AerOceaNetwork steps up the effort to protect our members financially!
Forgive me if this blog posting runs on this time, but I believe the issue I am speaking about to be of high importance to our membership.
This past year has been quite a tumultuous year for most of our members. Though AerOceaNetwork made great strides this year we recognize that it has been a very difficult year for many of our members due to the global “recession”. The good news is that as of this writing Germany, France and Japan have declared their national economies back on the track of growth – hopefully other G-9 nations following soon. God speed the recovery, I say.
I have had something happen to me this year that I have never had happen in all the years that I have been involved in AerOceaNetwork: It involved a payment issue between members.
A member from Europe complained to me about a delinquent account of another member we had in the Middle East. This member in the Middle East had been a long-term member and had never had a problem within our group before. So I got the information from our European member (invoices and other details) then approached our Middle Eastern member. I asked him whether there was a mistake and had payment been made of if payment had not been made was there any dispute? Barring that the payment had not been made and there was no dispute then when could our European member be paid? The answer? “I hereby resign my membership from AerOceaNetwork…”
Nothing about the unpaid debt. And after several subsequent e-mails and phone calls still nothing.
Rather than even attempt to work this through our former Middle Eastern member decided it was easier to just run away from it totally. This makes me both angry and disheartened at the same time. Yet to add insult to injury I was forwarded a new member announcement the following week of yet another network, this one brand new and based in Turkey, that was proudly announcing the membership of this Middle Eastern company that so brashly screwed over our AerOceaNetwork European member then shucked me off when I tried to work this through with him.
In the mean time, but we have learned many difficult lessons from some of our “industry colleagues” whether in the group or outside of AerOceaNetwork. I believe it is sufficient to say that some of our members quite frankly have found themselves in precarious positions financially as business has dried up or slowed up around them. To be in such a position is not a sin but rather it will be part of doing business, at least from my point of view. As an entrepreneur you cannot do much on your own to straighten out the global economy or even the national economy either. But what is very important – and I cannot stress this enough – is how you deal with the situation when you are down.
Companies who have found themselves in pinches and behind the eight ball with payments have been on the rise. Just have a look at FreightDeadbeats! Sitting in my position I have witnessed far too much of it this year. Unfortunately, I have also witnessed some very poor, and I dare say unethical, ways in dealing with the situation. Folks not returning e-mails and phone calls. Folks not being open about their problems. Folks not sticking to payment schedules…
Because of these problems I am instituting an open book approach to our membership from now on. Weekly AerOceaNetwork will be reporting to the members the status of all other members in our group. If a member is late with paying other members, provided it is reported to us, all members will know it. If a member has a payment dispute with another member, provided it is not an actual legitimate cargo dispute, we will all know it. If a member is late paying his dues we will know it. If a member does keep up to date with the financial protection program we will know it.
This will seem very unfair and cruel to some members but I am convinced that is the only way our members can know that they are safe in working together.
Why not just be more careful about who gets in, you might ask? It isn’t as easy as it sounds. Before companies are admitted to membership in AerOceaNetwork they are vetted by an application process. All applicants for AerOceaNetwork membership, unless already known by me personally or having at least two recommendations from current members in good standing, must supply four references from companies who are freight forwarders. These forwarders must be outside of the applicants’ home countries and not part of the same corporate structure of the applicant’s company. I ask the referee agents to attest to the applicants abilities in the areas of finance, operations, sales follow up and communications (timeliness and ability).
The process works well from the beginning but then time becomes a factor. Here’s an example of how the problems can start:
Company X joins AerOceaNetwork in 2005 and is a member in excellent standing for three years. Then something catastrophic happens to their company – their sales team up and leave for a competitor, the founder sells out to outside investors, their best in house client goes bankrupt, they have a fire in their warehouse, they are sued by a third party… Face it. Anything can happen and circumstances change. Now all of the sudden, without much notice to the rest of the AerOceaNetwork members, if any at all, our good friend and network member with a previously superb reputation, Company X, has become a financial risk. They start being late on payments. Then they start not making payments at all. They are now a burden on their agents and a liability for our group. What was once a win / win situation for other members has now become lose / lose for the entire network.
My main concern is protecting the members of AerOceaNetwork. I have provided a financial protection plan for the members so that money is recoverable when working with other AerOceaNetwork members. (I have to shrug my shoulders though when some of the very members who passed this over later come to me to complain about payment issues with another member – it makes no business sense at all. But this is another subject.) Anyway, once a member is having problems and is already in the dumps it is often too late for me to do anything effectively to help either party. I can call on behalf of the other creditor member or harass the debtor with e-mails but at the same time I am not a professional collections agency either. I am often faced with the dilemma: Kick the bums out so they don’t spread mayhem within the group by leaving other members with debt as well (the most likely answer) or do I drag them along a little bit longer so that I still have a small bit of collateral influence in trying to help some companies recover. But at the same time, AerOceaNetwork is not a third-party to business done between members so we have no legal standing in the case which is why this is spelled out in the AON Regulations.
Personally, I would much rather see a smaller group of stronger members than a larger group of some strong members and some weaker members. So I made the decision to implement our new open book policy. You will always know where the other members stand within the group from now on. Companies who stay clean will obviously get more business and those whose records are weak will lose out on the development for sure provided that they do nothing to improve their positions. Those who take up poor payment habits will neither get business nor will they last in the network. It will be bitter medicine for many but for those doing the right thing they will see their rewards with impeccable reputations and more and more business.
What I will say to all is to be ready for the group to go through a period of shrinking. Once this kicks off I can pretty much guarantee that the growth from then on will be solid – and with much stronger companies. There are many benefits that membership should be on the table for all. Members should funnel cargo back into the group and at the same time members should know that when they put business into the group or receive business back from other members that they will be paid. If this is covered then I believe the other networks will be licked. That is why this will be a focus of our group from now on.
Again, I can always check the references of any applicants for membership, but once a company is already a member in the group it is very important that they play fair with others and continue to do so. I think the new changes will be welcome by the majority of members and the ones who don’t welcome it or don’t fit into the scheme will go. I won’t lose too much sleep over the ones who fall through the cracks because they don’t fit into my vision of a strong group. And I believe this policy will make for a brighter, more productive and more profitable future for the whole group!
Having recently participated in a successful 18-month EU pilot project on paper-free trade, Celtic Forwarding Ltd is now fully committed to going paper-free by working with TradeFacilitate, a secure online system for importers and exporters, as a means to reducing costs and increasing competitiveness in the international trading supply chain.
For those who attended the AerOceaNetwork meeting in Kuala Lumpur you would have already have met Laurence Rajamanikam as his company had recently completed the application process just prior to the meeting. Laurence and his company, Mayglobe Logistics, were recommended by Mr. Sri Rasamanickam, CEO, of Aero Lines GmbH, an AerOceaNetwork member based in Switzerland. Mayglobe operates in two countries: Malaysia and Thailand, though Thailand is only really involved in trucking. They have a trucking business that can pick up and deliver between Singapore and China covering also Malaysia, Thailand and Laos. Besides trucking, the Malaysia operation is a full on freight forwarding and customs brokerage company as well. Mayglobe Logistics is a great addition to the team
Dyanami Aviation is a company that supplies charter aircraft to governments and also to humanitarian relief organizations. Dynami Aviation can provide a full range of aircraft from light turbo prop to Antonov, Ilyushin and heavy cargo planes and helicopters for the transport of essential equipment to disaster areas anywhere in the world.
MASkargo will make a presentation to freight forwarders from around the world
