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Business confidence in T&L

The BNZ business survey was out this week. The survey contains quotes from people in various industries. I found the transport and storage quotes interesting and have posted them below:

• Road Transport. Seasonal activities are strong but general freight has eased noticeably.
• Transport/Storage -- Domestic removals and international arrivals significantly down but everything else same or even up on last year.
• Road Transport. Lower running costs (Fuel)and good availability of experienced drivers. Outlook positive.
• Transport import export containers drying up Transport Industry (Freight Forwarding/Logistics): Freight volumes are down due to the state of the economy; companies are sending less freight. Our customers are seeking lower rates to all destinations, which is a challenge for us to offer. However, we see the current economic climate as an opportunity to increase our market share by claiming accounts from the smaller companies who are looking to go into receivership.
• Transport (Courier) Industry. After a quiet January February was a reasonable month. Still behind on budget but there still seems to be a reasonable amount of volume in the network. Quite a bit of pressure from competitors slashing rates which is a little self defeating.
• Transport . We transport food and associated products. Probably as safe a bet as any at the moment. Modest downturn in business coupled with reduced operating expenses. Wage expectation has backed off with a number of driver layoffs in the industry.
• Public transport business generally picks up in an economic downturn. We are starting to see that now.
• We import tyres from overseas and sell directly to Truckies. Buyers are definitely more cautious, but having said that our business has picked up because people have to watch every cent and are shopping around for best deals. We have cut the middle man out. The hardest is the falling NZ dollar, needing more and more available cash flow for purchases inwards.
• Transport - as we carry food and food ingredients plus seasonal items/fish and stone fruit - a comparison is difficult but it feels like it is worse than this time last year, and most people are predicting it will get worse. If oil kicks up in this period there will be casualties in many parts of the transport industry.

KiwiRail appoints Jim Quinn as CEO

This from the NBR... 

KiwiRail Group's announcement of Jim Quinn as its new group chief executive has surprised industry sources, who expected current acting CEO William Peet to continue in the role.

KiwiRail and Kiwibank chairman Jim Bolger announced Mr Quinn as the new chief executive yesterday. Mr Bolger has worked closely with Mr Quinn before; Mr Quinn is currently CEO of Express Couriers Limited, a joint venture between New Zealand Post and DHL. Mr Bolger is chairman of New Zealand Post and Express Couriers.

"Jim Quinn combines experience in the private sector and with a major state owned enterprise. He brings to the rail industry experience from his work in the postal, electricity and transport sectors as well as a strong customer service dimension from the courier business,” Mr Bolger says.

Awesome stuff! Kiwirail needs vision and leadership. Jim will surely do this. He also has industry knowledge to actually work along side transport companies as customers and to improve the service.

All that said, a political hot potato to have with a new government. I wish Jim all the best.

Transport companies go green.

OK, so I have had my summer catch up of Transport & Logistics News.

Here is an international article from DHL and a local one about NZL.

Carbon Neutral Warehouse Pointer To The Future
DHL has completed its first carbon neutral warehouse which is likely to become a pointer the future of warehouse design world-wide. The transformation of its Yorkshire warehouse to carbon neutral status has been achieved by installing a ground source heat pump for heating and cooling, and motion sensors to electric lighting systems. The warehouse also switched to a green energy tariff, which provides energy from carbon-reduced sources.

Tauranga. Transport company NZL Group is hoping to cut it’s annual fuel bill by 8% by improving driver bahaviour in terms of fuel efficiency. Monitoring fuel efficiency is part of a move by the company as part of the business’s plan to look at a triple bottom line approach to operations including environmental impact. Company owner, Mark Fielder, spent four months setting up a fuel efficiency programme at their Mt Maunganui site keeping close watch on the fuel consumed by each of its fleet of 170 trucks. Fielder has been informing his staff on the effect conduct such as avoiding idling, cutting speed and improving driving techniques can have on cutting fuel consumption and emissions.

Cheap trucks anyone?

I read this in the Transport & Logistics News recently.

US Trucking Firms Downsizing
More than 130,000 large trucks are currently parked up in the US equivalent to 7% of the nation’s entire heavy trucking fleet as demand for freight services dwindles. This figure is expected to keep rising as the recession bites. The downside is expected to continue even when the recovery starts. Freight rates are picked to jump as rebounding demand outstrips the industry’s ability to re-commission capacity.

I wonder how that compares to NZ as a percentage, rather than 130,0000?

Judge gives stern warning to transport operators

This from the NBR last week;

Road transport haulage operators have been given a clear message by a High Court Judge: Overload your vehicles at your peril.

In a reserved judgment handed down at the High Court in Hamilton, Justice Lyn Stevens said the country loses $100 million a year in unpaid or under paid road user charges.

...

The judgment entirely debunked a widely held transport industry belief that enforcement officers allow a five percent weight tolerance over and above the licence purchased.

Justice Stevens made his comments in the case of Mt Maunganui transport operator TD Haulage which was appealing a District Court assessment that the company owed $1.215 million in short paid road user charges.

...

In the end, it is not known what TD Haulage was required to pay to settle the matter because a confidential settlement was reached been the parties during the appeal. But Justice Stevens closed the case by delivering a judgment anyway, using it to sternly warn the industry of its shortcomings.

Australia T&L

One of the things that Aussie are doing well is in combining their industry recruitment and branding under one umbrella organization.

They brand themselves as T&L.

This includes Road Transport, Logistics, Warehousing, Rail, Sea, Air. Anything but self loading freight. Check out a Virtual Careers Expo they have set-up at Virtual Careers.

This sort of collective behavior is seriously lacking in NZ.

The year ahead...

I think there is little doubt that the economy is slowing.  Christmas spending, and therefore transport volumes, where very late. Figures just out from show that Retail EFTPOS transactions are down in January.

Add to that an election year and high fuel and interest rates and it can only but slow down.

This is further reinforced by a quote I read in the Herald about Freightways result.

"In the current operating environment of low organic volume growth and rising costs, Freightways has been careful to continue to make decisions for the long term good of the business," the company said.

"As such, our investment in facilities, technology, customer service initiatives and most importantly in the training and development of our people has continued."

I agree with Freightways. Training, Development [and retention] are critical tis year.

Climate change cost?

I read this article in the October truck and driver magazine and thought I would post an excerpt here:

The biggest risk to the transport sector arising from climate change won’t be the change itself … but poorly-based Government polices, New Zealand Institute of Economic Research director Brent Layton told the RTF Conference.

“If the policy changes to deal with climate change are well thought through, aimed at minimising greenhouse gas emissions at minimum cost to the economy, applied evenly to different business sectors and are formulated so as to not reduce NZ’s competitiveness compared with other countries, then their impact is likely to be modest – and the impact on the road transport industry likewise. ...

“There are increasing signs that policy advisers seem keener to offer advice that is acceptable to the Government rather than giving the best advice. Finally, there is the strong political interest locally in emission control, so of it manifesting itself as an urge to see NZ leading the charge to save the world.

On the transport-specific front, climate change and environment issues seem to be a magnet for people that feel that cars, and by association trucks, are obviously bad, so that something which is against there use is obviously good.

The worry is that we’ll end up with NZ instituting polices that lead globally, but end up tilting the playing field unevenly. A subsidy for biofuels is example of this type of approach.”

