s merchant ships have plied the oceans and other navigable waters conveying goods and passengers,” reads an explanation accompanying the summer 2011 issue. “During wartime, they have also helped deliver troops and war materials.”

The Merchant Marine is a hybrid—part commercial enterprise, part U.S. military. Though privately owned and run by civilians, the ships are available to serve (sometimes urgent) government demands. Its crews have proved as brave as Bogart—so courageous that, in the case of merchant mariners serving in World War II, President Franklin D. Roosevelt relaxed his ban on awarding medals to civilians.

The U.S. Merchant Marine bailed out soldiers and civilians in Korea and Vietnam; it was there at the beginning of the Afghan and Iraq wars; member ships relieved New Orleans in 2005 after Hurricane Katrina and the Gulf Coast after the 2010 Deepwater Horizon oil spill.

The Postal Service’s 2011 series is not the first time it has honored the Merchant Marine. That would be in 1946, when the USPS released its first Liberty ship stamp, “U.S. Merchant Marine: Peace and War.” Unveiling the stamp, Assistant Postmaster General Joseph J. Lawler recalled “that 604 large American merchant ships were sunk by the enemy during the conflict” and “noted that Crew Casualties [totaled] more than 5,000 dead or missing in action.”

The stamps are called Forever stamps; it says so above each vessel in the series. The USPS will tell you that means the stamps “can be used to mail First Class letters no matter what the postal rate.” But in this case—in the case of the men and women who run these ships on behalf of strangers back home—we prefer to think of the word “forever” in more poetic terms.

—Andrew D. Kelly

EXPORT OAR ELSE

Shipping canoes in a cargo container is like working a Rubik’s Cube, a task that requires an engineer’s smarts and the patience of geological forces. It was so hard in the beginning that Osagian Canoes almost abandoned its hope of becoming a global company.

“For years, we sent them assembled and just didn’t sell very many,” says John Carr, VP of Osagian’s parent company, Lebanon, Missouri-based Carmeco Inc. Fitting just 20 canoes to a cargo container, Carr says, “it cost us almost as much to ship the canoes as we made on them. And it was always a chore to get them in there.”

OSAGIAN’S CARR
“I thought I was going to have to learn German. I learned that English really is the international language of buisness.”

Carr allows that there was occasionally a little loss of faith and maybe some cursing. Because along with the frustrations of shipping their canoes to foreign markets was the realization that the U.S. market is pretty mature, canoe-wise: 30-year-old Osagian was selling a steady 800 canoes per year, with no growth in sight . . . unless it was offshore.

Nevertheless, along with Carr’s anxiety about foreign languages and unenforceable contracts, the cargo-container puzzle was enough to keep Osagian Canoes in dry dock. And when he got the occasional call from an interested foreign buyer? “As soon as we talked about freight prices, well, we usually just gave up.”

And so the company’s export effort limped along, hampered by questions that have bedeviled generations of moving men—the questions of square pegs in round holes, the diabolical shape of a canoe and the container into which it must fit for export.

As recently as 2010, foreign sales accounted for a measly 1 percent of company revenue.

Then Carr attended a Commerce Department ExporTech workshop; that helped relieve his language and legal worries. (“I learned that English is the international language of business,” he says. “I thought I was going to have to learn German.”) And then out of the chaos came an answer to the cargo-container challenge, like something handed down by the Ikea furniture gods: if they shipped the canoes in pieces and assembled them on the other end, Carr and his colleagues could move up to 400 canoes in a single container. That would cut delivery costs dramatically, from about $250 per canoe to something like $12.50.

The solution hinged on the presence in Europe of an assembler. Carr turned to Claus Nielsen, a Danish outdoorsman and fanatical oarsman who, Carr says, “just really loved our product.” Nielsen had already asked Osagian if he could represent the firm in Europe. Osagian went a step farther, making him an employee.

The plan unfolded in October 2010. Osagian shipped unassembled canoes to Copenhagen; Carr, his brother and the Osagian Canoes plant supervisor flew in behind them. The trio showed Nielsen how to assemble canoes for transshipment to distributors throughout Europe.

