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With sea ports snarled and companies scrambling to get space on super-sized container ships, air freight has become an attractive option for companies to get the goods.The sector is booming as a result, with prices two-and-a-half times higher than pre-pandemic levels. âFlying it inâ has tangible advantages: air freight is far quicker than going by ocean, with just five days needed typically to get goods from the workshops of east Asia into key markets in the US and Europe. Itâs also typically safer, with goods less likely to be broken than during sometimes-perilous ocean voyages.
However, it comes with a price tag, air freight is usually four to five times more expensive than road transport, and up to 16 times more than sea.The pandemic has forced a rethink. Freight prices have increased roughly eightfold in a year, as coagulation across global shipping lanes fed by logistics issues and frequent shutdowns in China chokes supply. Air freight has risen, but not as quickly, making it an increasingly tempting option.
Pre-Christmas pressures are helping to sharpen the minds, and open the wallets, of purchasing managers and chief financial officers. For many companies, a two-week delay waiting for a product during the peak sales season could be disastrous.The sectorâs strength has not gone unnoticed. Carriersâ cargo revenues have risen from about 10pc to 15pc of their total to about a third and they want to ensure they keep a slice of the pie once passenger numbers recover.Shipping companies are also watching closely.
Earlier this month, industry leader Maersk announced it was looking to build air freight capacity as part of efforts to make its supply chain offering more resilient.
Itâs not alone in realising the potential. Several other shipping advisory companies and data providers have recently expanded their product offering to ensure they cater for ocean and air, as companies become more flexible in their demands.The key to future growth is likely to be e-commerce. The sector has boomed during the pandemic, with consumers across the West becoming more used to products arriving within days of being ordered and Maersk expects growth of 4pc per year in the sector in the coming years.
There's plenty of activity at the moment which is creating multiple opportunities. Starcom have some of the best track and trace secure products currently available on the market. Avi recently said if they were successful in converting their current leads then it would secure "significant revenues over the next few years, including SaaS revenues".
I would also like to see these funds reinvested in the business. This will yield a much better return in the long run for the serious lth's, in my opinion. This is bubbling away nicely, below the surface, and will eventually see a rerate when the Market realises the future direction in which this company is heading. There's been much progress achieved over the last 18 months which isn't yet reflected in its financials due to circumstances which have been beyond the management's control.
I'm hopeful that Starcom's BOD have already embraced this as previous RNS's have intimated that we've provided assistance along these lines to customers based within a South American country and this may be one of the material orders which we hope will be announced after the Share Consolidation and name change have been approved.
There are various cited reasons why Starcom's superior tech has not previously captured the market share it deserved. However, there is now a new dynamic at play which has resulted from the pandemic and the global shut down of all supply chains. As the US and other developed countries seek to wrestle control of the global supply chain away from China, this will present numerous opportunities for the BOD of Starcom to present their business case and provide the solutions which big business is seeking. The price of our products was previously regarded by some as being too expensive but the rapid acceleration in shipping, air and rail freight charges along with additional costs such as penalties and demurrage expenses have now removed this obstacle. Also, the new inflationary environment is allowing for these costs to be absorbed within the price chain mechanism.
This means converting business processes over to use digital technologies, instead of analogue or offline systems such as paper or whiteboards.This is already a major trend within the maritime industry, but since the outbreak of COVID-19 it has become more important as ports must find ways to keep trade flowing as efficiently as possible.
For ports to cope with changes in the global economy, meet growing demand and an increase in throughput of cargo, the ports themselves and their stakeholders will have to strike new agreements on collaboration and standardization on big data, which in turn make port digitalization easier to achieve.
Digitalization in the container handling context is often considered as a matter of the overall logistic chain, cloud and big data. While those are undoubtedly key aspects in digitalization of container shipping, digitalization also transforms the operational processes and port workersâ roles within terminals which has an impact on terminalsâ productivity.
Their ultimate aim is to launch a service for the digital issuance of orders, as the Russians have already done in relation to their railway system, hopefully with Starcom involved in the process, and transform into a fully paperless management system.
The technology enables the digital exchange of legally binding documents with the appropriate customs authority taking the goods from their port of origin to their ultimate destination.The adoption of this technology means that the procedure of order preparation by forwarding companies and issuance of documents confirmed by customs has been completely digitalised.
On the basis of an order issued in this way, the terminal may start loading a container onto a vessel immediately without additional approval. All participants of the process â the forwarding company, the customs authority, the terminal and the shipping line â have online access to information about the status at all stages of the process.
The technology removes the need for paperwork, making the transaction of goods more efficient and environmentally friendly by decreasing the time required to handle a shipment of export containers and will greatly simplify the interaction between the process participants.