I agree with what Brent is saying. There seems to be this ground swell of opinion that we need to lead the world in being green. But at what cost?

People really don’t want to look at climate change objectively.

“It is the trucks fault and trucking companies need to fix it … dirty smelly trucks” seems to be the feeling and yet the same people demand more and more consumer choice (which means more and more trucks). The same people jump on a 747, which uses 16 tonnes of fuel just to take off (The equivalent of running six cars for a year).

It is convenient to point the finger at just the transport industry. Then it is not my problem.

The solution needs to be found in a holistic approach to the supply chain. Something I fear (know) our government will not do.

 

Infrastructure Rant – Part 2

I was on the North Shore last night and I saw all the work and expense going into the bus lanes. I wondered how many people are actually going to use the bus when the are bus lanes?

I couldn’t help but wonder what would have happened if they had decided to put rail in instead. If they had decided to close two lanes of the Harbour Bridge and make it rail. (I know it is probably not technically possible due to the incline but bear with me).

Suddenly you are sitting in 3 lanes on the harbour bridge rather than 4, watching the trains fly by. Would you then look at catching a train tomorrow if you really don’t need your car at work?

You bet!

Quickly transport movements are freed up and productivity improves.

Steve W raised 2 really valid points to my last post.
1) Auckland is an isthmus. In my view this further drives the need to act now, as it takes longer to make tunnels and bridges.
2) The second crossing needs to be joint rail and road. I agree if it doesn’t have rail and connection into southern rail network Auckland is stuffed.

Finally, in my last post I said that strong leadership is needed. Ideally that would come in the form of one strong leader with the desire and mandate to fix the problem.

The problem in Auckland is far greater than that however. There is no one body that really controls Auckland. The councils are often out to protect their interests rather than collaboratively work together. Even when they have the right intentions and start working together it appears Central Government and Transit slow the process to a grinding halt.

What’s needed, in my view?
Either, one regional council that combines all of the councils. This makes the most sense for the long-term planning and productivity of Auckland, but I suspect will take 3 – 5 years too long to really happen and will only be a half hearted attempt.

Or Central Government appointed relentless leadership (not a commission of inquiry or working party) who have the legal mandate to steam roll Transit and the councils with clear short-term goals to make it happen.

 

Infrastructure Rant – Part 1

We need strong, long term leadership to fix Aucklands problems and we need it now!

The most noticeable thing to me when I first hit Melbourne was the infrastructure!

They actually have a transport infrastructure.

They have a motorway from the airport to the city and beyond. You can get everywhere in the city by Train, Tram or Bus. You can pick-up a rental car in the centre of Melbourne at 8:30 in the morning drive aimlessly around the central city and get onto a motorway in 10 minutes. Even as I left the city the inbound traffic was mildly congested, maybe 10 minutes slower than normal.

Compare that to Auckland with a population half the size.

The second thing I notice is that when they decide to build a road. They build it. They work around the clock to make it happen (Oh, that means they get lots done at night when the traffic is not around) If it is a critical road they pull out all the stops with the consent process and push it through.

Compare that to Auckland. The Greenlane intersection (which is outside our Auckland Office) will take 9 months longer to complete, will be have grown in cost from $14 million to $26 million dollars.

I was in Auckland this week and there was no work happening on it at all. What would I expect? After all it was the school holidays and traffic is lighter so it makes perfect sense to do nothing.

“Almost finished the upgrading of the Green Lane intersection” is the first transport highlight that Dick Hubbard sights on his website as a reelection highlight. 9 months late and $12 millions dollars over spent. Now that’s a highlight.

I know that not all cities in Australia have the infrastructure and planning that Melbourne has. But at least when they decide it is needed. They do something. In New Zealand we talk and talk and talk and talk. But nothing happens. Nothing.

Auckland in all reality is not any better off than it was 15 years ago when I joined the industry. No light rail, no real improvement to inner city traffic.

If we want to continue to grow as a country. We need strong leaders that will make it happen.

I find it all quiet disheartening and can see why 2,000 people a week head off to Aussie.

 

Log Book & Work Time Changes

Below is a brief video that Agoge Training has made to summarise the changes in Logbook and Work time rules effective 1 October 2007. If you would like a free high quality copy please contact Jim on 0800 42 46 43.

Transport & Logistics Bodies

One of the most noticeable elements of the Australian T&L seen is the fact that so many of the industry bodies are actually working together.

The have a body called the Australia Logistics Council which is a government and industry partnership to raise the profile of the T&L industry. They deal with all modes of transport and logistics except self loading transport (an Aussie term for passenger transport).

This body along with its many partner bodies has developed the T&L brand. They realised that everyone calls Transport, Road Transport, Aviation, Logistics, Supply Chain by different names. This dilutes the industry and most people think it is just smelly old truck drivers.

T&L is a brand aimed at encouraging younger people into the industry. T&L incorporates Rail, Warehousing, Road Transport, Stevedoring, Transport Administration and Logistics, Aviation and Maritime.

The also have a strong push to get more women involved in the industry.

The lesson for NZ is simple: We (Road Transport, Warehousing, Maritime) are competing against each other for the same pool of people rather than working together to make the industry more appealing to young people.

There is career path in T&L.

In fact I think we should use T&L to describe the industry in NZ. I’m sure the Aussies wont mind, they steel most of our stuff.

Transport & Logistics (NZ vs Aussie)

Greetings from Freight Week 2007 in Melbourne. I thought I would start my reports on the week by giving you a quick insight into Transport & Logistics in Australia.

Firstly, Australia has some very similar issues to New Zealand.
• The average age of their drivers is 48 (NZ in their 50’s)
• They are struggling to be seen to be sexy enough to attract Gen Y’s and now Gen Alpha.
• They have reasonably high interest rates (although they are 2% below NZ)
• The cost of fuel is high.
• Unemployment is at all time lows.
• The industry is going to double by 2020.

Next, they actually bundle all of transport and logistics (T&L) together and I’ll post more on that later. In Victoria alone they have 330,000 people employed in T&L and it makes up 14% of the Gross State Product. Nationally, T&L employs 4.5% of the Aussie workforce, is 15% of GDP and the industry contributes A$76 billion to the ecomony.

Finally, the Linfox CEO spoke at lunch and said they would not be acquiring much in the next 18 months (He said they are preparing for large Asian acquisitions) Anyway the issues they face in the next 18months is higher fuel rates and higher interest rates, and they appear to be preparing to weather the storm of a slowing economy.

All in all, a very interesting day yesterday and I came away with a few ideas about what NZ could do better to improve the Transport & Logistics employer brand.

RFID tags

There are a lot more issues for supply chain companies that are looking at implementing RFID into their process than just the cost of the tag.

They need to consider investment in technology, current system integration, and the bandwidth to handle huge volumes of tags in one spot (like a truck driving through a entrance, and a reader capturing all tags)

Back in 2003 the Auto ID Centre in the US did some predictions on the price of RFID tags into the market place.

It is interesting to look at the chart produced by the Centre almost 5 years ago. They envisaged two scenarios: (1) By 2008, EPC tags have come close to reaching the mythical "5-cent" tag, and there would be "fast adoption"; (2) tag prices stay higher, and there is "moderate adoption.”

