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How to Take the Risk Out of International Container Logistics

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Archives, Global Logistics, Global Trade Daily, Uncategorized

How to Take the Risk Out of International Container Logistics

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Who is reliable enough to trust with my assets? This was the main question of people after my keynote about “How to take the risk out of container logistics” at Intermodal Europe in Hamburg. Trust is basically the most important ingredient when doing business with a partner: Will they return my containers on time? Do I have to follow up on my invoices? Can I easily reach my partner when I have questions? Without a certain level of trust, you would probably not make deals with a company, even though the offered price seems cheap.

Over the last decade we have built long-lasting relationships with partners where trust was not an issue, but now two things have changed: (1) Digital technologies allow us to collaborate with basically the entire world in no time and (2) stakeholders are increasingly asking for transparency e.g. to better understand where the products they purchase come from. To adapt to these changes, we have to redefine “trust” and find answers for how to make time-efficient and risk-free deals with partners you have never worked with before. 

Trust is an everyday problem in logistics 

The lack of trust is an everyday problem for most container owners and users with a high impact on the decisions they make. Let me give you a few examples: Imagine a container lessee returns your equipment too late or in bad condition. Of course, you might receive per diem fees to compensate you and the DPP (Damage protection plan) covers damages but how do you explain that to your next customer who is waiting for these boxes? How much time does it cost you to follow up, arrange container inspections and send emails back and forth?

Imagine if you bought a used car and the condition was completely different from what the seller had told you before, you would probably not work with the same seller again in the future (and I bet you would also advise your friends against buying his/ her cars). What happens is that operational costs increase due to the lack of trust, Maersk, for example, announced random container inspections because of misdeclaration of cargo. Increasing costs and high risk ultimately leads to something everyone probably has already said at least once: We only work with people we know.

What is currently being done to mitigate risk?

Most of the time decisions are made based on gut feeling or anecdotal evidence from your network, the press, Google or sometimes just a random Linkedin post about a specific company. In addition to that, personal meetings and extensive travel are still the standards for vetting a potential new partner before setting up bank guarantees, credits assessments and “triple-checked” watertight contracts by expensive layers. It’s not only incredibly difficult, time-consuming and expensive to collaborate with new partners but also not real-time, non-scalable and error-prone. Such partner vetting processes lead to fewer partnerships, less market transparency and slower speed- which makes no sense in times of real-time communication, cost pressure and the increasing need for market transparency.

In today’s digital age, there must be a better way. Why? Because you won’t have the time to initiate your traditional vetting process when a potential customer is reaching out. If you want to get new deals, you have to be the first one with a quotation.

Other industries rely on platforms as neutral data layers

To create trust, we can learn from how other industries have increased trust through platforms as neutral data layers, data standards as the common language, user-generated content and financial credit scoring models. May it be Amazon or Alibaba for buying and selling products online, Trustedshops for e-commerce or Delivery Hero for ordering food online – Other industries rely on platforms as neutral data layers. Take Alibaba as an example: Would you buy from a small, random company that you have never heard of just because the price is cheap? Most likely you would not. On Alibaba you do so because you trust their platform, the Alibaba insurance and their vetting process.

Moreover, you trust your peers and you look at how other partners have rated that company in past transactions on Alibaba. That’s why most online platforms have introduced performance reviews & ratings. You would probably rather buy from a seller on Amazon with thousands of 5-star reviews instead of someone with barely any ratings.

With Container xChange, we can see the same happening in container logistics. Since we introduced peer-to-peer reviews and ratings we have seen an increase in transactions by 17% for top-rated companies (>4 stars on average) and overall it has led to faster replies, release documents and a greater level of trust because members now have a bigger incentive to be a reliable partner. Another great example of how platforms in other industries leverage technology are payment and loan providers such as Klarna or even retailers like Ikea with next level credit scoring models. Instead of gut feeling, they can now, for example, even include signals from social media with their algorithms to forecast creditworthiness – which speeds up vetting processes and decreases human-made errors significantly.

May it be reviews, credit checks or vetting – I think we can do the same in logistics. Platforms like Freightos (for freight forwarders and shippers), Xeneta (freight rates) or Container xChange (asset-sharing in container logistics) already exist, but in the end, it comes down to your behaviour. Make credit checks for your partners as easy as possible, be reliable and stick to what you agreed on. Becoming a trustworthy partner yourself is the first step to a greater level of trust in logistics.

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5 Traits Today’s Leaders Need to Revolutionize Their Management Style

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The rapid rate of change and innovation brought about by the digital age is putting many large corporations in peril as they realize they are in an “adapt-or-die” era.

