As we see it, one of the most unfortunate aspects of logistical developments in the past three decades is the virtual take-over of the large-scaled enterprise tactical planning space in logistics by those whose panorama is confined to what they believe to be the capability limits of their existing system structure & architecture.

The problems associated with the rise of logistical process gatekeepers within enterprises, especially those that are system cadres, or devotees, are often compounded by these same people's lack of experience in the wider logistical world.  Many in the logistics space now appear to have evolved their way to the top of logistics organisations, on the back of credentials which are underwritten by various accreditations & certifications.  There is often a rightful emphasis placed upon the merits of a given adaptable philosophy in respect of logistics & enterprise planning, but in translation the output has often become process dogma.  This would be an unhealthy state of affairs for any enterprise over time, and it is especially so today as we confront new market realities. 

When logistics professionals become captivated by the merits & soundness of their existing process it is sure to inhibit their employer's enterprise when it is required to respond to emerging events that require a significant structural shift.  This scenario becomes especially burdensome for enterprises when their imperative requires more adaptable logistical architecture, that which might respond faster to the more cantankerous consumer demand scenario we see unfolding today.  Doing as well as the guy down the road, or any other user of their enterprise software provider, may not cut it at the enterprise viability level when large swathes of the consumer merchant-supply chain business model is threatened by disruption (or failed efforts at achieving disruption). 

To illustrate our message, and talking about one of those cantankerous cases that we have observed elsewhere, we will initially cite here the example provided by the US’s Afghanistan War “bump-out” logistics planning team's last-minute recruiting efforts.  This team were seeking supplementary human resources, and their executive appeared to be looking beyond a process-cadre style of human asset.  And our point is that their HR sourcing team had very good reason to be looking beyond those captivated by existing logistical planning architecture.  It is this style of circumstantially driven, & enterprise-specific, case that we wish to start exploring today. 

In the cited case, the US military at that time had very likely already done the sums, based upon all the existing logistical processes they had available to them in seeking to complete their Afghanistan “bump out”.  Perhaps they didn’t like what they were seeing?  There had been a gradual build-up of assets in Afghanistan over many years, the inbound logistics costs had already been enormous (plainly ridiculous in commercial equivalent terms) & the fast exit was mandated.  The "bump-out" would be a very different & far more challenging beast.

www.economist.com/news/asia/21576720-logisticians-face-practical-and-geopolitical-mess-relish-big-retrograde 

The soundest logistical advice the military hierarchy would have received from any free thinker would likely have entailed the planning team manager making a request for their political masters’ to seek to improve their working relationships sufficiently (within the near-term time constraint mandated by the force withdrawal) with those nearby states that would have afforded the logistics team access to the optimal logistical corridors & transit opportunities.   However, the eventual outcomes reflected a scenario where the politicians were only able to respond within time at the margins (over-flights etc). 

These Afghanistan “bump out” logisticians were always facing an uphill task, one where options narrowed as the political opportunists started making their next plays - before extracting themselves from their ill-fated last one.  That had immediate consequences at significant logistical pressure points & imposed new constraints.   The US military did, however, apparently source a few more capable logistical minds; and they then set about reducing the task by wrecking, & dumping, & redirecting assets.

The result was that the US military generally muddled their way out - while testing the Russian’s patience to the limit; and apparently taking it past the said patience limits of their central Asian “partners”.

But we pause here, and reset, because we were supposed to be talking about something derived of my experience. Having been part of the team handling the Sydney Olympics’ official broadcaster NBC’s "bump-out" air charters & shipping, did however, see us appreciating the Afghanistan "bump out" effort as it unfolded.  Although this latter task was far smaller, here too there had been a long build up of inbound infrastructure (1 year in this case), and all but the inessential needed almost immediate repatriation (to cover the next big world media event/s in Europe & the Americas).  And it wasn't down to fortune that we did far better than muddle our way through, we executed using a bespoke process.