Osagian has made three such shipments and will complete another in a few weeks. Foreign sales now account for about 20 percent of total sales, Carr says, “and we hope to grow international to be about equal to our U.S. business.”

Carr says the experience has taught him something about geography: “It’s not that big of a world out there.”

—Will Swaim

NEW RULE: BRING A BELT AND SUSPENDERS

Yes, yes, yes: we’re all bullish on global trade—from President Barack Obama (who appears to have been prophetic in his bullish 2010 promise to see the U.S. double exports by 2015) to the chatty guy with the oversized ego sitting next to me in business class on a 16-hour Cathay Pacific flight into HKIA (you know who you are). Amidst all the intoxicating optimism, it’s a weird sort of relief to read “Locate the Nearest Exit,” the Ninth Commandment in Perry Newman’s new book, The 10 Commandments of International Business—and other rules to observe religiously.

“It may seem counterintuitive, even a bit defeatist, to contemplate the potential failure of a deal or the collapse of an effort to enter a new market, particularly if you’re just starting out and are excited by the prospects of going global,” Newman writes. “But it’s essential to consider the possibility that things will go awry for one reason or another, and that you’ll have to abandon the effort.”

Conversational, generous, and smart, Newman’s primer is also (despite the Ninth Commandment) invariably upbeat. You can do it, he seems to say in such chapters as “Makest Thou a Plan” (the Fifth Commandment) and “Appoint Thee a Moses” (the Sixth). And then, suddenly, in chapter nine, there’s this wonderful, bracing and undeniable reality: “Force yourself to consider the possibility that things won’t work out.”

“This is a particularly unusual suggestion,” Newman tells us, acknowledging that, sure, contemplating failure distinguishes his book “from many others of its ilk—given that so many government agencies relentlessly encourage entrepreneurs to go on trade missions and generally to get in the game whether they’re ready or not.

Newman should know. A writer, speaker and trade consultant, he’s spent a good part of his adult life working with big-time exporters as well as rookies. He is chairman of the Maine District Export Council; that he has served in that capacity under Bill Clinton, George W. Bush and Barack Obama tells you something of his diplomatic skills—that and the fact that the Canadian government picked Newman, an American, to serve as its first Honor¬ary Consul to Maine. He sits on too many trade-related boards to list (though we’ll mention our favorite, the delightful-sounding French-American Chamber of Commerce for New England), and has worked with the European Union on infrastructural development.

He knows international business, in other words, and so he’s seen a few major screw-ups. But even many of those worked out, he says, because the exporters had a Plan B.

NEWMAN AT THE TAJ MAHAL
Sometimes it’s worth thinking about the possibility that the glass is half full. And broken.

Newman recalls, for instance, the U.S. exporter who shipped frozen chickens to Russia. “This was when the country had just begun to transition from a command economy to one that more closely resembled a free market,” Newman tells us. “The product arrived in Moscow, but Russian customs authorities refused to release it to the importer, citing various alleged insufficiencies in the documentation.

Never mind that the American had hired a reputable logistics man; the Russians were adamant: these chickens would not cross the road. And to add international insult to injury, the Russians told the American exporter that he would be assessed “significant charges” while his birds cooled their already-frozen chicken heels in cold storage.

“Fortunately,” Newman says, the exporter “had taken precautions.” Knowing he’d be doing business in the wild West of post-Soviet Russia, he had established a relationship with a representative of the U.S. Commercial Service in Moscow before he shipped the product. Newman wants you to notice that the exporter “was not starting from a blank slate” when the shipment stalled: the exporter made two phone calls—to his newfound friend in the Commercial Service and his Russian sales agent. Each had been prepared for just such an eventuality; each called the recalcitrant customs agent. Even in Yeltsin’s Russia, apparently, that was enough to shake loose the chickens.

The Lesson: “You have to take a belt-and-suspenders approach, particularly with emerging markets,” Newman says. “You can do everything right, but mistakes—or, in this case, avarice—sometimes get in the way.”