But for a business to change, its leadership must be willing to change as well, and that doesn’t always happen, says Oleg Konovalov (www.olegkonovalov.com), a global thought leader and consultant who has worked with Fortune 500 companies and is the author of the new book Leaderology.

“Old strategies and approaches are not sufficient anymore,” Konovalov says. “Unfortunately, we are stuck in the Dark Ages of management, in which we fall back on the old ways of leading people, rooted in the patterns, metrics and expectations of the past. We are in desperate need of a management revolution.”

Put simply, he says, a leader’s hesitation to learn and adapt to new realities kills any chance of spotting opportunities and being innovative.

“We have memories of such giants as Kodak and Borders,” Konovalov says. “Both used to be on the Fortune 500 list, but passed away because they were stuck in the old paradigm of thinking. A dogmatic way of thinking and acting won’t get anyone far in business.”

Konovolav says over the years he has learned numerous lessons about what separates extraordinary leaders from the ordinary. Here are just five of the traits true leaders possess:

They are involved with their teams. Managers who just monitor from afar what employees are doing tend to think they are good leaders as long as everything seems to be going well. “This is wrong,” Konovalov says. “Are you giving input to the team? Are you present when things are going well or only if things go poorly? The amount of effort and energy the leader puts into the work defines the actual role and status of the leader.”

They are a coach and receptive learner at the same time. “This is a good combination because, on the one hand, you help people to grow by sharing your expertise,” Konovolav says. “On the other hand, not learning from other people is equal to ignoring them.” In the best scenario, he says, there will be experts on the team from whom the leader and everyone else can learn.

They understand leadership is not a dictatorship. People in leadership positions possess power and influence, but they should use that power to serve people, Konovalov says. “If you do that, you’ll be paid back threefold with respect, support and loyalty,” he says. “Make your leadership worth following. Be an example by working for others, rather than acting like you’re king of the mountain in a kids’ game.”

They over-deliver on promises. When true leaders pledge to do something, they are able to calculate the risk and understand the effort needed to achieve what they have said they will do. “Real leaders know they will be judged against actual deeds and fulfilled promises,” Konovalov says. “Unfulfilled promises work against them and people who counted on them will leave. Promising too much is for incompetent leaders.”

They know that winners breed winners. It’s a leader’s duty to help people feel like winners even in small achievements, and to convince them of their ability to succeed despite past failure, Konovalov says. “People trained to win will win,” he says. “People trained to fail will fail.”

“The modern leader needs to combine meticulous planning with flexibility,” Konovalov says. “The wrong decisions and actions can lead to the whole organization losing sight of customer needs as well as quality, harming the long-term sustainability of the organization.

“Making the right decision means thinking of more than the company. It means considering the values and needs of customers and employees as well.”

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Oleg Konovalov (www.olegkonovalov.com) is a thought leader, author, business educator and consultant with over 25 years of experience operating businesses and consulting Fortune 500 companies internationally. His latest book is Leaderology. His other books are Corporate Superpower, Organisational Anatomy and Hidden Russia. Konovalov received his doctoral degree from the Durham University Business School. He is a visiting lecturer at a number of business schools, a Forbes contributor and high in demand speaker at major conferences around the world.

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FCPA Can Provide a Favorable Competitive Edge for Your Business

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FCPA can be used as a useful business development tool when dealing with government officials and customers in international markets by conducting a valuable training awareness program or seminar.

 In 1977 FCPA Regulations were implanted in response to revelations of widespread bribery of foreign officials by U.S. companies. The US Regulation was intended to halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integrity of the marketplace. More recently, the Securities Exchange Commission has joined the Department of Justice is expanding the scope of what an FCPA violation means with vague, broad guidelines.

If one thinks US Multinationals are confused by the new regulation in nature and scope, one can only imagine the confusion of customers, vendors, government officials, and other stakeholders within over 80 International markets.

In many markets, the word “bribe” in business is not a negative reactionary term but respected and expected. In fact, in most emerging markets across Asia, Latin America, The Middle East, or Eastern Europe require this.  If some form of a gift, payment, or consideration is not part of the agreement, it is considered rude and disrespectful, and business negotiation will stall.

Emerging Markets are even finding themselves in a position where they are reluctant to do business with US Multinationals for not respecting local customs and norms and not understanding the FCPA Regulation itself due to the complexity. US Multinationals under FCPA jurisdiction are losing billions of dollars in business opportunities within these markets since their “hands are tied” when it comes to ensuring strict FCPA Compliance. All of which has led to a significant loss in revenue.

However, there is a solution with a win-win for all parties, including the SEC and DOJ.