We could also have chosen to further illustrate our case by going down the oil & energy services route here, to draw upon specific tactical logistics experience, and that enterprise has certain synergies with military logistics.  Instead, I have chosen today to talk about 1980’s and 90's vinyl gramophone record imports.

https://vanessaberryworld.wordpress.com/2012/04/21/sydney-record-stores-of-the-past/ 

Why should a case based upon a gramophone record market resonate better than that of oil & energy services, given the latter's just-in-time movement to far flung drilling sites of down-hole nukes & mud?

Well oil & energy services companies are able to selectively plan their inventory's levels & geo-locations.  They have established lead times for all their customers & geographies.  In my experience, these enterprises planned & carried inventory at certain locations that provided a patterned contracted level of response & support to their customers.  Under this operating basis, the oil & energy services providers then looked to engage the best available transport professionals to meet or improve on delivery outcomes; or more usually to save them in the case that supply shortages or breakages meant drawing on inventory from further away than anticipated.

There wasn’t, however, much of a chance of another oil or energy services competitor turning up in the meantime at their customer's drilling site & making a sale with a similar piece of inventory, one that could substitute, given the nature of the turnkey-styled contracts prevalent in that industry.

The import gramophone record market, however, was essentially - in its time - more dynamic from the logistical point of view. This stemmed from the dynamism of the import vinyl record pop music market.  The on-line B2B and retail world of today has certain synergies with that vinyl record market in respect of the international sourcing model, and it is this facet that we wish to explore.

The music market of the cited days was a discretionary consumer purchase based one.  In such a case, where non-availability or non-delivery was encountered, a buyer was likely to source elsewhere, or buy something else entirely.  An import record shop’s loss of a customer at that time can therefore be an exemplar of an on-line buying platform’s discretionary purchase & repeat business loss today. 

If you take today's on-line consumer scenario in the approach to the Xmas peak, the consumer is likely, despite loyalty programmes etc, to buy from one of a diverse array of platforms - or a bricks and mortar competitor - based upon the expectation of a delivery being fulfilled, irrespective of allegiances.  Similarly, the B2B platform buyer, one who has an array of on-line vendor choices, will more often buy-to-stock dynamically, with a weather eye on opportunistic pricing and being more immediate in their reaction to the latest stock-turn rates, than was possible previously.   

Back-in-the day, however, an import record shop's game plan was more specifically adapted to its limited market.  The owners would be trying to beat the local labels to the street with trending music, or supplying a niche market that local vinyl record production-run economics could not support.  Like the mainstream market, however, popular demand for a given recently-released record usually waned quickly.  Stock that could not be moved brought the undoing of many of these import record merchandisers.  The wider industry environment at that time was also full of traps.  It was replete with boondoggle mandates, but this is another story, and it is better left unexplored here.

Given the recent resurrection of vinyl record sales internationally, it is interesting to note that some of the old production run & distribution issues have resurfaced in the mainstream media:

www.nytimes.com/2015/09/15/business/media/a-vinyl-lp-frenzy-brings-record-pressing-machines-back-to-life.html

The matter of interest for us here, however, is that the single most important concern for the import record shop proprietor back-in-the-day was the necessity of not being beaten for stock arrival by their competitor.

In the said times, it was a non on-line environment where orders were taken at origin in New York and London by phone or telex on a Thursday; product was shipped on a Friday, yet it was expected to be on shelf by the following Wednesday.  The Australian import customs clearance process was also at that time uneven, & it took 48 hours or more (juxtaposed with today where most commercial import shipments are cleared within minutes).

An interesting side-factor was the back-chat channel between the various import record shops (bred of the incestuous nature of the general industry-wide environment) about what they had ordered, what had shipped, who got theirs, and when. 

This chat-loop fed back to the suppliers at source who were often pressured to act “fairly”, and to the transport carriers whose performance was judged on the basis that a pass was on-time, a service irregularity was when you delivered late – but you had also delivered their competitor’s products late, and a fail was when their product was not delivered on-time - but their competitors had been.

Another continuously evident aspect of this trade was that there was always an individual gramophone record of which the import record shops did not have anywhere near enough stock-in-hand on any given day.  This red-hot stock-keeping unit (SKU) issue, where product runs - rather than walks - out the door during demand spikes, and where supply chain options & corridor widths are assumed to be limited, is one we will return to.