Clearly the adoption of RFID has been slower than expected and at best is their second prediction.  We are a while away before we really see RFID become a significant force in the tracking of products.

NB: RFID means Radio-frequency identification (see wiki) and are small tags that generate a genreally unique radiowave, which can be read by devices without having to scan bar code etc. Some tags can be read from several meters away and beyond the line of sight of the reader.

  Hattip: SCDigest

Work time and logbooks

As of 1st of October some of the rules around work time and logbooks are changing considerably.  These changes will affect most transport companies at some level.  Below is a summary of the changes and when they take affect.

Key Changes

Work time and logbooks

• From 1st October 2007, instead of recording ‘on-duty’ time and ‘driving hours’ separately, all time spent working must be recorded as ‘work time’.
• Drivers must take a break of at least 30 minutes after 5.5 hours of ‘work time’, regardless of what kind of work they were doing.
• In any 24 hour period drivers can work a maximum of 13 hours then have to take a break of at least 10 hours.
• Drivers can still work up to 70 hours before they must take a break of at least 24 hours.
• Failure to produce a logbook can result in a fine of up to $2,000/individual, $10,000/company, and 35 demerit points.

Chain of Responsibility

Employers or those that control drivers can face fines of up to $25,000 if they knew, or should have known, that a driver under their control did, or was likely to, breach work time provisions.

Key Dates

• 1st October 2007 - 2 new logbook formats released (general and taxi), and all work time provisions become law.
• 1st April 2008 - All existing logbook exemptions expire.
• 1st July 2008 - Only new format logbooks may be used.

Freight Week 2007 (www.freight2007.com.au)

Andrew Nicol here

I am heading to the Freight Week 2007 (www.freight2007.com.au) in Melbourne starting the 17th September 2007.

If any people from New Zealand or Expats stumble across this post, give me a call or drop me a line and I’ll buy you a beer.

I am attending the following sessions

• Freight Careers Day (Mon)
• Freight Expo (Wed)
• Safety Day (Thu)
• Innovate/Collaborate (Fri)

Interested in catching up and discussing the implications to the NZ market.

Email:   andrewn [at] viewpoint [dot] net [dot] nz  (spam avoidance)
Phone: +64 7 957 7609
Or post a comment with your email address

   

Transport and Logistics is boring.

Last week I attended a presentation by the Road Transport Association about the changes in log books.

IT WAS BORING!

Now an important disclaimer: This is not a criticism of the RTAs intent. They genuinely desire to have a positive impact on the industry and the logbook rule change is really important.

But…

The presentation was boring. The power point presentations were too long. They read straight from the slides, didn’t paint pictures, tell stories or sell the changes well.

And to top it off there were the grumpy old truck drivers there who thought it was a good time to relitigate the law. Not the RTAs fault but they should have shut them down.

Fortunately, with the exception of a couple of people I was with, there were no Gen-Y there. They would have been bored silly. They would have thought that the transport and logistics industry was boring, stayed and unchallenging.

Based on what they saw last week. They would be right!

If we are really to compete for talented, energetic, young people, we need to start being a heap more upbeat and edgy and passionate.

Not slowly, but now!

   

The NZ Dollar is not high, nor bad!

I read an article out of Australia about their strong dollar last week. What struck me the most was how positive they are about it. The know commodity prices are up, they know they have growth and they know that they are stronger in the world market.

Compare that to the reaction in New Zealand. Exporters are screaming. Alan Bollard is driving our dollar up because of interest rates. When, oh please, will it come down?

Here are my issues with the way we view the dollar in New Zealand.

• The NZ dollar is not overly strong. The US dollar is very weak. Compare these four graphs GBP vs USD, EUR vs USD, AUD vs USD and NZD vs USD. Notice any trend? Those who want the dollar to drop want us to become worse off against the Pound, Aussie and Euro!
• We are missing all the positives. A weak USD means the US economy is weak, means we have more opportunity.
• The positives of a strong dollar is cheaper imports. Fuel is 25c a litre cheaper than it would be if the dollar was around 60c against the US. Is this the real problem for the government and Bollard. Cheaper imports equals more spending?
• The exporters (small ones) seem to be complaining about the dollar. We are never going to compete against China as a manufacture point for low value products. We need to build businesses herein NZ, that have supply chains elsewhere (like icebreaker).

I spoke to a couple of large exporters recently, they make high end, high value goods, they are hurting but for them it was part of the cycle of business and had more to do with hedging that the dollar. If you are selling to Aussie or Great Britain or Europe, even through the USD, the net result is not as bad as you would think by just looking at the NZD vs USD.

Finally, I don't claim to be an economist so don't take this all as gospel, and overall the tradeweighed index is up. But the graphs and Aussie attitude seem to speak for theselves.

Is it such a bad thing that we have a high dollar?

   

Supply Chains are critical!

An interesting article about the importance of the supply chain from the NZ Herald this morning.

Here are a couple of excerpts

• Companies no longer compete for market share by differentiating their products. Technology is now so advanced that almost anything can be copied. Communication is instantaneous. The result is products don't compete. Supply chains do.
• "Few people realise that 10 per cent to 40 per cent of the cost of most goods is supply chain cost.
• "For example, 45 per cent of the cost of a leg of New Zealand lamb sold in the UK is supply chain cost."

Its great to see Geoff Vazey trying to get some positive spin around the supply chain. 

It also has a bit to say about Trevor Mallard's ‘dream’ of building a stadium on the Waterford. That would have been a disaster for New Zealands supply chain.

Ports of Auckland move 685,000 containers each year with 45% being export and 55% import.

Agoge at the MHL Expo

By way of a mini advert. Below is a very basic video/powerpoint of agoge's key messages at the MHL Expo.

MHL Expo in Auckland

Last week agoge had a stand at the Materials Handling and Logistics Expo, which coincided with the ISN Safety Show. According to Forkliftaction.com over 2700 people attended, which I suspect that number is optimistic.

Forkliftaction is quoted as saying “Not everyone felt the addition of the Safety Show alongside MHL was beneficial. Louise O’ Neill of RT Equipment, distributors of materials handling equipment and forklift attachments, says the safety show detracted from the materials handling and diluted the quality of visitors.

She tells Forkliftaction.com News that future participation by RT Equipment would depend on whether the MHL show was big enough to stand alone next time.

She believes that while her company did not get any sales leads at the show, it was a good way to get in touch with their existing dealers and create more awareness of the company.”

Imagine going to an expo for 2 days and not getting sales leads!

All up it was very successful for agoge. It cost us roughly 5 times the cost of a magazine ad which might generate 1-2 leads.  We got a round 170 leads, with probably 20 - 30 very qualified leads. The leads didn't just come to us, we had to go after them and ask for details. A lot of stands just stood around hoping someone would ask them what they do.

There are a couple of things that the expo made me very aware of, firstly the lack of younger people in our industry and secondly the difficulty small/medium logistics companies have in introducing simple cost effective technology. I will write separately on both of these next week.

Ports of Auckland and Tauranga end talks

I know that this is now old news, but Ports of Tauranga and Auckland have decided not to merge.

From the Herald

ARH chairwoman Judith Bassett said the board had decided not to support Tauranga's merger proposal, otherwise known as "Project Mako".