Buy the book on Amazon.com. Email Perry Newman at pbn@atlanticagroup.com.

—Will Swaim

NEW TANG FAN

If you watched television between 1965 and 1985, you almost certainly saw the ad campaign linking Tang—the orange-flavored drink mix—to the American space program. Now part of Kraft’s Global Snacks division, Tang is winning market share in the world’s developing markets.

The trajectory—from space-age drink of astronauts to No. 1 choice of urban poor—isn’t as odd as it sounds. And let’s admit that one of these target markets is substantially larger than the other. Popularity in emerging markets accounts for the fact that, though it holds a measly 2.5 percent of the powdered drink-mix market in the U.S., Tang has become Kraft’s twelfth billion-dollar brand.

Tang began life in the late 1950s as a General Foods product marketed with then-conventional tactics. The earliest print advertising reads like a chemical engineer’s spec sheet, featuring “instant,” “vitamin C,” and a well-manicured blonde. A black-and-white TV commercial from the era features two boys who awake in “the bunkhouse,” dress up as cowboys and then playfully shoot one another in a struggle over Tang.

The marketing campaign soon changed—dramatically and for decades. The proximate cause: In 1965, the Kraft website deadpans, “Gemini 4 astronauts bring Tang along on their mission. Tang is on board all manned Gemini and Apollo space flights over the next 10 years. Space theme is used in communications.” Indeed it was: A 1966 TV commercial features documentary footage of the Gemini space program—including an astronaut mixing and drinking Tang while his capsule floats like an enormous gas mask high in earth orbit. In the 1970s, playful cartoon aliens trade moon rocks for Tang. In 1983, it’s documentary film footage intercut with suburban domesticity—“from Gemini to the space shuttle to your family.”

The decision to put Tang in a space capsule was no mere product placement hatched in the General Foods marketing department. Among the modern environmental movement’s early heroes, engineers who designed astronauts’ flight suits created a recycling system to transform waste water (an anonymous NASA engineer refers to it euphemistically as the “byproduct of a recurring chemical reaction”) into safe if foul-tasting drinking water. The addition of Tang to that byproduct made potable palatable.

And still does. Market analysts say Tang has become popular in emerging markets for reasons the Gemini crew could relate to—pushed along by some thoughtful marketing at Kraft.

Sanjay Khosla, a Kraft executive VP and president of developing markets, attributes Tang’s success to “Glocal” marketing—that’s “go” plus “local” in a neologism that sounds like “global.” Nixing the one-size-fits-all strategy, Khosla doubled brand sales, from $500 million in 2006 to more than a $1 billion today.

IN PORTUGUESE IT MEANS “HELLO” AND “GOODBYE”
No, it doesn’t. But Tang that’s “new,” “fresh,” “modern,” amd “green” makes for powerful marketing in Brazil.

“I have been experimenting with this concept for a while, and I have realized that the difference is only in implementation from country to country,” Khosla has said.

Consider China, where Tang first appeared more than 25 years ago. Sales remained anemic until the company acted on research revealing that Chinese drink Tang hot and in smaller servings. Most powerfully, the research showed, while Chinese mothers wanted their offspring to drink more water, Chinese children, like their Gemini counterparts, don’t like the taste. This led to a new marketing campaign, smaller packaging, and a slogan: “Tang makes water more exciting.”

Similarly, Tang has always been marketed toward mothers as a great way to get Vitamin C into their children. But mothers’ dietary concerns vary by region. Kraft’s research indicated that Brazilian children were iron-deficient; Tang in Brazil is now fortified with iron. That may help explain soaring sales there—up 40 percent last year, making Brazil the brand’s biggest market. A new Tang factory opened in Pernambuco last year.

It’s not all taste and nutrition. Kraft Brazil president Marcos Grasso told Bloomberg he’s “fueling sales partly with a marketing campaign that encourages kids to recycle Tang packages so they can be made into pencil cases and backpacks.”

Space backpacks?

—Patrick Danson with research by Lindsey Gregory

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