To close today's case however, in the import record market we have described, the transport provider choice made by the owners of most of these record shops was to select only one or the other international freight forwarding company, from a field of hundreds.  Many also employed the same import customs broker.  Those select transport services vendors were said to be those that understood their business. 

Funny that.

Does your logistics organisation own an item that is yet to have landed?  One that is yet to be counted and stowed in a bricks and mortar location?

If you are inclined to answer in the negative, perhaps you feel that all which comes before and after can be solved by means of optimising supply, purchasing, and vendor management routines.

However, if network design and holistic network optimisation is “not my section”, then whose is it?

There may be few logistics professionals today found reading of the affairs of a 19th century German trading house.  There might, however, be more if they found it useful to reflect upon the then prevailing logistical complexity, risk, and the elasticity in the logistical solutions that sought to bring product to market at the most opportune moment in those times.  It was an era when logisticians were merchants; and warehousemen were warehousemen.

We do not mean to be gratuitous, there are many clever people in our industry today, some bullet proof networks that prove the 80/20 rule, and some Chinese walls that improve supervision and tolerances.

Further, in respect of the contrarian case, we have evolving in-transit regulatory complexity issues challenging the prospects for the full or partial implementation of virtual warehouse solutions.  Such network solutions normally require transportation supply diversity and a tactile approach in order to achieve economy and reliability.  And so, in the coming week, I am scheduled to meet an old friend, one who is struggling with the effort of promoting a solution to what is fast becoming an old problem – promoting electronic commerce for international transportation transactions.

The principal issue in respect of the lack of progress, as I see it, lies in the displacement effect brought on by regulatory agency activism and their responses to fears expressed in the political sphere.

In the surveillance and information age, regulatory agencies desire everything.  Yet such agencies can usually only effectively physically control and intervene at hub points where shipments are often already consolidated with others or else submersed in sortation process. So we see here yet another form of hop scotch, and regulatory agencies supervising the international trade and transport industry having eventually become committed to making international carrier manifest the determinant point of intervention from which to affirm regulatory compliance.

In a week where we have seen publicity surrounding Japan and China’s adoption of inbound (in-advance-of-arrival) cargo manifest filing regulatory procedures, it is worth the pause to get a fuller understanding of the direction in which cargo manifest surveillance & regulation is heading.  The jurisdiction that has sourced the funding and political inertia to lead such security related initiatives, describes their work here:

www.itds.gov/xp/itds/toolbox/background/

Scanning the details and noting the complexity of the US system may be sufficient for your purpose today.  It may suffice here for us to note the 48 separate agencies involved, and the grand impression and carefully expressed hopes sold to the US Congress - but we will also provide the link to the latest report released this January:

www.itds.gov/linkhandler/itds/news/2013_itds_report.ctt/2013_itds_report.pdf

The US Congress may proudly declare that they are overseeing the implementation of the world's most interventionist export port controlled cargo manifest approval system.  But what is really up for grabs here?

Well, there is the prospect of fluidity being promoted by some players in the transportation industry– if there is an agency red flag on a component subject to agency control – it should not, under an integrated system, make it to a cargo manifest, right?  Well regulators and industry may say “perhaps”, or “well, sometimes” – and “we reserve the right to change our minds” – and perhaps they may change their minds for some, while recognising the “practicalities” of not decisively changing it for others…

Moreover the reality is that it is not unusual for merchandise to already be in motion and consolidating with other orders, or shipments, prior to a conceivable flag related process intervention – which in turn may have other consequences.

On the sunny side, however, we see before us the long desired (for some) prospect of a system of legislated export & import permission requirements finally coming into force at the time of cargo manifesting the exporting vessel from the port, airport, or land vehicle terminal.

Congress may believe they are getting something that may, on one day in the future prove to have prevented a brown bomb being loaded onto a ship sailing to a US port, and “domestic” minded international transport operators who believe that time lost (and the lack of certainty for planning purposes) arising at import ports is the overarching issue of merit,will best see their interests prioritised by means of the US government being more absolute and resolute, in the first instance, “over there”.

