Among the many events and excellent keynote speakers, I attended a presentation by Dr. David Fung, entitled “Meeting the challenges of growth demand: a shipper’s view.” Dr. Fung currently serves as Chairman and CEO of the ACDEG Group of Companies, a global technology integrator with business partnerships in several different sectors in North America, Europe, and Asia.

His analysis of the current and future business prospects for ocean freight carriers was quite pessimistic, due to changes in the economic forecast and in the business models now being used around the world. For example, with business producing more goods locally, the number of containers shipped has diminished substantially. New technologies such as 3D printing are also decreasing the need to ship by sea.

Of course, nobody wants to hear pessimistic forecasts, but we have to appreciate the contradictory opinion because it helps businesses prepare for tough times. He concluded by encouraging the audience to not look to the past for solutions, but to focus on looking forward and accept the new challenges.

Even the top companies are facing challenges

I wanted to investigate this outlook further, but data from the major ocean freight shippers is not always easy to obtain and when we do, the data is always a bit old.

I looked at the financials for Maersk, the world’s largest shipping company, whose latest data is from Q4 2016. On their financial report, they argue that the demand for transportation of goods grew below expectations in the first half of the year, leading to significant downward pressure on freight rates. In the second half of the year, and especially in Q4, demand increased while the number of deliveries was reduced, which led to a gradual improvement of freight rates.

The difficult business environment during the year enabled industry consolidation, and Hanjin Shipping Co. Ltd., the world’s seventh-largest container shipping company, went out of business. Despite this, Maersk Line continued its cost leadership strategy and gained significant market share.

Maersk Line nevertheless recorded a loss of USD $376 million (compared to a profit of $1.3 billion in 2015) and a return on invested capital (ROIC) of -1.9% (+6.5% in 2015). The underlying result was a loss of $384 million (profit of $1.3 billion in 2015) due to poor market conditions leading to sustained lower freight rates. The lower rates were then partly offset by higher volumes and lower unit costs related to lower bunker price, higher utilization and cost efficiencies.

Looking at the financials for Nippon Yusein Kaisha (NYK) Line as well, their revenues for the first three quarters of 2016 were ¥2,272.3 billion, but their forecast for the same time period in 2017 is just ¥1,414.5 Billion, a major decrease.

Tough times for the industry may be worsened by the Trump administration

While Hanjin’s insolvency made headlines in early 2016, they weren’t the only company struggling at the time.

Due to the sharp decline in ocean freight rates, all of the world’s top 15 container shipping companies reported negative operating margins (EBIT margin) for the first six months of 2016 except the Asian shipping company Wan Hai, which only operates regionally.

Since then, the biggest news story in the world has been the election and presidency of Donald Trump. The election and its economic consequences are not still clear and it is too early to say if and when the change will bring some improvement or deteriorate the current forecast for the industry.

One possible effect is on the iPhone, one of China’s biggest focuses in 2017. Based on the iPhone’s packaging dimensions (15.5 cm x 9 cm x 6 cm, 0.385 kilograms) it is estimated that 44,000 phones will fit in a standard 40-foot shipping container before it hits the weight limit. However, based on recent announcements by Apple, more production is scheduled to happen in the United States because the Trump administration is pushing for Made in America production.

Are sunny skies ahead for the ocean freight industry?

Despite the rough start to the year, the September 2016 quarterly financial report of Hapag-Lloyd, the world’s fifth-largest container carrier, remained positive. It reminds their investors that according to the IMF, the volume of global trade, which is key to the demand for container shipping services, was forecasted to increase by 2.3%. Continued growth of 3.8% is expected in 2017.

Based on current forecasts, the growth in global cargo volumes could reach up to 4.2% in 2017. IHS Global Insight is also predicting average annual growth of approximately 5% in the global container shipping volume from 2018-2021.

The issue is of course, is whether the growth of 5% forecasted for the period will be enough to cover for capital expenditures and operating expenses, while still allowing some profit. Even this level of growth may not be enough to cover rising costs for companies, and could result in further problems unless they begin to consider new approaches.

Innovative and courageous thinking is needed to guarantee future success

The current data confirms that the ocean freight is experiencing tough times, and will likely continue to do so. The question now is whether the time has arrived to re-think their business models.

It seems that now is the time to collaborate, rather than compete, and that doing so to meet logistical needs might improve profit margins.

I want to conclude by thanking the Cargo Logistics Canada organizers for the realization of such a wonderful event. Also, a big thank you to Dr. Fung for his “courage” to share his view about the shipping industry, especially when the industry would prefer not to listen to his pessimistic views.