"With the aid of independent advice and having regard to our statutory obligations we have resolved not to support the merger of Ports of Auckland and Port of Tauranga," she wrote in a letter to Port of Tauranga chairman John Parker.

Deputy chairwoman Joce Jesson said: "The merger doesn't align with ARH's long-term strategic investment approach for both this equity investment and ARH's total $1.4 billion investment portfolio."

The risks "outweighed any identified possible benefits in relation to ARH's long-term strategic approach for the company", she said.

It would seem to the untrained eye that Auckland Regional Holdings (owned by the ARC) became the sticking point. This is hardly a surprise and one of my key questions at the beginning was “Practically how do a listed company, and a delisted company (owed by councils) effectively merge?”

Way to hard!

On another note a collegue and myself went on the Port of Auckland tour a couple of weeks ago and the cellphone pictures attached prove it. A nice sunny day in the middle of winter, a ferry ferry ride around the ports. It’s a hard life, but I would recommend the tour.

CourierPost buys Roadstar

Express Couriers which is the joint venture between DHL and New Zealand Post, has completed the acquisition of Roadstar on the 1st July.

There overall goal in the acquisition seems to be to increase their service offer into multi-package and
palletised product.

“Customers are demanding we offer a full range of services including their multi-package and palletised product” says Jim Quinn, CEO of Express Couriers Limited. “We are delighted to have secured the Roadstar business to achieve our growth aspirations, and meet those needs” he added.

As a signal of the desire to ensure this new ownership is a success, Grant Robertson and the management team of Roadstar have agreed to remain with the business. Both Grant and his team continue to be passionate about the business and the industry, and are delighted to be part of a new ownership that shares this passion.

It is self evident that they will be seeking some synergies, and Roadstars branding is already changing. Even within the last week small changes have taken place in the CourierPost business to take up some of these synergies. I suspect you will see ECL move quickly to gain any synergies as I know they learnt a lot from the purchase of Ansett Couriers and XP couriers of old.

Freightways acquires MSS

Freightways has purchased MSS Records in Christchurch for $1 million dollars. It intends to merge the operation into its Online Security Services business.

“Inclusive of synergies gained by merging MSS into Freightways’ established Archive Security business, incremental EBITDA of NZ$0.3 million is expected to be achieved in the 2008 financial year from MSS.” [Freightways Media Release]

My read on this is that incremental means once the synergies are achieved. Synergies generally save money, so it is safe to assume that the EBITDA (operating cashflow) was lower.

This causes me to wonder what sort of multiplier Freightways paid for MSS against its existing EBITDA.

If the MSS EBITDA was
250k it would have been 4
200k it would have been 5 (my random blink would be this one)

Once they get the synergies (which Freightways will) it becomes a 3. Not a bad buy, one less competitor and 3 years to repay the investment.

Freightways said it is looking for more acquisition opportunities.

Toll to be 100% Aussie owned.

Well NZ Rail, come Tranz Rail, come Toll NZ will finally disappear off the NZ Stock exchange.

Toll purchased 10% of the shares from a New York based fund and can now undertake a compulsory takeover of the remaining 6% of shares in the company for $3 per share.

Toll originally tried to gain compulsory acquisition when it took over at $1.10 per share and has withheld dividend payments over the last 2 years.

The parent company Toll Holdings in Australia has indicated it may duel list its shares from Aussie on the NZX.

It is another lose to the New Zealand Stock exchange who appear to be having more delistings than listings this year. It is also a loss to New Zealand as yet another huge company will see its dividends sent off-shore.

Toll is the operator of the largest rail, road and ferry business in NZ.

Supply Chain Index

I have been following 11 different companies that are in, or fringe the supply chain and agoge's business. This is a basic index of the average share value (Total Capital / Total Shares).

I will try and up date it every few weeks. We will see what happens.

Targeting the unemployed in their 20's.

Remember back to when you were in your early 20’s. Life was probably a little bit simpler and you may not have nailed down exactly what you were really going to do with your life.

[Click Graph to enlarge]

Well 1 in 12, a full 19,300 people, aged 20 to 24 are currently un-employed. If you expand that to 29 year olds there are 29,000 people looking for work.

That excludes the ones that are studying or training.  It is the highest unemployment bracket by far (8.6%) and one would assume that these people have already given up on, or finished going to Uni or Polytech and are now in the work force.

I know that many of you would have had experience with this group being unreliable, particularly those who are unemployed. But surely if the transport and logistics industry is going to find people to full vacancies we should be targeting this group.

I know that the transport and logistics industry is not that sexy or appealing to them. So maybe it’s time to really work on creative employment packages for these people. In a previous post on Gen Y, I said that “Our industry will need to be a lot more creative about attracting Gen Y’s. They are not generally going to want to drive a truck for 60 hours a week. They will find pick/pack work dead boring.”

Maybe they would work 10 hour shifts, 4 days a week. Maybe they would want every fourth week off and make it part of their salary. Maybe they want more variety and flexibility.

There are 29,000 people unemployed between 20 and 29. That's 45% of all unemployed people are in their 20's.

What are we going to do to attract them to our industry?

Another Airline! What do they put in the water in Nelson?

Maori Trust, Ngati Koata has decided to set up a small air charter and freight service. They will lease two 18 seat Jetstream aircraft for the venture (old Origin planes I suspect). The trust is looking for companies that want to use its freight service in the Nelson area.

Recently another Nelson man claimed he was going to set up an Air Charter business but nothing came of it. In this case the Trust has applied for an Air Operators License.

How many regional airlines can a place like Nelson create? NZ is a very small market and some pretty clever and well-backed businesses have tried to enter the regional freight and passenger service. Unfortunately the airways are littered with their wreckage, metaphorically of course. I suspect this will be another one that last 12 – 18 months.

Land Transport and Transit to merge?

Land Transport and Transit are set to merge as further consolidation in the government agencies continues.  This follows the previous merge of Transfund a few years ago.

Minister of Transport Annette King said: "Despite recent improvements, transport agencies need to work more collaboratively and with a common purpose."

I believe that this is a sensible move and will remove one additional layer of bureaucracy and hopefully enable a quicker more consistent approach to land transport in New Zealand.

The government is also considering directing all road user charges to roading rather than the general fund.

If this happens and transit and LTNZ have a common vision we may actually see some real change and much needed infrastructure in place sooner.

Turnover is highest in the Jun Quarter

Statistics NZ released there latest employer-employee data last week. He are some interesting numbers I have discovered:

Staff Turnover
The transport industry had a 14.4% turnover for the year to March. This is down slightly on the same time last year which is 15.5%. For the wholesale trade (which includes many distribution centres) turnover is 13.3%

Looking at the stats it is interesting to see that the June Quarter is actually the highest turnover period for the supply chain industry and historically rises to around 17% for transport and 15% for wholesale. Time to keep a close eye on the your staff.

Number of workers
The other fact I found interesting was that since Mar 2002 (when agoge launched) work numbers in this transport category have increased by 15% from 61,000 to 71,000 people.

Workers in the wholesale industry have increased 14% from 96,000 to 110,000.

All in all a growth industry! While it would be nice to reduce the staff turnover I suspect that this will continue to rise. People are no longer committed to long term employment and will move jobs more frequently than ever.