A robust  FCPA/ Compliance and Controls Training Program delivered by US Companies to Emerging Markets customers, vendors, government officials,  and other third parties to help third party markets better understand US Regulations and has led to a measurable increase in local sales/revenue.

Locally, language adapted, simple, effectively delivered (and maybe even “fun”) training programs using case study interactive examples in a classroom setting provided to local clients/customers/government officials/vendors provides an essential need of US FCPA and Compliance and Controls Requirements.

Private and Public Sector examples show that across Emerging Markets a robust, custom-developed FCPA Training Program, in the local language with interactive case studies  successfully delivered in a hotel or meeting room including modest meals and beverages,  will lead to increased sales/revenue and cost avoidance  in the areas of  Government Tender revenue, ease of custom clearings,  and accelerated regulatory approvals of product or services.

The bottom line benefits are:

-FCPA Regulators appreciate the training and awareness of programs delivered throughout Emerging Markets avoiding subsequent fines and actions

-In-country clients/third parties and government officials enjoy learning about FCPA and how it might differ from their local country norms around bribing

-US Multi-Nationals could significantly increase revenue within emerging markets while complying with FCPA Regulations.

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If you would like to find out more, please contact Frank Orlowski, Founder Ation Advisory Group at 917-821-2147.

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Archives, Global Trade Daily, Special Reports

When The Creative Light Bulb Flips On, Here’s How To Make Your Idea Take Off

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Smart business ideas can pop into someone’s head just about any time and anywhere: While walking or jogging, when driving, before going to bed, while doing housework, or during a brainstorming session.
The idea is usually triggered when the person notices a problem or need. The exciting moment the idea springs to life may seem like an epiphany, akin to a light bulb flipping on brightly in the brain. But that doesn’t mean it’s always a good, viable business idea, and discerning whether it will work doesn’t happen nearly as easily as the idea originally came.
“Getting a business idea from zero to reality requires numerous steps, lots of important details, and diligence,” says Deni Sciano (www.ScoreGameDayBag.com), the founder of Score! Designs, LLC, a women-owned designer handbag company based in San Antonio, Texas.
Sciano got her business idea to design clear handbags when waiting in a long security line at a professional sports event. Her products are now sold in 100 stores across the U.S.
“When you have that ‘a-ha!’ moment of discovery, your passion for your idea can take over, but that passion doesn’t give you the pragmatic side of business that you’ll need to properly investigate its potential and make it work. Having said that, by taking the right steps, being persistent and figuring it out, your idea might really take off.”
Sciano offers five ways to turn your idea into a business reality:
Do your homework. “The idea person who’s basically new to marketing and selling really needs to self-educate as much as possible,” Sciano says. “Read books on sales and marketing. Learn the importance of trade shows and networking as well as online marketing. Research the market; you need to carry out a full analysis of your idea by investigating the target audience and its demographics.”
Plan to spend money. The dream-big side of a new idea is countered by — and sometimes ended by — the reality-check side of having enough money to invest in the project. “You have to ask yourself early-on, ‘Can I afford this?’ ” Sciano says. “That’s the No. 1 thing that can stop you. There are many money factors to consider — for a lawyer, an accountant, to hire staff, to get trademarks, do the marketing, etc. There’s a lot that goes toward building your brand and your market.”
Find mentors. “It’s crucial to form relationships with entrepreneurs who had an idea, believed in it, and made it happen,” Sciano says. “You need the knowledge and inspiration gained from them and their successful experience.”
Keep the faith. “The grinding day-after-day part of pursuing your idea and turning it into a business reality can be drudgery, overwhelming, and discouraging at times,” Sciano says. “Fear is a huge factor that stops people from following through. It’s like a chain on your ankle. But let your adventurous spirit and your continuing curiosity shine through. Keep the faith in yourself and your product.”
Learn how to juggle. Sciano says that if it’s done properly, dedicating oneself to a product investigation and launch is extremely time-consuming. The person with the idea needs to weigh whether following through on it is worth the personal sacrifices they must make. “You have to go all-out, and the first couple of years you have to give up some of those things you enjoy — spending time with friends, hobbies, etc.,” Sciano says. “Figure out what kind of work-life balance you need.”
“After you come up with a great idea, trying to make it work can seem like hitting a wall over and over again,” Sciano says. “You learn how to go over the wall, and going for it is worth it.”
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Deni Sciano (www.ScoreGameDayBag.com) is the founder of Score! Designs, LLC, a women-owned designer handbag company based in San Antonio, Texas. A former teacher and marketing director, Sciano’s created her company and products with today’s heightened security issues at sports stadiums and arenas chiefly in mind.
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Archives, Features, Global Trade Daily