The challenge for the industry is now that they know about the difficulties, what can they do to turn the challenges into profit? Time will tell, but I think major opportunities await to those companies able to tackle these major challenges head-on, rather than hoping things will get better on their own.

The post The ocean freight industry is struggling – but is there hope on the horizon? appeared first on Trade Ready.

That same year, Canada imported five times more to Mexico than it exported, with total exports of nearly $6.6B CAD and imports totaling $31.2B. This means many Mexican companies are already in the Canadian market and could serve as business partners to Canadian companies interested in importing from Mexico.

Interestingly, the inverse trend presented itself in foreign direct investment, as Canadian companies have found huge opportunities in the Mexican market which should continue to grow. Mexico invested $1.4B in Canada in 2015, while Canada invested $14.8B in Mexico.

Recent signs point to a deepening Canada-Mexico trade relationship

Canada’s relationship with Mexico has never been better. In fact, on June 28th^, 2016, the Governments of Canada and Mexico agreed that a strong relationship between their two countries is vital to creating jobs, strengthening the middle class, and ensuring sustainable economic growth.

During their bilateral meeting, Prime Minister Justin Trudeau and President Enrique Peña Nieto renewed their close relationship on the environment, climate change and energy, and highlighted the opportunity for North America to become the world’s most competitive player in the clean growth economy.

Canada and Mexico also have a strong and growing relationship when it comes to education. This cooperation is supported by over 400 inter-institutional agreements between Canadian and Mexican higher education institutions, as well as significant collaboration between Canadian provinces and territories and Mexican states.

Both governments also offer scholarships to attract students or researchers from the other country. Mexico is now Canada’s 10th largest source country for international students, hosting more than 5,000 Mexican students in 2015.

Not only do Mexican students come to study, it is estimated that in British Columbia alone there are at least 21,000 dual citizens who have decided to stay in Canada.

The Mexican-Canadian community of British Columbia is full of individuals with the highest academic degrees from universities around the world; businessmen developing new industries in the province, technology developers, post-graduate students, artists, and overall individuals with very strong attachments to this country we now call home.

Nearly 2 million Canadians also travel to Mexico every year for both business and pleasure. A significant number of Canadians, particularly retirees, have purchased property in Mexico and spend extended periods of time there enjoying the warm weather. Northbound, Canada has recently seen an increase in visitors from Mexico as well. According to the Canadian Tourism Commission, more than 200,000 Mexicans vacationed in Canada during 2015.

In addition, Canada receives approximately 20,000 agricultural workers annually under the Seasonal Agricultural Workers Program, often cited as a model for international labor mobility arrangements. The workers provide much needed help to local farmers.

What makes the Mexican market an intriguing option for Canadian businesses?

Mexico is ranked 38th worldwide in the World Bank Group’s Doing Business 2016 rankings, an improvement from 42nd in 2015. Mexico is also ranked 5th this year in its ability to obtain credit, a major improvement from 12th in 2015.

This means that it is relatively easy for entrepreneurs who want to develop their business in Mexico to access credit from financial institutions .

As of June 2016, according to Statistics Canada’s Harmonized System data, Canada exported more than it imported from Mexico in live animals, pulp of wood or other fibrous cellulosic material, and base metals. The data shows Canada has the lead in those products and more of these goods can be exported to Mexico because of high demand.

Export Development Canada (EDC) is present in Mexico to help Canadian companies interested in exporting to the country. Likewise, offices for ProMexico, the country’s trade and investment promotion organization, are also present in Canada to help Canadian companies that want to do business in Mexico. Canadian entrepreneurs should consult with both organizations before starting a business in Mexico.

Are you prepared to take advantage of the opportunities available to you?

There is a tremendous opportunity for Canadians interested in the Mexican market, and the time is right to take comprehensive global business training such as the FITTskills program. An informed and knowledgeable trader is the only one who is prepared to capitalize on the global business opportunities available. Preparing entrepreneurs and employees to deal with the challenges of today’s business is what organizations like FITT are here for.

To further discuss the economic implications and explore future business opportunities, I will be speaking at the Mexican-Canadian Forum on International Trade in Vancouver, British Columbia on September 7th, 2016

This year’s topic is “International Trading and the Free Trade Multilateral Treaties”. The Forum will have keynote speakers from Mexico, Canada, and Europe delivering their presentations and experience with particular attention to the industries that connect Canada and Mexico such as mining, banking, technology and services.

