breakbulk americas 2016 EVENT COVERAGE
STOP THE LOGISTICS TALENT DRAIN
LIMITING MARKET EXPOSURE
BY CARLY FIELDS
Due Diligence, Contracting Terms Shield Cargo Owners
F
reight forwarders and shippers have limited means to protect themselves from the collapse of an ocean carrier, but thorough due diligence and an eye on proper contracting terms will help shield breakbulk specialists from the worst of any fallout. Speaking on a panel at Breakbulk Americas, Utsav Mathur, Norton Rose Fulbright senior associate, said that when things go wrong, costs and delays can quickly spiral. He explained that there are stark differences in maritime law versus bankruptcy law, not least because maritime law offers remedies for creditors through the arrest of a ship or seizure of assets. However, bankruptcy law is designed to protect the debtor, or the bankrupt shipping company, and not necessarily the creditors. To stay ahead of the curve, shippers and forwarders should undertake due diligence and not deal with companies when there are significant market indicators suggesting the company is not financially strong. Project cargo movers also need to 62 BREAKBULK MAGAZINE www.breakbulk.com
understand that in a bankruptcy scenario a carrier will file for bankruptcy in its own country and the priority in which the creditors get paid out is determined by the laws of that country. “In advance of booking cargo, figure out what the home country is, where you would fall within the country’s law on the list of prioritized creditors, and what steps you can take to improve your priority,” advised Mathur. He added that shippers should do the groundwork at the pre-contracting stage, determining where stakeholders are based and establishing where would be the easiest place to resolve disputes. “Be proactive in identifying and mitigating these risks up front,” he said. Dennis Mottola, Bechtel Global Logistics corporate traffic and logistics process owner manager, added: “The big points are knowing who you’re going into business with and staying in tune with the market and the people you have a relationship with. You can’t just go out today, get your bids and pick one based on which looks best on paper. Today, it’s about having a relationship with the carriers, knowing which carriers you can
The project cargo industry needs to make a concerted effort to retain people in logistics roles and keep them from diverting into more popular logistics positions in other industries. A diverse Shippers’ Panel at Breakbulk Americas was united in its concerns that the continued downturn is pushing talent away from logistics in project cargo verticals and into positions in Amazon, automotive, frozen foods and pharmaceuticals, among others. “I think that the next generation challenge is a really important one for us to embrace as an industry,” said Gary Sostack, administrator, logistics and services division at Aramco Services Co. “We’re in the middle now of the baby boomer departure and you see now that the best people aren’t coming into this industry; they’re going somewhere else.” Pascal Ochquee, global director international logistics at Halliburton, said that logistics was built on people and systems. “There should be emphasis on supply continuity and ensuring that you have the right talent in place internally and through service providers,” he said. “One of our biggest worries is people leaving and going to other industries. We need to retain talent both within our own companies and within our vendor base.” The industry was criticized for poor self-promotion, which was blamed for the increasing inability to retain good staff. Lee Tipton, corporate logistics specialist at FMC Technologies, said she had worked hard to get the message out that logistics is the foundation of what project people do. “It can really make or break a project,” she said. Tipton added that this needs to be coupled with more focus on practical training of new employees. “We need to foster an environment where not only are we training the newcomers to the industry academically, but we are training them with practicalities as well. There are a lot of academic logisticians now and they need to get out with the carriers and see what they do – it will make them earn a little respect.” BB ISSUE 5 / 2016