Of course, the supply chain process might be tracked all the way back to the material components incorporated prior to, or after, manufacture; and before packing and consolidating those packages for export.  And such components or accessories could, perhaps, be absolutely material in an ultimate security & surveillance sense and less than well identified. 

Ultimately, unless all componentry and materials are tracked from supply chain source by regulatory authorities, we will usually have relied upon general intelligence, the faithfulness of what is declared at shipment dispatch, and the faithfulness of the party that chooses and processes what is to be loaded or packed in the shipment. 

We occasionally wonder how many that have either prodded or designed regulatory solutions for Congress might be saying “not my section” when it comes to the more meaningful matters related to trade compliance.

And, as for the impetus for the universal adoption by carriers and shippers of electronic commerce?  Calling Congress is a complicated process.

It wasn’t so merry a Christmas for many in either the B-2-C (Business-to-Customer) or traditional bricks and mortar channel this season just gone.  January reports on the wash-up unveiled a widespread dearth of joy:

http://washpost.bloomberg.com/Story?docId=1376-MZK92B6JIJV001-6NM5PNBC0CNU89IF3NDQTK27QC

The immediate attention of those in transportation industry was naturally drawn to the volume surge effect on UPS and Amazon in particular:

www.bloomberg.com/video/ups-profit-fell-8-5-after-holiday-shipping-snafu-Yb12CVm6RbSbMK1avQp2Yw.html

However, as already noted in our opening comments, the spread of concern was far wider.  In short, the “market failure” pejorative scenario started to lurk behind the narrative coming from noteworthy commentators.

The downstream effects of Amazon Prime’s offer of “free shipping” has come under increasing scrutiny, with the implication often being that it is solely responsible for the mass of late peak orders, and the fractionalisation of orders (smaller individual consumer purchases) that is reducing shipment sizes. 

www.minyanville.com/sectors/technology/articles/Amazon-Prime-Amazon-AMZN-Amazon-Prime/2/10/2014/id/53695?camp=syndication&medium=portals&from=yahoo

The fact that “shipping costs” have now reached 9% of Amazon sales revenues is only one part of the “market failure” rubric mentioned in the article.  The fact that transportation company operating costs are rising well above CPI, as are their shipping prices, and the rate of climb of Amazon’s shipping costs from 7-9% in a zero interest rate economy, should be noted.  

In writing his article above, Mouton has picked up opaque industry jargon such as “due to a more adverse mix of packages” to explain past increases in UPS and Fedex rates.

However, I spoke recently of matters concerning Amazon's order pre-distribution and demand planning situation and perhaps this is more notable.  Given what happened at Xmas perhaps the associated media at that time reflected some externalisation of general angst in that business in those respects.

Despite Mouton carrying negative testimony in his article in respect of the local stocking of inventories, there is no necessary causal link to lower yield potentials for carriers.  Conjecture, however, may focus on three possible scenarios emerging downstream from the same observation:

1.      Poor pre-distribution and demand planning by retailers can see the wrong levels of inventories arrive, short of, or in the wrong consumer location – and that high priced, long distance, premium priced transport necesarily employed may still not meet delivery deadlines in such circumstances due to the surge effect.

2.      Bulk shipping to regional DC’s ahead of peak demand will see existing high rigid-cost centralised parcel hub operations of major express transportation companies being defrayed over a lesser volume of shipments outside of peak periods.

3.      When demand planning fails to locate inventory according to the overall plan, and excessive levels express hub transport is employed at peak in a crisis, that both the shipper and the transportation company may be complicit in “market failure”.

Bear in mind that UPS and Fedex operate both regionalised ground package service hubs for economy package services; and large centralised air hubs for premium overnight long distance express transport.  The latter dominate the cargo volumes moved through the general airports of their two major air hubs (Fedex - Memphis; UPS - Louisville), and we leave you to ponder the variation between the two sets of airport statistics that were reported for December:

www.bloomberg.com/news/2014-01-27/memphis-airport-december-cargo-statistics-summary-table-.html

www.bloomberg.com/news/2014-01-24/louisville-airport-december-cargo-statistics-summary-table-.html

note: this is a revised version of the original blog post which includes minor text changes.  An unedited version was mistakenly originally published.