Why can’t we have a simple budget?

Labour continues to deliver complex policies, that may have good intentions, but that in reality add extra layers of bureaucracy and cost to our country and slows progress to below that of a snail.

To recap, there is KiwiSaver, which will compel employers to contribute an additional 4% of salaries to the KiwiSaver programme.  Secondly there is the Regional Roading Tax for Auckland and Wellington.

Both of these will have a huge affect on the profitability and compliance costs for any Transport and Logistics business, and both have huge positives and negatives to them.

The enormous problem I have with most of what the Government is doing is this…

Nothing is simple!

KiwiSaver will be a huge administrative nightmare for business and rather than just give tax cuts or making contributions tax free they are giving tax credits. How confusing to the average person!

As for the tax on fuel to cover roading in Auckland and Wellington.  Labour have told the councils they must consult extensively with the public about where they spend the money. This means the money won’t start being collected for another 15 – 18 months.

Auckland and Wellington need roads now, not 5 years of consultation and happy talk.

Councils need the ability to lead, not get caught up in consultation and RMA’s.

For more simple summaries of the budget from treasury click the below links:

KiwiSaver Employers Fact Sheet (PDF)
Infrastructure Changes for Roads
18 Pages Executive Summary of Budget

Empowerment a catchphrase from the 90s?

Finally a book from Ken Blanchard that takes more than one minute to put into place. Unfortunately it is still narrative and it would be great to read about a real company that really existed that made these things happen.

I brought the book because I was working on our strategies for the year ahead and noticed it talked about sharing information (something we do OK at) and creating boundaries (something we are currently working on). I hoped it would be something I could read with my team but as a story it is just to slow moving.

It lacks what John Allen calls "intellectual curiosity"

Did I enjoy it, not overly. Did I learn something? I always do.

Below is a summary of the book from a diagram call "The Empowerment Game Plan"

Click Image to see in full size

Book Summary

Empowerment - Takes More than a Minute
Ken Blanchard

Genres          Management, Empowerment
Pages           135
Readability     2 (1 = Easy, 5 = Hard)
Enjoyment     3 (1 = Never Read, 5 = Remarkable)

I'd rather have no advice than bad advice.

I unashamedly post this entire quote from Jeffrey H. Gitomer. It's a great reminder for sales staff:

I can't help it. I read some bad sales advice today and gotta say something. I'll try to keep it positive, but my tongue is already bleeding from biting it.

The title read: When sales calls stall.

Every salesperson has experienced that barrier in one form or another, so I wondered what this “expert” had to say.

It started with the usual sales dialog: You have a meeting with a prospective customer. They’re hot, hot, hot, for your product or service. They ask for a proposal. You quickly oblige. A week later, you call the hot customer. And they have evaporated and won’t return your calls or emails.

What to do?

He recommends every manipulative “sales technique” from implying urgency, to getting creative (whatever that means), to using intrigue to connect. He advises to be prepared like a boy scout, appeal to a higher authority, assume all is well and they are just busy, and a bunch of sales talk mumbo jumbo that any seasoned executive would smell like a skunk that hasn’t bathed, and laugh at you.

This is why that approach will NEVER work.

FIRST: The prospect is not returning your calls for a reason. Wouldn't it be important to find out why? If you could discover that, it would help your next 1,000 sales calls.

SECOND: Why did you ever offer a proposal without making a firm face-to-face follow-on sales appointment in the first place? This is one of the most powerful – yet mostly lost – elements of the sales cycle.

THIRD: Stop trying to sell. Stop trying to be cute.

FOURTH: For goodness sake, stop trying to butter up the assistant. Assistants are loyal to their employers, not you.

FIFTH: The salesperson (not you, of course) did a lousy job in the presentation, left some holes, never discovered the prospects motive to purchase, was subjected (relegated) to a proposal/bidding process, never followed relationship-based strategies, and was too hungry for the sale and the commission than to uncover what will build a relationship. You didn't connect – you didn’t engage. Why are you blaming the prospect for not calling you? Why don't you take responsibility for doing a poor job and take a lesson. Not a sales lesson, a relationship lesson.

FIVE POINT FIVE: Their daddy decides, and you never met daddy, let alone know who he is. Someone else higher up told your prospect NO, and your prospect is embarrassed, or doesn’t care to tell you.

SALES REALITY CHECK: In sales you have ONE CHANCE. One chance to engage, one chance to build rapport, one chance to connect, one chance to be believable, one chance to be trustworthy, and one chance to meet with the real decision maker. You have one chance to differentiate yourself, one chance to prove your value, and one chance to ask for (or better, confirm) the sale.

BAD NEWS: If you miss your chance, or blow your chance, recovery chances are slim. OK, none. Not being able to reconnect with a prospect is not a problem. It’s a symptom. And it’s a report card on how well you’re doing. Or not doing.

GOOD NEWS: Lost sales and sales gone wrong are the BEST places to learn.

BETER NEWS: If you make a firm commitment to meet a few days later – not by phone – to meet face-to-face, you have a better chance of discovering the truth.

BEST NEWS: Once you get to TRUTH, you have a chance at SALE. Or better stated, you will have created the atmosphere where someone wants to BUY from you.

Sales techniques are increasingly becoming passé. So are the people that stress using them, rather than emphasizing the softer side.

I grew up selling, and I grew out of it.

If you have lost a connection, or if a hot prospect evaporates, or refuses to call you back or respond to you, the WORST thing you can do is try a sales technique. Why don’t you try something new? Try being honest. No, not with the customer -- with yourself.

I promise that a harsh self-discovery lesson may not help you reconnect with who you lost, but it’s connection insurance for the next s thousand. Take a chance. It’s the only one you’ve got.

Want more on how to connect instead of how to sell? Go to www.gitomer.com, register if you’re a first-time visitor, and enter the word CONNECT in the GitBit box.

Linfox and PFL

Finally a small article appears in the NZ Herald.

Provincial Freightlines (PFL) was a successful privately owned logistics business with blue-chip customers, Linfox chief executive Michael Byrne said.

PFL served industries including logging, timber, packaging, chemicals, refined fuels and fast-moving consumer goods.

The acquisition would double the revenue base of the New Zealand arm of the Linfox business, Mr Byrne said.

It will be intresting to see if they are rebranded, merged or left alone in the medium term.

Linfox buys Provincials

Linfox as purchased Provincial Freightlines Ltd effective today. It hasn’t hit the general media as such.

While the sale of privately held companies to Aussie companies is inevitable I must admit I think it is a loss to New Zealand. It is further evidence that the Transport market is maturing in NZ, as the medium size companies either grow or are acquired.

Provincials had some really rocky years back in the 80’s and I remember well their merger with Heatons. In the last 10 years however they have developed a really strong brand.

Their silver trucks with simply the word “Provincial” on the curtains is a crisp, clean and very well recognised brand.  They have developed a strong customer focused niche business.

What will become of “Provincial”? Time will tell. They were the first customer of agóge and I appreciate their loyalty and continued support. I wish them all well in this transition.

The Google Story

Larry Page and Sergey Brin started Google as a research project while studying at Standford University. From there they have grow Google into a worldwide household name and one of the largest companies (by market value, not revenue or employees) in the world.