3 Guiding Principles for Digital Transformation Success

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Many companies have adopted digital technology to transform their business. But the transition can be a challenging process, and studies show that digital transformation projects often fail to reach company expectations.
This happens for a variety of reasons, says J. Eduardo Campos, co-founder with his wife, Erica, of Embedded-Knowledge Inc. (www.embedded-knowledge.com) and co-author with her of From Problem Solving to Solution Design: Turning Ideas into Actions.
“It’s often due to ineffective communication between the IT department and business teams,” Campos says. “But overall it really comes down to an inability to problem-solve and a tendency to lose sight of teamwork and the big-picture business plan.
“To have a successful digital transformation depends greatly on employees working together, but too many organizations are siloed, thus hampering the communication and creating obstacles in the process.”
Campos offers three ways company leaders can deal with problems in digital transformation:
Define the essential problem. Campos says digital transformational programs fail when company leaders don’t grasp the root of the problem they hope digital transformation will solve. “Beware of solving the symptoms instead of the problem,” Campos says. “To define the essential problem, you first need to step back, reflect, and clearly define what you are trying to address. Detaching yourself from a problem and trying to see it from a different perspective, you then will have a better view of how things interact with each other. There are often multiple layers to why a problem exists, so ask a series of whys that drill down to the answer.”
Design solutions. Once the problem is identified, setting goals and assessing options come next. ”It’s not unusual to find yourself in a situation where the problems you identified are part of a dynamic environment, affected by constant changes that require you to revisit your goals and options regularly,” Campos says. “This is where technology and software can be very helpful in making sure everything is being tracked appropriately without any information getting lost. in addition to technology, using risk management concepts can be a very effective way to help keep consistency throughout the solution design process.”
Engage stakeholders. Digital transformation often represents a massive change for personnel. Campos says it’s vital for the decision-makers to craft a stakeholder engagement plan that addresses all aspects of a recommended solution. “Clearly identify whom will be impacted by the solution, either positively or negatively, and how to handle stakeholder reactions,” Campos says. “You want them to be willing to commit to your recommendation because they indeed want it, not because you are selling it to them. And when you are influencing the decision-making process, be sure to show your stakeholders your appreciation of varying opinions.”
“Achieving success in digital transformation brings together people, process, and technology,” Campos says. “Many businesses never get far past the launch point of their digital transformation because that triad of people, process and technology isn’t in sync, and problems that could have been solved were not.”
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J. Eduardo Campos is co-author with his wife, Erica, of From Problem Solving to Solution Design: Turning Ideas into Actions. Campos spent 13 years at Microsoft, first as a cybersecurity advisor, then leading innovative projects at the highest levels of government in the U.S. and abroad.  His consulting firm, Embedded Knowledge Inc. (www.embedded-knowledge.com), works with organizations and entrepreneurs developing customized business strategies and forming partnerships focused on designing creative solutions to complex problems.
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Archives, Commentary, Global Trade Daily

Is Your Business’ Global Message Lost In Translation?

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American businesses with plans to take their products global know they will need to overcome language barriers, but that little chore could prove to be a greater challenge than they realize.

The potential for missteps abounds as companies attempt to translate websites, apps, user manuals, print advertisements, marketing emails, and other materials for a customer base that’s not their usual audience.

“It’s critical that companies be aware of not just how their products will be perceived, purchased, and used in other countries, but also that selling internationally requires tweaking business processes,” says Ian A. Henderson, author of Global Content Quest: In Search of Better Translations and co-founder with his wife, Francoise, of Rubric (www.rubric.com), a global language-service provider.

“Many products designed for and by Americans are in high demand in other countries, but that doesn’t mean the user experience will be exactly the same.”

Some translation complications that businesses encounter could easily be avoided, Rubric’s founders say. A few of those problematic situations include:

Creating poor user journeys. The Hendersons say they sometimes encounter clients who have a general idea of what the content should be in English, but have not thought about what it should be in other languages, or how to adjust it for different cultures. “Because of this,” Ian Henderson says, “people often end up translating for the sake of translating from some vague idea of necessity, rather than to intentionally grow the international market for their product in a strategic way. This leads to a poor user journey.” If you don’t put time and thought into what you are translating and why, he says, you may end up with inconsistency in content.

Using misapplied tools. Companies often look for software that will solve all their problems, and in many cases a multi-language feature is sold as part of a content-management system, or a product-information management system. “Unfortunately, it is often not very effective,” Francoise Henderson says. “Translation is more of an art than a science, and it is rarely as simple as plugging words into a program.” She recommends running a pilot program to test out new software before committing to buying it.

