Shipping office services, helpline, consultancy and supply chain security

Friday, 21 December 2012


There I was happily driving back to Manchester from the Holyhead ferry after a few days helping a client in Ireland, when the phone rang. It was 2003 and I had just set up my own International Trade Consultancy. Leaving the world of employment was a tough thing to do but the timing had been right because by then I had 16 years of international selling experience and qualifications to go with it. The guy on the phone was from RBS. I had met him at a number of Export Club events where we had talked about business and football, and he had been kind enough to refer me to one of his clients, a manufacturer of Hi-Tech speedboats that were used by coastguards and security services.

So I followed the lead. The customer was concerned that they might need an Export License for four such vessels that were due to patrol oil platforms in the Gulf of Aden for a Canadian oil company. So I took them through the process, examined the purchase order, and agreed that we should send a Rating Enquiry Form to the Export Controls Organisation (ECO). Rating Enquiry Forms are simple documents used by ECO to establish the status of an export consignment, and to decide whether a license is needed. So we filled in the form with the key details of the proposed shipment and two weeks later received the decision that ‘no export license was required’ because the boats were for Civil use.

Manufacturing continued, and the company began to make arrangements for the sea trials, with the Canadian company ready to pay the balance for the goods upon successful trials. With six weeks to go until completion, we received a revision to the Purchase Order which just about changed everything. The customer details had changed, and we were no longer supplying to a Canadian Oil company, but to the Ministry of Defence for the Republic of Yemen. The specification had changed to include ‘hard points’ on the bow and stern of each vessel, which were clearly for mounting guns. Therefore the Civil status of the consignment had changed to either Dual Use (Civil and Military) or to plain Military use.

There was no option but for the company to make another Rating Enquiry, and after two weeks we received the predictable response that the consignment would need to be covered by an Export License. By this time the company had already agreed sea trial dates and officials from the Ministry of Defence for the Republic of Yemen were making arrangements to observe the trials and rubber stamp the deal. It can take up to four weeks to receive an Export License and the sea trials were scheduled for five weeks time, and the fact remained that the boats were going nowhere without one!

You have to bear in mind that even for Civil Use in the Gulf, it is likely that patrol vessels will need to be armed to some degree. It is an incredibly volatile region, and Yemen continues to have its own specific problems. The Export License was granted after four weeks for Dual Use and the Yemenis visited and observed successful sea trials. Had a license not been granted then £800,000 was at risk, and while the boats could have been sold eventually to another organisation, that is an expensive amount of stock for a small company to carry. Failure to obtain a license could have bankrupted the company.

However we achieved everything within a very tight timescale, and the boats were prepared for shipment to Manchester Airport where the Yemenis has commissioned a huge Antonov aircraft to collect all four once payment had been cleared through. That was my very first job as a freelance International Trade Consultant and covered every emotion from severe stress to elation! It illustrates how Exporters need to be aware of procedures that they may only need to perform once in a blue moon, and why regular International Trade Training updates are required for relevant staff. Non-compliance can cause bankruptcy, and failure to obtain the right licenses for equipment that might have a military or security use can result in imprisonment for company directors. Tread carefully.

Friday, 14 December 2012


Charlie Bates. That was his name. It has taken me about six months to remember the name to the (rather red) face that I am not likely to forget! Relationships are everything in business, and I am glad to have a reasonably good instinct when it comes to forming and developing key business relationships. I have achieved that in multiple countries and across cultures, making many good friends along the way. And where friendships have not developed there has generally been the kind of connection and mutual respect that leads other people to actively want to do business with you. 

One of my longstanding clients once had a need to locate a very specific type of woodworking machine and asked for my help.  I had been out of the business for some years but said I would see if I could find one through any of the machinery dealers I used to work with. As part of that process I phoned a dealer in St. Louis USA. I had not spoken to him for about eight years, yet he still had my name in his phone and answered with a warm “Hey John! Good to hear from you!” It taught me a lot about communicating and making your connections work. It’s something that doesn’t happen overnight.

Conversely, it was poor communication and an inability on my part to connect which ultimately caused my relationship with Charlie Bates to break down! Charlie was a Sales Agent for one of our US distributors. He took a commission on machines that he sold on their behalf. The woodworking machines that we manufactured in Windermere were complex machines, albeit based on simple principles. Charlie had understood enough to sell a machine line to a woodworking company in Johnstown Pennsylvania. It was a high speed spindle turning machine linked to an automatic sander.

The machine had developed a teething problem and after several telephone conversations with both the distributor and Charlie, I felt the best thing was to take an engineer with me to resolve any issues. That went down very well and Charlie said to me that he felt it would ‘take the heat off the situation’, which has something of an ironic ring to it! Everything was very cordial, polite and positive and we had agreed to meet Charlie en route from Pittsburgh Airport to Johnstown. It was late in the day when we arrived, and being British we managed to get lost on straight roads. This all happened pre-mobile phones, and as there was no way of contacting Charlie we drove directly to the hotel, imagining that he would put two and two together and find us there.

My only direct communication with Charlie regarding the hotel had been to pass on details through the distributor of where we were staying, and we knew that he had received that information. So we assumed he would eventually meet us there. After an hour or so of settling into the bar, we started to get a little peckish, and as the restaurant was scheduled to close at 9pm we ordered. Still no Charlie, so we pressed on. About half way through our meal, this incandescent, red-faced ball of fire appeared at the end of our table bombarding me with accusations of giving him the wrong directions, with a peppering of expletives thrown in! So I let Charlie rant on for a while before eventually pointing out that actually he had been to Johnstown before, he had been to see the customer to complete the sale, and he would have had to drive past the hotel en route. Furthermore, I was British and had never previously been to Johnstown yet I managed to arrive at the hotel several hours before him. Poor Charlie wouldn’t let it go, and carried on with this endless and illogical public attack for so long that by the time he had finished the restaurant had stopped serving. When he realised, I offered him a French fry. I expect that wasn’t entirely helpful.

