Never in the history of aviation between the two countries have fares been so low and still flights are departing half full. Showman, Richard Branson, may have bitten off more than he can chew here. First of all, he is a bit of a Donald Trump. He doesn’t exactly use his own money and that being the case, his backers may have a different view from him into how much of a loss the airline can sustain before they will want to pull the pin. With Delta, they are so used to bankruptcy, so it is a slightly different case. Once upon a time Continental and Pan Am (United bought the Pacific routes in the eighties) ruled the skies to the South Pacific and Delta, now the world’s largest carrier, feels it can pick up that mantle once again. American carriers have an advantage that reorganizing in bankruptcy is a “piece of cake” so the decision for Delta to fly where they have never done so before was done on the basis that commercial considerations obviously took second place. If it fails, bankruptcy is an easy option out!

My belief is Virgin will not last very long and Delta, just like Continental, Northwest and America, will pump a fortune into promoting the route only to fail like their three predecessors. Qantas will prevail, because it possesses the image of the most successful international regional carrier in the world, something that Dickson a couple of years ago set out to destroy.

At CII, we are bracing ourselves that what happened in December will carry through for all of 2009. In January we made some virtually unpalatable decisions. We had to cut our overhead to match the gross profit of December and this we did. We believe our business in 2009 will be at the most 80% of 2008. For the first time ever we laid off 20% of our staff, reduced benefits and some of us had to also wear a 20% reduction in salary. Although, politicians tell us small business is the backbone of America’s economy and President Obama is going to help our small business by granting loans through the banks, this won’t happen for non-asset based companies like CII. Banks just don’t lend on receivables, a balance sheet showing a significant difference between assets over liabilities is the only criteria banks will look at. CII even in its best years never produced a pre-tax profit of 5% on revenue. So for us anyway, we must look within to survive these tough times. We have to work doubly hard at making sure our receivables remain minimum 90% current. This we are striving to do.

Sometimes when I hear negotiations taking place with the airlines, I cringe at how tough the team is. We know the gross profit percentage margin now must be higher than in 2008. We hold on to the philosophy that we can only negotiate with the airlines when we actually have the freight on the dock. If we marginally cost a shipment, then we have to work harder pinning down the carrier to a rate where that booking becomes a profitable shipment. This strains or stretches relationships to the limits, but we know we must remain profitable in order to survive. We scrutinize and double scrutinize every shipment be it 50kgs or 500kgs. I only wish we had adopted this policy sixteen years ago, but when times are good, it is easy to fall into the trap, “We will make it up on the next shipment.”

In spite of all the doom and gloom we may face in the months ahead, we will remain focused on our niche market, the South Pacific. For us to expand our services/destinations into the unknown could lead us into trouble because it will distract us from the “main chance”. 95% of our business is export airfreight, with 80% being the South Pacific. We are convinced that there is still opportunity for us to expand into Australia especially and already we have conducted one sales campaign and next month another executive will be spending two weeks in BNE, SYD and MEL knocking on every door leaving no stone unturned.

What we are doing at CII is probably similar to what is currently going on within the industry. If we had decided to do nothing and bury our heads in the sand, our doors would close before the end of the year. I believe it may be at least two years before we see a pick up in the global economy and when that happens, I think markets other than China will see it happening first. As far as America is concerned I think European trade will grow back to the levels of the eighties and nineties and I have absolute faith in the South Pacific. Central and South America may replace China as the source of supply for textile piece and finished goods.

I believe the small to mid-sized forwarder has the ability to weather the storm over its larger rivals. Just as President Obama has placed faith is small business to play a major role getting us out of this recession and not big business, I will make a bold prediction now and say there will be two large multi-nationals to go broke and be out of business before year’s end.

For smaller forwarders down under we have created a user friendly web site www.m8sr8s4fr8.com and Peter has already reported this tool has been greeted with huge acceptance. That old cliché “thinking outside the box” certainly has merit and it is in these difficult times when innovation can really make a difference. All through our sixteen year existence the CII team has worked hard at being cutting edge even though it has been from the same base of business. While we have looked at other opportunities to expand our business, we have never lost sight of our major market, the South Pacific. Although we have experienced exponential growth in our short history, over 80% of our revenues are still derived from exports by air to Australia and New Zealand.