From Alltransport in the 1970s, to e4PL solutions today
The poet John Keats once famously said ‘nothing ever becomes real ’til it is experienced’. Well I’ve experienced a lot of reality in my four and a bit decades in shipping and forwarding, much of which has transformed our industry and our world.
The 1972 national dock strike was just beginning as I stated my first forwarding position, as a clerk for Alltransport.
Brazilian ships coming into London port had pilferage problems, from the hold, over the ship’s side, to the truck. To avoid further losses, the next ‘season’ saw the first vessel contain only right-footed shoes, with the left-footed shoes arriving in the next sailing. And so I was introduced to logistics!
In interview with Alessandro Pasetti of The Loadstar
Containerisation was still in its infancy, but the forthcoming shipping revolution lessened the need for men to unload ships by hand, and would lead to the closure of London’s docks within a few years.
Container-inspired industrial action was also taking place in the USA, with strikes halting activity at ports all along the Atlantic and Gulf Coasts, as unions fought to control the loading/unloading of containers within 50 miles of each port.
The unions won their fight and their ‘rights’ were protected by law right up to 1987, when an FMC determination found that the rule was contrary to US shipping law.
The 1970s forwarding office entailed a lot of work on manual typewriters to create documents, and a primitive printing method invented in 1923, called Banda, was used to duplicate them.
With email still some decades away, a global teleprinter network, called the “Telex network”, was developed in the late 1920s, and used through most of the 20th century for business communications. Variations of the technology are still used in the maritime industry.”
The 1980s marked the beginning of globalisation and I launched my own freight forwarding business, SBS Worldwide, which over the next three decades grew to six freight centres in the UK and four in the US, with revenues exceeding $80m.
Globalisation is a fundamental feature of the modern economy and the biggest enabler of globalisation is the shipping container, invented by a US trucker, Malcolm McLean.
The shipping container might seem an unlikely candidate for the most important invention of the 20th century, but its impact is every bit as big as the plane or microchip.
Until the beginning of the 1980s, virtually all goods were shipped loose in the holds of cargo ships.
McLean bought an old oil tanker in the mid-1950s and began experimenting with it as a vehicle to carry trucks. When that idea didn’t work out, he switched his focus and the ‘intermodal container’ was born.
By eliminating wasted space, ships could carry many times more cargo and cut unloading time by up to three weeks, which meant costs plummeted and efficiencies soared.
Early container ships carried 1,000 boxes. Today’s ultra-large container vessels carry over 20,000 boxes.
Today’s consumer is used to cheap clothes, cheap electronics, cheap everything.
But the fact is, none of that would be possible without it costing so little to ship it, often just pennies per unit.
The consumer is the winner.
On the flip side, the outsourcing and off-shoring of manufacturing to developing economies which has been made possible by the container, impacted workers and communities across the developed world, as their jobs simply disappeared.
Today’s economic integration and trade would simply not be possible without these steel boxes. The world as we know it has been shaped by the container.
The 1990s had the most excellent start. Liverpool FC won the league!
The growth of China in this decade was significant for global trade, and was the primary factor in the explosion of forwarding services from Asia.
In the early 1980s, China began to open its economy and gained observer status with the General Agreement on Tariffs and Trade (GATT). China’s ambition was to be included as a WTO founding member (which would validate it as a world economic power) but its attempts were preceded by the need to reform various tariff policies, tariff reductions, open markets and industrial policies, and it was not until 2001 that it became a WTO member.
By the mid 1980s China’s exports were booming, closely followed by a boom in imports, which resulted in trade deficits in 1984 and 1985.
During this period SBS Worldwide, like many forwarders, launched consolidation services from Hong Kong, which remained the most efficient and effective gateway to and from the mainland.
Trade with the US was also booming and SBS Worldwide continued to grow as we rolled out our US hub strategy, to support our key publishing vertical.
Publishing was one of the first verticals to embrace digitalisation, and books were beginning to move to CD in the 1980s, leading many ‘experts’ to predict the end of the physical book. In fact eBooks have plateaued and physical book sales are growing – so I’m pleased we didn’t listen to the experts!”
China’s export growth, while significant in the 1990s, became spectacular in the 2000s, doubling exports to the UK in the first half of the decade, repeating this remarkable achievement by 2009. The volumes were amazing!
Also amazing in this decade were the corporate shenanigans of an entrepreneurial logistician, who has since become a good friend, John Harvey CBE.
John joined Unilever from Cambridge University in 1957, rising to managing director of its UK logistics subsidiary, which became Tibbett & Britten.
He led the 1984 management buy-out of Tibbett & Britten from Unilever, and went on to guide the flotation of Tibbett & Britten Group, following the Group’s extraordinary growth under his leadership.
Tibbett & Britten Group revenues rose from £30m in 1984 to £1.6bn two decades later – when it operated in 34 countries and employed 38,000 people.
The company was acquired by Exel in 2004. The following year Excel was bought by the expanding Deutsche Post and rebranded as DHL.
The early years of this decade were about the financial crash and the long road back, which, thanks to a global bull market, was a motorway, returning to pre-crash levels within just a few years.
Though global trade volumes have remained strong, the bull market has tapered off in recent years and is one of the reasons that we are now seeing the biggest forwarders looking at consolidations.
But it’s not just about buying market share, or getting access to a new market.
Digitalisation is prompting a lot of this activity as C-suite executives realise that their digitalisation investments are constrained, and they need to acquire more scale to drive revenue growth.
The media coverage that the ‘digital disrupters’ have received hasn’t always been positive, and they have been unfairly pilloried in my view.
Market disruption is a natural component in economic life-cycles – and it is critical if the market is to evolve and adapt to changes in its environment. In this case, it is the inevitable digitalisation of the freight vertical.
Complacency is not an option, if you want to survive.
Launching a new tech business is difficult and the failure rate high, which is why I admire many of these entrepreneurial start-ups and welcome the innovation and wake-up call they have given us.
As digital rate platforms, direct carrier booking and online interaction accelerate, the traditional transactional freight business will decline – probably significantly and quickly.
The ‘disrupters’ typically focus on specific service niches and develop a solution that is entirely customer-centric.
They are blazing the trail that the brightest forwarders will follow, to use their technology to open up new revenue streams, based around digital freight, finance, insurance, cashflow and supply chain management.
Flexport has single-handedly shaken our complacency, forcing forwarders to think beyond established offerings and look to innovation.
DHL and Schenker’s failed attempts to develop proprietary solutions, underlines the value of off-the-shelf products that are simple to implement and bring instant value.
Forwarders must move beyond their transportation management system (TMS) track and trace function, and make the digital transition by leveraging their TMS to develop e4PL solutions.”