Although we then didn’t share a table for breakfast the next morning, we seemed to work well enough as a team to resolve the customer’s technical problem and had the machine line running perfectly by the time we left late in the afternoon. Yet if Charlie and I passed a dozen words between us that day, it is probably an exaggeration. At least we were both professional enough to know that the relationship that each of us had with our customer was paramount, and hatchets can be buried whenever a job needs to be done.

These two extremes demonstrate that while people do business with people, sometimes people just don’t get on. There have been instances where I have visited customers and made a good impact where previous salespeople have failed, and there have been others where I have failed where others have succeeded. Relationships are everything in business.

Friday, 7 December 2012


After trading successfully in many parts of the world, my company decided to enter the US market. Whilst this market offered the obvious benefits of size it is also fraught with many commercial dangers. Potential issues ranged from controlling this vast market through to addressing the numerous legal barriers both at Federal and at State level.

We exported consumer products and our target market in the US was primarily the Asian-American consumer. Demographically the main areas of population were found in the ‘Chinatowns’ and ‘Little Vietnam’ neighbourhoods in prime cities such as San Francisco, Los Angeles and New York. A number of secondary cities such as Chicago, New Orleans & Atlanta were also identified. California was by far the key state by not only possessing the highest share of this consumer group but was also the first point of entry for successive generations of  immigrants.

Of the many issues to be resolved when entering this market, distribution was a key factor. A number of options were considered. Agency arrangements were quickly dismissed as we required stock inventory to be placed in-market and to be freely available for trade purchase. Our main competitors were US and we could not afford to be out of stock.

We required a distributor arrangement where our products were purchased, stored and supplied in-market. We then had to decide upon the most effective distribution arrangement. We considered and discarded a state by state appointment of distributors. We believed a high number of reporting lines into our UK head office were undesirable and difficult to control. In particular there would be a danger locally of ‘range wars’ where one party sells into another’s designated territory.

 US anti-trust laws place a particular pressure on distributor/principle relationships in that the exporter cannot, in any way, directly influence the distributor’s price or his margin. Yet pricing is, in itself, a key issue in successfully marketing consumer products so the only solution was to develop very strong relationships with the distributor to ensure both parties were working to the same end. This would be very difficult to achieve if working with a number of partners in the same market. So the conclusion was to appoint a national distributor wholly responsible for all US business.

This decision then raised other potential issues such as how to ensure all major priority areas received the same degree of attention and focus locally. This was not just in terms of product supply but in sales and marketing effort to ensure there was appropriate market development. There was the additional matter of ensuring that we capably handled the ethnic requirements locally.

We therefore decided that we would set up sub-distributor arrangements in each key location, each being managed and serviced by our national distributor. The basics of such an arrangement are:

  • Each sub-distributor is in contract with the national distributor

  • Each sub-distributor purchases stock from the national distributor

  • The price of that transaction is set by the national distributor

  • The national distributor forgoes part of his profit margin in his price by passing it onto the sub-distributor

We then set out to locate a suitable candidate for the national role who was based in our prime market of California. Space prohibits discussion on the selection process except that it took over three months from selection to appointment.

Our appointee was non-Asian but highly experienced in consumer product distribution and sales. At the outset the idea of a sub-distributor arrangement did not appeal to all but our chosen partner already possessed experience in this process. As important he showed an early willingness to work closely with us and saw our business as an incremental opportunity to both grow his business and develop his influence in other states.

He was based in the Bay area of California so we supplied product to him via Oakland port. We agreed a launch plan which consisted initially of the two Californian conurbations to be followed by New York 6 months later. With California being a highly litigious state, the drafting of a contract including the sub-distributor responsibilities was a drawn out-affair but nevertheless was successfully completed...

We agreed, as part of our support for the initial launch into California, to run a special training programme for his sub-distributor appointees. This was ultimately carried out in Las Vegas, a highly motivational location for Asian Americans.

Once the sub-distributorship arrangements were in place, the launch was initiated. The timing coincided with a West Coast trade show so we jointly hired a stand for ourselves, the national and sub-distributors to exhibit. Generally in the US, attendance at Trade shows is high and much business is done through them. It proved to be the same for our business. Our new direct and indirect business partners were successfully able to promote both their business and our products to existing and new trade customers.

Whilst there are many facets to any product launch, focusing on the product supply and trade distribution aspects our launch was successful. Within the target launch period we were able to achieve our distribution targets that had previously been set with our trade partners. During our Las Vegas meeting we had agreed on the numbers of key trade outlets to be sold to such as Asian-American specialists, supermarkets, wholesalers etc. in San Francisco and Los Angeles.

Naturally there were teething problems with the launch but the fundamental strategy of using national and sub-distributorships was sound. The main benefit to us, being based in the UK, was the ability to manage the business locally through one contact point

After 6 months of successful trading we all agreed to move to the next phase which was New York. In terms of product supply we set up a new arrangement to overcome the logistical problem of servicing the East from the West coast. Once the new sub-distributor was selected and appointed, we would supply their product requirements direct albeit on behalf of the national distributor.

The US remains both an opportunity and a potential problem for many exporters. For us we spent much time at the outset considering the pros and cons of distribution in this market, we found an appropriate solution.