The Google story follows the incredible rise of the company, its culture of innovation and its “Don’t be evil” philosophy. The growth in the Google business is mind blowing, for me at least. Founded in 1998 here is their revenue growth

Google’s Revenue History

Year	Revenue (US$ in millions)
1999	$.2
2000	$19.1
2001	$86.4
2002	$440
2003	$1,466
2004	$3,189
2005	$6,139
2006	$10,604

Google is an only in America story. You simply couldn’t have build a company like this in New Zealand for 3 very clear reasons:

1. Our IT network simply wouldn’t be able to handle the volume and you would have to move off shore in your 1st or 2nd year.
2. We simply would have enough IT people available to be employed to build the system.
3. In the 2nd year they raised $25million (about NZ$48million at the time) in Venture Capital. You would not raise that sort of money in NZ.

All that said, it is a remarkable story and has some key lessons:

1. Keep your project teams to 3 – 5 people. Anything more slows down innovation.
2. They have a 20% rule to drive innovation. Their engineers spend 1 day a week working on any project or idea they like. If it is good enough it may get funded and launched as a product.
3. An awesome employee culture meant they employed people for less and stole people from other huge companies in their formative years. Without it they probably wouldn't have made it.

Book Summary

The Google Story
David A Vise

Genres             Google, Business
Pages               325
Readability       4 (1 = Easy, 5 = Hard)
Enjoyment        4 (1 = Never Read, 5 = Remarkable)

Finally, now that I have read the Google Story it makes me think it would be almost impossible to take on Google in their core brand (not that I was thinking about it). I still think some of the lessons of my previous post apply, but it fails to acknowledge just how intelligent the founders of Google are.

Transport companies get a 3% increase in costs

Some significant cost increases to the Trucking Industry in the last few days.

Firstly the long awaited increase in the Holidays Act from 3 weeks to 4 weeks. I was thinking about the implication of this to the industry. We currently have around 25,000 ‘Heavy’ Truck drivers. Each of them is now entitled to an additional 1 weeks leave. For an industry that it already short of drivers, it now needs around another 500 drivers just to cover the additional 125,000 days annual leave to be taken this year.

Don’t worry about finding an additional 500 drivers, it will be easy – Yeah Right

The second issue is the increase in Road User Charges with 48 hours notice. It is estimated that the 11% increase in RUC will increase operators costs by 1%. This is a significant amount of money that can not be recouped from customers instantly.

A 3% increase to transport companies costs from 1 April. Welcome to the new financial year guys. Sorry I don’t have any solutions apart from getting a new government.

Get your FREE PRIZE here

Free Prize Inside follows on the back of  'Purple Cow' and 'Unleashing the Ideavirus'. Seth Godin again does a great job of provoking a review of how we conduct our marketing and challenges us to create remarkable businesses. He introduces two new terms 'a Free Prize' and 'Egdecraft'

A free prize is an idea, an innovation or an add-on to your existing service that makes your product more remarkable. It is ideas that are so simple that they make people talk about your service, and this leads to an ideavirus.

Edgecraft is the craft of finding ideas that are innovative enough to take you to the edge and beyond. It acknowledges that to be noticed you need to be different, and to be different you need to be edgy in your industry.

Here are some quotes:

'If people aren't blown away, they won't talk about it. If they don' talk about it, it doesn't spread fast enough to help you grow.'

'Edgecraft is an iterative process that is much easier for an organization to embrace than brainstorming.

There are hundreds of available edges, things you can add to, subtract from or do to your product or service. Find an edge and go all the way to it. Going partway is time-consuming and expensive-and it doesn't work very well. Going all the way to the edge is the only way to jolt the user into noticing what you've done. If they notice you, they're one step closer to talking about you.

It's all marketing now. The organizations that win will be the ones that realize that all they do is create things worth talking about.'

Book Summary

Free Prize Inside
Seth Godin

Genres          Marketing, Management, Ideas
Pages            235
Readability    3 (1 = Easy, 5 = Hard)
Enjoyment    4 (1 = Never Read, 5 = Remarkable)

You can download "Unleashing the ideavirus' for free here. Or you can check out Free Prize Inside here. Oh and there is a Free Prize in Seth's Book as well. If you enjoy ideas and stretching your thinking, READ IT.

Setting up in Australia

Mainfreight today announced that they have conditionally sold Pan Orient Project Logistics business and its 75% interest in LEP (New Zealand and Australia) to global logistics company Agility Group for A$83 million. It is the last of the non core Owens businesses to be sold. The funds released from the sale will be used by Mainfreight to fund its ongoing international expansion.

With Mainfreight, Freightways and others slowly establishing significant off shore businesses I wonder what a successful strategy would be for more NZ companies to do the same?

The road to overseas subsidiaries it would seem is littered with more stories of failure than success. Air NZ and Ansett, Telecom and AAPT (yet to see the end of this movie) are examples of huge companies struggling to make it happen. How then is it possible for a NZ company to stem the tide of Aussie investment and head into their backyard? What are the key points to consider?

#1 It is harder than you think.
Summed up well by Josef Roberts who launched Red Bull in the two countries. "Don't rush overseas. Australia might have five times the population, but it also has five times the competition, and Kiwis aren't used to dealing with Australian bureaucracy. Roberts worked out a worst-case scenario, and then doubled the cost and doubled the time. "We were about right," he says. "It took three times as long and was three times as expensive." [From Idealog "Meet the man who gave Red Bull wings"]

#2 You need to avoid the Valley of Death
Rod Drury wrote about the Valley of Death "From New Zealand, once you have saturated the local market, you then have a massive transformational change to address another market. You may need to introduce capital, add new staff, learn foreign rules - the list goes on. For us to take almost our first step of expansion, to enter only our second market - we bet our businesses. I'm calling this - the Valley of Death."

#3 You need to take your time.
This would be the key lesson I have gleamed from companies like Mainfreight, Freightways or even Michael Hill who have set-up in Australia. They seem to make slow educated decisions about their growth into other countries. They take the time to understand the markets, people, culture and regulations and they take small incremental steps. They have done this well and don't bet the NZ business on it.

I don't have much first hand experience. Hopefully one day I will, but in the meantime I am interested in your thoughts.

Does advertising really work?

'Old marketing is dead
10 years ago we were able to advertise a position in a paper and know that people looking for a job would see it. Nowadays you need to advertise in many papers and on multiple websites and you are still not guaranteed a good response.

It used to be that you could build a product and market it really well and people would naturally use your service. Nowadays we are all bombarded with advertising and media and information. We as consumers often ignore these messages. When was the last time you made that call after hearing an ad? It is almost impossible to make an impression and a thousand fold more difficult to actually get them to pick-up the phone.

New marketing is everything we do
Brand is no longer about just having a great logo and good advertising. Brand is now driven by everything the company does. Every time we answer the phone or deliver a sales proposal or email a client or they use online, we build our brand. The aim of new marketing is to get talked about, in a positive way of course, because of how ingenious we are!