On a day where all roads seem to have led to issues concerning the appropriateness of hubs and spokes we find ourselves returning in a general sense to matters we have raised in earlier blog posts.

During the day we have engaged on logistics issues related to order aggregation, logistics network optimisation, unforeseen distribution complexities in the single sourcing model, and the fragility of the air cargo market.  On each and every matter we were drawn to comment on the nature of problems derived of hub and spoke operations raised by inventory managers and transportation industry executives.

While we may disappoint the supply chain professional with our priorities today, we will start today with the air carriers.  We hope supply chain and logistics professionals will bear with us, however, and in coming posts we might uncover some method in our madness.

Air freight markets, and more importantly the underlying networks supporting them, are not strong currently.  We wrote recently of supply and demand, and implied that we saw weaknesses in the dominant supply siders’ business models.   We believe we see this reflected in the reported mood that came out ahead of the Singapore Air Show last Sunday, where International Air Transport Association (IATA) director general Tony Tyler “cautioned that weakness in cargo markets is the airlines’ biggest worry for the new year.”

http://finance.yahoo.com/news/air-cargo-weakness-threatens-airline-174149733.html

The article cites weaknesses across both the passenger carriers (primarily employing combination passenger and freight carrying aircraft) and dedicated cargo aircraft operating carriers.  As in all communications of this nature, it is important to take note where the comment was made.  In this case it is Singapore, which happens to be a nation long at the forefront of supply side investment in the hub and spoke model (by means of airport infrastructure & terminals, and the national carrier’s investment in freighter aircraft).

Long term trends had come to fruition by 2012 for Singapore Airlines, who are among the largest tonne/km operators of dedicated freighter aircraft on international routes, when cargo losses had reportedly tripled and they reduced their capacity by 20%: 

www.businessweek.com/news/2012-11-02/singapore-air-posts-lower-than-estimated-profit-on-cargo-slump

By mid 2013, the underlying result was hardly better when it was reported (see URL following) that Singapore Airline’s “Cargo revenue was affected by lower loads (-5.3%) and yields (-5.5%) with overcapacity in the market as well as the weak global economic situation.”  Moreover, that the overall airline operating result was affected by further measures including “A restructuring impairment cost of $293 million was booked on four surplus SIA Cargo freighter aircraft that have been removed from the operating fleet and marked for sale.”

www.virunews.com/singapore-airlines-net-profit-sale-freighter-aircraft/

We mention again today the fragility of the proposition, absent of supply sider political and capital intervention, that operating efficient primary transportation hub ports primarily supporting efficient aircraft or vessels necessarily represents the optimal channel (in supply chain engineering terms) to support the majority of world merchandise trade.

In respect of the similarly poor results for the combination passenger-freight aircraft operators we should start by speaking of fleet transitions both in freighter and passenger aircraft markets.  As discussed in an earlier blog post, the supply side interventions into the second hand aircraft owner-operator and leasing markets were important elements in the development of network models that came to incorporate a majority of the world’s fleet of wide-body freighter aircraft.  

Without the resale potential made available by means of freighter conversion of older wide-body passenger aircraft market and the lifting of prices of those second-hand aircraft, many new wide-body passenger aircraft sales in the 1980’s and 1990’s would never have materialised.  Moreover, many less aircraft engines and spares would have circulated during the period.   Hence, it should be less than surprising that engine maker GE features so prominently in past share registries of aircraft leasing and freighter aircraft operating companies.

The consequences of cheap supply derived of the “old banger” freighters kept in the air well past what many were saying at that time was their “use-by-date” was a tide of both revenue and market share growth for international air cargo which conveniently married with a technology boom.  Once the market was established, noise regulations surfaced that disappeared the old aircraft and engines, and replaced them with brand spanking new ones purchased by those with liquidity (capital or debt) and convinced by supply side theory. 

