It is sad we have an environment within American industry which almost matches that of Wall Street. Industrial leaders are all about the compensation package they receive and in order disguise that fact, it comes under the heading of stock holder value. Their remuneration is directly linked to the stock price and cutting costs. Not often, I look to my former homeland New Zealand as a beacon of commonsense and fair play, but I can recount a story of one of New Zealand’s most successful businessmen who also happens to be in the same industry as me.

Bruce Plested, founder of Mainfreight (now in the USA after taking over Target Logistics) one of Australasia’s largest transport companies began his career working for Brambles, a large Australian conglomerate. He rose to become Auckland branch manager of Brambles International. The forwarding industry in N.Z. in the seventies was continually being held to ransom by the labor unions. Bruce always settled the disputes ahead of his competition and when he was finally fired in 1978, it could be said his career in transportation should have been at an end. He had burned his bridges! Instead he partnered with former Bramble’s head storeman, Howard Smith and opened up on his own. Over the next twenty five years he swallowed up every one of his opposition to become one of the largest public companies in N.Z. Not only did he and Howard become multi-millionaires, but also many of his staff who came aboard during the eighties enjoyed huge financial reward when the company completed its IPO in 1996.

About four years ago in his annual report, as Chairman he restated his corporate objectives in order of priority; firstly staff would continue to benefit from the company ESOP, it would maintain the same levels of re-investment and above all Mainfreight would keep to its program of investing back into the local communities. His last consideration was to ensure after all this was accomplished, hopefully the company’s profits would continue to sustain a fair dividend yield for shareholders. The “Wall Street” of N.Z. and the media pilloried Bruce and told him these actions were destroying shareholder value and they would have no alternative but to place a sell recommendation on Mainfreight’s stock. Bruce’s response was the company’s prospectus upon going public in 1996 clearly stated these philosophies. Now the company’s revenue through exponential growth exceeded a $billion it was even more important not to lose those core ideals. He told those gathered at the AGM that if they did not agree, they were free to take the recommendation of their financial advisors and sell their stock.

My point in relating this story is Bruce Plested is a fearless leader. He proudly stands up for what he thinks is right. And he is right. Every major Australian or New Zealand competitor over the thirty years since he has built up his business has either folded or been swallowed up by Mainfreight. His belief in his people to always do the right thing for the company and for him to do the right thing by his people has created probably one of greatest success stories in N.Z. business. Funnily enough in spite of Bruce’s “unorthodox” attitude towards the financial world has worked to the benefit of all Mainfreight’s stockholders, as the company is still the darling of the N.Z. Stock Exchange.

America was once full of Bruce Plested’s, Lee Iococca being one of the better examples. Today, we need to see the return of leaders who will act in doing the right thing by America. It starts with bringing the plants back home and re-employing Americans. The Skilling’s, Embers, Kozlowskis, of this world who dominated the headlines because they were nothing but crooks are just the tip of the iceberg of the corporate world as I see it today. Most Fortune 500 CEO’s are self serving thieves who conduct business hiding behind a bunker. They cannot fail. If they get the boot, their golden parachute takes care of them for ten lifetimes; if they succeed, they earn more than they could spend in a hundred lifetimes. We need the return of true leaders to help rebuild industrial America. For starters maybe we should ask octogenarian Lee Iacocca to take over the reigns of General Motors! With former workmate Bob Lutz, (seventy seven and still Deputy Chairman of GM) the pair of them could restore Detroit back to being the industrial capital of the world!

So in the last fifteen years with the leading economies moving from a manufacturing to a services base, we have seen airfreight change from a position where there was some form of equilibrium of trade between most sophisticated countries to one where it has become virtually one way. In the good old days where export and import volumes were 50-50 this allowed many indigenous forwarders to obtain great market share in their home countries. As the pendulum started turning the other way and exports started shrinking and imports growing, multi-national forwarders quickly started swallowing up the market share leaving local forwarders fight for the scraps. Nowhere better to illustrate this change than to look at what has taken place in Australia over the past twenty-five years. In the early eighties publicly listed transportation companies Mayne Nickless, Brambles, TNT and several privately-owned forwarders Fliway, CH Cargo Handling, VIP, and Simpac more than held their own against the might of the multinationals. Today these companies no longer exist. TNT lives on as a Dutch company in name only. As air imports grew all were acquired by their foreign competitors. Today few of the larger trading countries exist where a local forwarder commands any market share. This has set the stage for the new era where the top five forwarders control over 80% of the global airfreight market.

During the course of 2009, 227 freighters have been taken out of service and we are not talking vintage aircraft like the DC 8, DC 10 and 727. Most are 747’s and MD 11’s, with many of the 747’s being the latest 400 series. What trade were most of these aircraft assigned to? Yes, you’re right China. There is such a glut of capacity that even with the parking up of so many aircraft yields are still continuing to decline. Air France/KLM have just announced they are getting back to their roots and handing their freighter fleet of 21 747’s and MD 11’s over to their subsidiary Martinair and now will only offer belly space. The combined airline since merging has been losing over $1 million per day from its freighter operations. The stage has been set for a far smaller market for airfreight to emerge from this global recession.

Why will this be so? Two things; the days of rampant consumerism as it has culminated into two years ago is over never to return and as trade starts to grow once again, ocean freight will play even a bigger role. Example; Polo Ralph Lauren pre-2009 relied upon airfreight to handle the bulk of their needs. Boss, Ralph Lauren, when hit by a shrinking market, studied areas of further cost-cutting and discovered by changing modes that he could cut his transportation costs to a fraction of what they were. Even though Polo is a premium brand, most of their goods are procured from China. Earlier this year Ralph Lauren issued the instruction all imports were to now move by sea and air was only to be used in an emergency. His decision has so far produced savings in the $millions. Others will, or already have followed suit.

Presently most of the large multinational forwarders, especially DHL, are fighting for their lives and are restructuring for the changing times. The industry has been turned on its ear. The fairy tale of exponential growth in air cargo over the next twenty-five years that Boeing forecasters continued to predict even as late as last year have turned them into laughing stocks. For airfreight forwarders to be relevant in the new era that is dawning upon the industry they will have to ramp up their ocean freight departments. The golden age of airfreight is now consigned to history.