To have a strong brand you now have to have a service that is so ingenious, so smart and edgy and stunning that it gets talked about.  Think about Google. How many of you started using Google because you saw their ad. None, they didn't advertise. You heard about it, tried it, liked it, kept using it and if you're an early adopter like me, probably told others about it.' - quote from my eBook called 'Being INGENIOUS @ agoge'

All this means that the old way of attracting candidates or getting customers works less and less. It will get harder and harder get peoples attention. Your only chance is to focus on providing a stunning service or being an incredible employer, so that you get talked about.

Finally, fyi, we measure most of our advertsing, we change ads and try new and creative things. When you measure advertising, the results generally dont make good reading, it forces you to think outside the square. You should try it!

Wasting your advertising dollars

A couple of years ago, Amazon.com announced that they were going to stop their advertising all  together. No more magazine adverts or TV. Instead they decided to invest all of their advertising dollars into providing free shipping of books.

From what I have read the marketing industry thought it was a foolish decision and predicted that it would spell the downfall of Amazon. How could they possibly think that investing money earmarked for advertising into making the customer experience more positive would increase sales.

The results: 1 year after the decision total sales were up 37% and international sales were up 81%.

The implication of applying the same thinking to our industry is huge. What areas do we spend money on, that if deployed into making our customers experience more positive, would actually increase sales.

Is it technology or marketing or advertising or capital equipment or research & development. How could we redeploy this money, improve the customer experience and increase our business along the way.

Delegation meets the Monkey

The One Minute Manager meets the Monkey is, as the title suggests, another in the One Minute Manager series. Like the rest of the books, it is written in a narrative style with lessons along the way. This makes it easy to read but because the people are fictional you often wonder if a real person can implement everything taught the in book.

The storyline, for want of a better description, is about a manager who is over worked, doing long hours, stressed and as a result is a poor leader. He discovers that the reason for this is actually monkeys. Monkeys are tasks or problems that people below him should be handling and resolving, except he continues to say "I will sort that out for you".

The man in the story, learns to leave the problems and tasks on his people's back and helps them with direction. Effectively it is a story of delegation and coaching, so here are the 4 lessons of the monkey:

Rule 1: Describe the Monkey: the dialogue must not end until the appropriate "next moves" have been identifies and specified.

Rule 2: Assign the Monkey: All monkeys shall be owned and handled at the lowest organizational level consistent with their welfare.

Rule 3: Insure the Monkey: Every monkey leaving your presence on the back of one of your people must be covered by one of two insurance policies:

1. Recommend, the Act
2. Act, then Advise

Rule 4: Check on the Monkey: Proper follow-up means healthier monkeys. Every monkeys should have a checkup appointment.

In summary, it was an easy read with some timely reminders about getting your people to solve their own problems.

Book Summary

The One Minutes Manager meets the Monkey
Ken Blanchard

Genres          Management, Coaching, Delegation
Pages           130
Readability     2 (1 = Easy, 5 = Hard)
Enjoyment     4 (1 = Never Read, 5 = Remarkable)

Bracewell - MD of Freightways talks Technology

A few weeks ago I posted on Technology in the Courier industry. It is fair to say, from the verbal feedback I received, that it was one of the more provocative posts I have written.

Shortly after wards I saw that the NZ Herald was interviewing Dean Bracewell, MD of Freightways, so I thought I would post a question. Below is my question and his response:

A question from a Herald reader. They are interested to know how technology fits into the future of Freightways. They say that Freightways seems to have lagged behind their largest competitor - CourierPost - in this area, but they have maintained market share and profitability. Do you see any major disadvantages in not having had the technology?

Not at all, but that question's probably got three or four parts to it.

Just stepping through them, technology is a part obviously of running a transport business such as Freightways and it always has been a key part of what we're about.

We've actually three quarters of the way through a $10 million upgrade to our IT system, so there's a fair bit of money and investment attached with IT

It's played a pivotal role in the business for 20 plus years and the information systems that we have are geared around delivering scalability because our business has grown very strongly so you've got to have information systems that can cope with that significant growth.

It's a very robust system but it has also got to be flexible to meet the varying customer needs. So we've got a very powerful, core information management system.

The part about lagging a competitor and still maintaining market share, well I think we've actually done more than that. We've grown our market share and we've grown our profitability over a number of years, so it's not just about maintaining it.

I think we've done this by keeping in touch with our customer needs and developing our services to suit those needs rather than getting caught up in a side-game that technology can distract from what you're really here to do.

We think it's most important not to lag customer demand rather than try and keep up with a competitor whose strategies we might disagree with.

Are we disadvantaged by not having some of the technology? Well, we made a decision to roll out in-van data capture technology this year and that's as a result of our customer demand but a time when we've assessed the network that transmits that data as being ready for us and the scanners that will go into our courier vans as being ready for us.

So, a few things have needed to come together but we believe the time is right.

And whilst we've been lining up to make that decision about the technology in the vans we've been focussing very heavily on ensuring we deliver our core service, which is getting packages to the right place at the right time.

What we believe we now have is a very compelling customer offer - premium service, competitive price and the latest technology to over-lay it all.

You talked about the scanners - how are the trials for those going?

They're going fine. We're rolling them out into the Auckland marketplace which is the most rigorous, high volume market to test the scanners and we'll get any glitches that are involved with new technology out of the way in this market prior to rolling them out around the rest of the country.

What developments - technology or otherwise - can we expect to see from Freightways in 2007?

I think you're going to see more of the same and whilst that might sound a bit ho hum, it's kind of what our customers like.

They want consistency, they want reliability, they want innovation when they're ready to innovate and when there is demand for it.

So what you're going to see from us is really more of the same and hopefully that will continue to deliver the sort of performance to all our stakeholders - our people, our employees, our contractors, our customers and our shareholders.

The article serves as a timely reminder, well to me at least, that technology matters very little if you are not delivering your core service. In NZC's case that is providing consistency and reliability,

You can read the full Herald article [here].

74 of the toughest questions in business today

Jack Welch was chairman and CEO of the General Electric Company from 1981 to 2001.  He generally regarded as one of the top CEO's of his time and was recongised for his candid straight up view of doing business. This book follows on from his previous book "Winning" and answers just 74 of the questions that he has been asked as he has toured.

Many of the chapters serve as timely reminders, other chapters blew my mind with the scale of multinational business and a few chapters I just out right disagreed with.

Below is an excerpt taken from the last chapter:

Winning, actually, doesn't have anything to do with markets. Or we should say, it doesn't have to have anything to do with them. By our definition, winning is a personal journey. It's about you as an individual setting a goal and achieving it. That goal could be creating and supporting a happy, healthy family. It could be founding or funding a homeless shelter. It could be teaching children to read; it could be sailing around the world.

And then again, it could be building thriving company that succeeds in the global marketplace.

Winning is about reaching the destination you chose. It is not necessarily about profit, though it can be. But winning is, at its most fundamental, about making something of your life. It is about progress and meaning. It is about achievement.

If you enjoyed reading "Winning", then this book is a great follow on, and is worth reading.

Book Summary

Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today
Jack and Suzy Welch

Genres         Business, Leadership, Winning
Pages           272
Readability   3 (1 = Easy, 5 = Hard)
Enjoyment    4 (1 = Never Read, 5 = Remarkable)

Winning - Leadership Development Booklet

Around 18 months ago I brought the majority of the staff in our company the book "Winning" by Jack Welch. The purpose for buying the book was to use it as a leadership development tool and to stretch their thinking, which in turn helps grow us as a business.