These developments mentioned above attracted both new entrants and expansionists into the new air freighter market; especially prominent were Asian carriers.  In the background we imagine the notion of their essentiality to the growth of hub port operating revenues being front-of-mind with the usual state corporatists.  New entrant express cargo carriers concurrently appeared to strategise that their ambition to grow the size of their international shipments meant growing the size of their aircraft, their networks, and their fleets; and a step along that path was the defraying their transitional network cost by selling off the back of their newly acquired wide-body cargo aircraft to subsidiaries, or the general market.   In the face of this, some of the longer lived combination carriers in Europe either trimmed their dedicated freighter capacity or allowed their freighter sector market share to decline.  Perhaps the thinking was that we live to fight another day? 

Despite market volume growth and artificial cost suppression, several ill-fated strategies and enterprises were already washed up before the end of the dot.com era.  Even so, the impetus derived of questionable capital investment led gambles returned to bolster the system during the noughties, while the underlying receding tide from a previous era played out. 

Absent continuous growth of air cargo market volume and revenue, the scenarios underwriting two generations of investment and the shape of infrastructure development come into question.  If the idea that past demand growth was built of unsustainable price subsidies, and supply growth was built of some peculiar strategies that anticipated demand without thought of what might underwrite it, then we are right to be concerned about market prospects.

The worry now is that with supply-sider network operating costs locked, economies of scale growth at both port and in the air stagnant, and the nature of markets altering, the Singapore Airlines experience will become the fate not only of aircraft operators, but also the capital intensive primary hub developments that sit behind them.

The upside, however, is the same as always for the air cargo market.  This is an industry built upon opportunism and innovation from its earliest days.  In the Yahoo report above we see the recent poor cargo revenue results of the passenger airlines, but we do not have a handle on the underlying movement in the aircraft types operated or the split between international or domestic derived volumes.  We know that the delivery cycle of the hub busting B787 aircraft and the A350 to follow are still to rotate into the schedules of the passenger carriers.  The cost of running cargo through three cargo terminals via the primary hubs and the employ freighter aircraft, when compared to the alternative consisting of two terminals and a cost sharing with passenger derived revenues while employing hub busting aircraft represents opportunity.

I hope the supply chain managers reading this long post will see jumping off points where we may continue to delve into downstream hub and spoke systemic issues; and their relation to evolving sourcing, aggregation, and network optimisation logistics organisational issues.  Have inventories hubs followed the freight hub capital investment?  How smart has that capital been?  Does political risk and labour cost/quality follow capital investment, or lead it, in respect of locating regional DC’s?  Is the warehouse vs transport decision paradigm moving as we speak?  How do we retain control of inventory moving around traditional hubs?

This was a long day, we will return to this matter on another one.

In our last blog post we talked about sales and marketing landscape changes brought upon us by changes to the volume, breadth, and accessibility of commercially useful intelligence. 

We also talked about not being able to leave such available intelligence on the table if is already in the public domain.

We at Gilead make no statement in respect of the systemic merits (or otherwise) of surveillance.  However, we plainly hold that employing the means to access and filter material information from that social intelligence is irresistible for sales professionals.

Twitter is by no means the only source of such social media intelligence, but the tools available and the public domain information may be useful if employed effectively.  Having the tools and the available intelligence doesn’t, however, necessarily lead toward a successful sales programme.  

Software tool providers are not shrinking violets when it comes to making claims about the essentiality of their products as the following illustrates: 

http://blog.socialbro.com/2014/01/what-cia-can-teach-your-business-about.html

However, as is the case for most software systems, the makers and marketers are often the least effective in providing the lead in successfully deploying their systems in commercial enterprises.

When employing social media for sales and marketing purposes, there are two critical aspects to be weighed ahead of assessing the quality of information derived from them.  The first one concerns identity, and the second one is the question of whether the content is an honest admission, or otherwise.

In the sales & service sense, if you have a contact or candidate, and you can confirm that the social media identity you have located is a match for that contact, then you have a start.  Then you must assess whether that social media contributor chooses to volunteer genuine information, and if that information is material.  In other words there are a lot of ifs.