If you’re interested in better understanding the latest trading trends between Canada and Mexico, please visit the event page to find out more and register for the event.

The post Why the Mexican market is more important than ever for Canadian businesses appeared first on Trade Ready.

When I hear these statements, it reminds me of what I say to my university students during lectures regarding the difference between a “goal” and an “objective”.

Goals are generic: for example, when some people say when they want to be “successful”. Being successful is a vague and an undefined end result.

Objectives are what we need to use in business. An objective must be SMART:

• Specific: it has to have a clear relation to what the business is doing
• Measurable: it has to be measured in order to understand when it is completed
• Achievable: it has to be possible to achieve considering the resources and the structure of the business
• Realistic: it has to push the business a bit beyond its limits but not to utopian unattainable utopia
• Time Defined: it has to indicate by when it has to be achieved

Objectives are usually created for different functional areas, such as strategy, financial, operational, marketing, IT and human resources. In fact, businesses must have objectives in each of the above functional areas.

An example of a financial objective is: “Company XYZ will increase its profit margin by 4% by March 2017.”

For human resources, an example might be something like: “Company XYZ will reduce employees’ level 2 turnover by 12% by November 2017,” whereas for marketing, an example would be more like: “Company XYZ will improve customer satisfaction by third quarter of 2017 by increasing percent of returned customers from 17% to 28%.”

Objectives make the difference between a dream and reality.

Develop the process and simple rules you need to achieve your objectives

This topic of success also reminds me of the definition Earl Nightingale gave in his article called “The Strangest Secret Article” published in 1950: “A success is anyone who is realizing a worthy predetermined ideal, because that’s what he or she decided to do … deliberately.”

Basically, Nightingale says we must have a purpose (the objectives I mentioned above), but if we read between the lines, we realize that we also need to have a process that is good enough for us to be able to achieve success.

Success is therefore the result of clear predetermined objectives, and the implementation of a step-by-step process.

Going back to business, if we want to become successful, we have to know the rules (the process) and predetermine our objectives.

We, the businesses, have to create the internal environment that can synchronize with the external environment following some simple rules.

I call the rules simple, because science has always proven that complex behaviors can also have very simple rules.

Think about the way Albert Einstein wrote the concept of relativity using the famous formula Energy=mc². A simple formula describes a very complex phenomenon.

Taking action is the first step towards achieving your objective

To better understanding what I want to communicate, I want to encourage you to follow these 5 steps:

1. Why are “you” in business?

Perform an introspective exercise to discover who you are and what you do the best.

2. Look around and find the “right” customer as per “The Art of Synchronization©” model

Use customer segmentation techniques to create a clear target market to understand their rules of interaction.

In my webinar, I will talk more about the “Art of Synchronization©” and I will refer to a study on computer graphic simulation conducted by Craig W. Reynolds in 1987 to explain how simple rules can create very complex results in computer animation. I suggest the same principle applies in everyday aspects of life.

3. Discover what the customer wants from you

Make an emotional connection: all the sales involve emotion and trust. How have you done lately focusing on establishing an emotional connection with your customers?

4. Developing and maintaining sales excellence

This requires informal leadership and morality. Business often pushes the message on why their product is the best too hard. What about making it easiest for your customer to remove any barriers that may prevent them from business with you?

5. Create, hone and perfect techniques that will help to grow your business

The three simple rules are: Collision avoidance, Velocity matching, and flocking centered.

In computer animation, the collision avoidance is codified stating that a certain distance must be kept among the moving pixels to avoid collisions. In business, I refer to buyers and suppliers instead of pixels. The collision is intended as a crash between the participants and must be avoided.

Another rule is to match velocity enough to get in the orbit between suppliers and buyers.

Flocking centered, using the analogy from computer animation, means creating the conditions to create the flock or working together.

What do I need to do now?

I want you to attempt to think about the entire process and the importance of thinking critically. To look at everything around you using a structured process, in order to improve your chances to achieve your definition of success.

Ask yourself how can you be the leader in your industry, working together with your leader customer to reach the realization of a worthy predetermined ideal, because that’s what you and/or your customer decided to do, deliberately.

If you set an objective, and build a process to accomplish it, a leading role in your industry is well within your grasp.

Want to learn more on the topic? I hope to have the privilege of your attendance at my webinar, “Five Steps to Sell More in the Global Market (The Art of Synchronization©)”.

While there isn’t a single, absolute, or unique method for success, I hope you’ll find this to be helpful as you work towards establishing and achieving your objectives.

The post Five steps to sell more in the global marketplace appeared first on Trade Ready.