To assist in the learning I developed a booklet that people used to stay on track. People would read 2 -3 chapters a fortnight. We would then have a conference call with groups of 5 -7 people, discuss our obersations and learnings from the chapters.

Agoge is a small business with limited funds for training and leadership development and has staff based all over the country. I found that this process worked really well and we learned a lot as a business as a result. A key lesson for us was Candor, which has since become one of our values.

Below is a link to the PDF file. I hope you find it useful. If you would like a word copy please email Andrew Nicol (links in side bar)

Download winning_reading_plan.pdf

What is your website worth?

An interesting website that summaries your website and values it.

My Site is worth $60 How much is your site worth?

viewpoint.net.nz is worth $40, and agoge.com is worth $145.

Kiwiblog has a PR5 rating and is worth $26,950.

Generation Y

OK I admit it; I have been more than a little bit sceptical of the Generation Y buzz that has been around for the last few years. I have openly wondered if it is all just an excuse for a lack of discipline and hard work.

To be honest I didn’t really understand the link between the baby boomers, Gen X (of which I am a member) and Gen Y. My view changed somewhat when I saw this graph from Bernard Salt at The Knowledge Gym.

click to picture to enlarge

It shows the net growth in the working aged population over a 100 year period. Bascially there is a decline in people joining the work force over the next 20 years as the Baby Boomers retire. Less people joining the work force and a growing economy simply don’t go together.

Bernard says that Gen Y’s are experiential, ethicists, uncommitted to career and consumerists. They have matured in prosperous times which means they have often received most of what they asked for.

Characteristics of Generation Y
   - Born 1976-1991 … now aged 16-31
   - Matured to adulthood in prosperous times
   - Many live at home with mum & dad
   - Very loyal to friends, to workmates, not to employers
   - Prefer ‘deals’ not contracts and ‘mentors’ not bosses
   - Will Inherit boomer wealth
   - Technology savvy; global thinking
   - They are the most educated generation to date.

So what does this mean to the Logistics industry in New Zealand?

Get used to immigrants.
Firstly we had better get used to immigrants filling the gaps. Most developed nations, except India, are going to have a labour shortage. A lot of our young talent will move off shore as huge Multinationals do recruitment drives down under. We will be able to attract people to NZ for lifestyle, but that means immigrants from countries where English is a second language.

I think that a lot of logistics and warehousing businesses understand this already, whereas transport companies seem a lot more reluctant to employ immigrants.

Get creative to attract Gen Y
Our industry will need to be a lot more creative about attracting Gen Y’s. They are not generally going to want to drive a truck for 60 hours a week. They will find pick/pack work dead boring. Most of all they will change jobs often and we may not been seen as edgey enough. The majority will head to Uni which will make it hard to attract them into a semi-skilled job.

We can no longer afford to just impose our current standards of employment on them. If we do they simply will not come.

There are a difficult few decades for the Gen X’s, like myself, to adapt and retain and lead the Gen Y’s. We need to take action now or we may not stand a chance.

People Matter

“Is this Mr Nicol”, asked the telesales person who interrupted my life shortly after I arrived home tonight. I answered “Yep”, which was followed by a very ungenuine “How are you?” I know it was ungenuine because I never actually got the chance to answer before she launched into her sales talk.

She talked for a full 90 secs and all the time I just stood there thinking about how she doesn’t give a toss about me, or for that fact, if I am interested in her product. She just wants to get her job done. Nothing wrong with that most people would say.

I thought afterwards about how easy it is for our staff to do the same thing. To answer a call, handle the call, take the order, track the delivery or resolve the complaint. But they can do it, we can do it, without showing that we actually care.

I am passionate about building a company that “Lives People Matter”, which means I want my team to continually remember that they are dealing with a real live person. A person who deserves honesty and authenticity and time.

We do this by encourageing our team to LISTEN first, CLARIFY by asking questions, EMPATHISE by putting themselves in the person shoes, then and only then to RESOLVE the issue.

It is so easy to think that we hear our clients’ problem and jump straight to resolve. The result is the person, the real living person, doesn’t leave the conversation feeling like they matter.

If they don't feel like they matter, we are just like the telesales person who interrupts our dinner.

Getting the best people

So you have a goal to build a strong employer brand. Great idea, but as you know that is easier said than done.

How does a medium sized company in the transport and logistics industry compete for great people against what can be seen as more sexy and edgy industries?

Well I am reading Jack Welch's book at the moment "Winning: The Answers". In the book Jack details the six critical factors for getting the best people.

1. Preferred employers demonstrate a real commitment to continuous learning.
2. Preferred employers are meritocracies. Pay and promotions are tightly linked performance, and rigorous appraisal systems consistently make people aware of where they stand.
3. Preferred employers not only allow people to take risks but also celebrate those who do. And they don't shoot those who try but fail.
4. Preferred employers understand that what is good for society is also good for business.
5. Preferred employers keep their hiring standards tight.  They make candidates work hard to join the ranks by meeting strict criteria that centre around intelligence and previous experience and by undergoing an arduous interview process.
6. Preferred companies are profitable and growing.

It's that easy! Well maybe? Interestingly enough though, this checklist could be applied to warehouse staff, truck drivers and senior managers. Have another look.

Oh, by the way he says it will take years, if not decades.

If you are interested you can listen to a podcast from Jack & Suzy on the same topic here.

Is customer facing technology worth it?

Freightways Group announced their six monthly result yesterday and had 11% growth, reaching $144.3 million in trading revenue. It would seem that the growth of their core express/couriers business is neutral at best, which is what a few of us suspected.

One of the comments in the NZ Herald article was "A key initiative had been the initial implementation of a data service providing customers with access to real time service information."  Only in the last 12 months have Freightways started to truly provide this technology. Express Couriers, who own CourierPost, have had Track & Trace since 1991.

Track & Trace was always going to be the key to CourierPost's success. It was to be their competitive advantage and reduce their costs to make them more profitable. For 15 years they held this advantage. 15 years is a long time for any competitor in any market to be behind in IT, let alone a time sensitive market. The interesting thing is it never really seemed to make a dent in Freightways.

An insiders view
So, as an ex-insider to both groups, here is I think the key. In the initial years CourierPost focused all of it's energy on building customer facing systems, track & trace, real time scanners etc. All the while they had really poor back end systems, couldn't drive profitability (and therefore ownership) to branch level, had bad stock systems and worst of all couldn't manage their customer inquiries well.

Freightways on the other hand, had very established back office systems, albeit very archaic. But the up side is they have always had profitability to branch level, great stock management, and manual but effective processes for customer inquiries.

Freightways were clearly the market leader 15 years ago and Express Couriers have grown to be the largest, but they never took out Freightways, rather they absorbed many of the smaller players.

So, was CourierPost's 15 years of technology and millions upon millions of dollars worth it?

My conclusion
At the time I was passionate about the advantage that scanners would bring to CourierPost. But given time to reflect I would take strong robust back office systems, any day, over a customer facing system.

Back office systems allow you to manage the business easily and free up people to focus on providing real human service to customers. It also gives you a better platform to build customer facing systems.

I want (& need) both. I now know back office is the most important!