And there are no lesser amount of buts.  Consider a situation where SocialBro became a hit and is deployed widely in the transportation sales market, and you have deployed that system in your organisation.  Your sales person has assured you that the twitter identity and your candidate are indeed one and the same, and they are volunteering private information…

Then follows the question: it may be material, but is it useful?  And if it is - how will you use it?  Will you inform your sales call contact how you came across the information?  What do you anticipate their reaction will be?  What happens when several sales people from competing organisations all access the same intelligence, and perhaps many employ it clumsily?   It is rather obvious to many that initiating calls & campaigns based solely upon intelligence derived from surveillance is fraught with hazard.  

The most useful information gathered from social media, however, may be that which informs the parties of existing common ground and interests within the parties 3 degrees of connectedness.  For both parties, the value of existing connectedness (in social, philosophical, or commercial terms) surfacing stands on its own merits - as it always has done.  

It is obvious that the sales person will try to associate themselves with the orbit of their prospect, but it is important to recognise, that in a maturing social media derived surveillance world, that prospect is defining and leading the presentation of that orbit on a voluntary basis.  If they are a critical decision maker, they will come to carefully manage their identities and what information they release in the public domain.

On another day, we may discuss twists and turns in respect of the personal identity issue in social media.  As SocialBro itself states above, the process of commercialising marketing ideas developed by intelligence agencies is well underway.  The idea of social media identities being out there building followers based upon their advocacy of a fashionable moral crusade for the expressed purpose of later selling that identity for commercial interest should not shock or surprise a marketing professional.

Transportation carrier supply & demand reports and market prognoses are featuring prominently in the logistics and financial news wires in recent times.  
As usual, the narrative employs standard rhetoric in respect of supply and demand, and of surveyed market confidence.  

www.forbes.com/sites/robertbowman/2014/01/21/air-and-sea-freight-carriers-plagued-by-low-rates-weak-markets/

The obvious framework of neo-classical liberal economics flutters through these reports, and the surveyed voices are sometimes said to have it that simple pricing solutions at the user interface will move the market forward.

http://theloadstar.co.uk/air-freight-survey/

But can we find a new way to approach the subject of carrier and transportation economics?  And, is there an acceptable manner of public speech that doesn’t lead the market audience towards false easy-fix market prognoses?

Unfortunately, the answer at this time is likely no. 

To understand this we might compare the neo-liberal market narrative with the supply-sider controlled realities that turn out market consequences for capacity (or supply). 

In the ocean containerised trades, capacity is ruled by supply-sider ideas: ocean carriers strategic desire to maintain or expand shares in trades and alliances, corporatist government views of shipyard and hub port unit capacity as strategic assets, the market in scrap metal that both lubricates new orders when it is up - and keeps old vessels in trades when it is weak, and that all important magic dust called financial market liquidity and funding.   We start our ocean container capacity forecasting from this base and ride the effects of new building programmes downstream of a game locked in years before in another market.

Citing a reality case-in-point close to home in the air carrier market (ie: QANTAS - a combination passenger and freight carrier) why would we be surprised when there is a neo-classically inclined led attack upon QANTAS’s objective of maintaining a 65% domestic market share.  

www.afr.com/p/business/companies/gobsmacked_at_qantas_market_share_v3zODox9752ibVRfUfdM1O

And why would we be surprised when such a contention is batted back by QANTAS at financial market and media critics by means of citing earlier published reports such as the one concluding that they have lost 15.5% market share in the past decade on international routes to Australia by failing to match competitors capacity increases (…and as a consequence their international airline business is a basket case)?

www.theaustralian.com.au/business/aviation/qantas-blames-rivals-for-market-share-drop-on-routes-to-australia/story-e6frg95x-1226784446855#

So both ocean and air carriers acknowledge, by means of order book action and reaction to financial market commentators that the reality is they surrender market share at their peril.  We deal with markets that are, in part, a product of that capacity reality in a supply-sider world.  If investors have gone along for the ride they might care to look at the daylight between their narrative and world views, and market reality.

Ahead of us are the issues of the fragility of the mega-hub and spoke models of global transportation systems, the fragility of air cargo freighter and engine economics, and the limits and dangers presented by “domestic mindedness” in the global commercial trade and transportation industry. We will return to these issues on another day.