Adding translation to someone’s other responsibilities. Companies often make the mistake of assigning translation duties to someone already on staff simply because they speak the languages in question. “On the surface, that seems to make sense because the person knows your product and is already on your payroll,” Ian Henderson says. But the employee won’t make translation a priority because of competing responsibilities. When the employee does prioritize the translation, the rest of their work suffers. Also, just because they speak the language doesn’t mean they are competent writers who can successfully convey a message from one language to another.

Being stuck in silos. If departments within a company fail to communicate, information might be unintentionally translated multiple times, costing the company thousands in extra translation costs, Ian Henderson says. Other times, different departments will use different vendors to translate. So when put through translation, a product’s packaging claim might not correspond to the material that marketing or legal is sending out. One solution, the Hendersons say, is to have a central communications hub through which everything flows.

“One thing we’ve learned is translation is more than just a language problem,” Francoise Henderson says. “People and the products they buy vary from country to country. As a result, marketing can’t be too uniform because it won’t speak to all the audiences. But if it’s too individualized, you can lose your brand identity. The trick is creating a balance that both preserves the global brand and serves the local needs.”

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About Ian A. Henderson

Ian A. Henderson (www.rubric.com), author of Global Content Quest: In Search of Better Translations, is chief technology officer and co-founder of Rubric, a global language service provider. During the last 25 years, Henderson has partnered with Rubric customers to deliver relevant global content to their end users, enabling them to reap the rewards of globalization, benefit from agile workflows, and guarantee the integrity of their content. Prior to founding Rubric, Henderson worked as a software engineer for Siemens in Germany.

About Francoise Henderson

Francoise Henderson is chief executive officer and co-founder of Rubric, overseeing worldwide operations and Global Content strategy. Under her guidance, Rubric has generated agile KPI-driven globalization workflows for its clients, reducing time to market across multiple groups and increasing quality and ROI. Francoise has over 25 years’ experience in corporate management and translation.

Archives, Banking on Global Trade, Global Trade Daily, News

New HSBC Report Urges Pro-Trade Policies

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New York, NY – Though the US “continues to confront a competitiveness challenge of too few quality jobs and too little income growth, there is a future in which America can create millions of good jobs connected to the world via international trade and investment,” according to “Made in America – Made for Trade,” a new report released by HSBC.

Reaching that future, though, “will require US policies that are based on a sound understanding of how American companies succeed in today’s dynamic global economy, and of the critical role that trade finance plays in that success,” writes the report’s author, Prof. Matthew Slaughter of the Tuck School of Business at Dartmouth College.

The US, he concludes, could boost productivity and revitalize the economy in the next decade if the country “pursues an expansive and connected set of pro-trade policies in the areas of international trade, investment, immigration, tax, and the social safety net.”

The report’s major points:

* In absolute dollars, US exports have more than doubled from$1.04 trillion in 2003 to $2.26 trillion in 2013. “The net result has been a commensurate surge in how important exports are to the total US economy.”

* In the past three years, exports as a share of US GDP reached about 13.5 percent; the highest share since at least 1947.

* Exporters and importers “are more capital-intensive, more productive, and pay higher wages – about 15-20 percent higher for companies that trade and about 25-30 percent higher for multinational companies.”

* The tally of US companies that export has risen steadily in recent years, reaching a record 304,867 in 2012. Small and medium-sized companies – those that employ 500 workers or fewer – accounted for over 97.7 percent of this total count, at nearly 298,000.

* International trade “has boosted annual US income by at least 10 percentage points of GDP relative to what it would have been absent this global engagement. That translates into an immense aggregate gain in 2013 of at least $1.7 trillion, an average gain of over $13,600 per US household per year.”

* An aggressive pro-trade policy initiative could create, over the next decade, about 10 million new high-paying trade-connected jobs in America: one million per year or about 100,000 per month. This is indeed an aggressive goal. But it is also one that is no doubt attainable.

The HSBC Made for Trade report was crafted as an on-tour “national conversation” with leaders in business, government, industry and academia in four US cities whose economies have been shaped by global trade holding discussions on the role of global trade in today’s economy.

The national tour looks at the contribution of international flow of goods, services and capital to the US economy, and the opportunities for American businesses brought about by global trade.

10/02/2014

Archives, Banking on Global Trade, Global Trade Daily, News

Wells Fargo International Business Indicator

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According to the latest Wells Fargo International Business Indicator survey,  nearly 70 percent of the US companies surveyed expect to see their international business activity increase over the next year. Additionally, more than half anticipate that their global business will be more important to their company’s overall financial success, both in terms of revenue and profit contributions.