Consequently an export shipment may be ordered and traced within a customer portal. The technology used guarantees data protection and integrity of data after it is entered into the electronic document flow system.
This will allow the digital preparation of documents that foreign economic activity players require to confirm the zero VAT rate application. Also,the congestion and delay caused by the pandemic could accelerate use of a digital Bill of Lading.
Another aspect of the Global Supply Chain which is receiving little media attention is the serious congestion at a number of major US airports. New Yorkâs JFK and LAX are witnessing delays of up to two weeks to recover cargo. There is several weeks of backlog and cargo on the tarmac in JFK terminals . A Supervisor who has worked for a major freight forwarder for 28 years, said he has never seen it as bad as at JFK. There are severe delays at JFK across several handlers, particularly in buildings shared by airlines.He also added that he currently had missing shipments and âwe have even sent individuals over to try and help look for cargo". They haven't a clue where their cargo is located. Each of Tetis, Kylos and Lokies are designed to address this issue.
Itâs not just JFK, although the congestion there seems the most severe. Alliance and Swissport in Atlanta are also seeing a several daysâ worth of delays.Chicago has had a rough year, congestion-wise, but sources said it had managed to resolve its difficulties. It was able to find solutions and move the imports off the airport grounds, due to the fact there was a lot of warehouse availability.JFK has zero warehouse availability for this option. JFK is a critical market, with the port authority needing to open space on the airport, regardless of the condition of the buildings. JFK is unable to find solutions and/or warehouse space.New York hasnât made an investment in air cargo in a while. Chicago did â otherwise it would have been really screwed. The north-east cargo facility has been invaluable.
LAX is suffering from a lack of warehouse space, and the city is heavily focused on the 2028 Olympics, which is taking all its mental bandwidth.New security rules from 1 July, that require all freighter cargo to be screened, had reduced the space available.
Make no bones about it, the supply chain restrictions are currently crippling the US after years of under investment in new processes and systems. A substantial proportion of the infrastructure stimulus is aimed at resolving the supply chain issues throughout all of the links within the chain. The "spend" will be huge and a company ,such as Starcom, is ideally placed to benefit. Track and trace is the core of its business and its technology is cutting edge and on a par with any of the global players.
This infrastructure stimulus will create huge demand. Labour shortages have been cited as the main factor behind the congestion. They now have no alternative but to embrace recent technological advances in IoT, AI, Robotics etc as this labour shortage can't be resolved in the medium term. Digitisation and Digitalisation have been identified as the key to providing a solution.
At last weekend's G20 summit the US were calling upon all of their closest trading partners to make a collective effort to improve all links within the Tracking and Tracing of goods flowing through global supply chains. Their aim is to persuade all of them to make a significant Infrastructure Investment to help overcome the problems currently affecting global supply chains.
If the major developed countries adopt this theme the impact will be enormous with Starcom ideally placed to be a major beneficiary.through their various business connections.
https://bit.ly/3ocCNM6
They were initially trying to acquire their stake at 1.7p but eventually had to settle at 1.8p. Be interesting to see if the sp "gaps up" this morning. Also, there have recently been several large buys in the 500K/ 1 Million mould. There is some speculation that Myles may be buying-in AGAIN. However, whether true or not, it doesn't really matter as long as sentiment and momentum are working in our favour. News of any substantial contract win should light the blue touch paper which would be especially apt at this time of the year
I was baiting him but sadly he wouldn't bite and i'd completely forgotten about the fish connotation. However, i sent him links to the "We are 42" website and a copy of the Maritime Industry article , referred to earlier this morning. I suggested it all looked rather coincidental. He hasn't deigned to respond and i don't think i'm likely to hear further from him on that subject
Just asked Igor the significance of the number 42 and his response is :
Igor Vatenmacher
Thu 04/11/2021 11:40
Reply
Hi Nigel,
The correct answer would be â
Toward the end of the "Hitchhikers Guide to the Galaxy", the supercomputer Deep Thought reveals that the answer to the âGreat Questionâ of âLife, the Universe and Everythingâ is âforty-two.â
Thanks,
I hope that solves the mystery
I think that looks like a very good possibility .Avi Hartmann in his September blog was referring to container tracking solutions and more specifically to increasing the number of monitored containers .He made reference to a wide variety of data points and parameters of the container which both Tetis and Tetis R provide .
He then linked this to Starcomâs online monitoring platform (SaaS revenues) and how they provide a flexible solution for all data points and relevant personnel.âThe system is designed to optimise the supply chain, prevent potential mistakes and makes the entire experience of shipment more transparent and less stressful â.
As reported, the Company is in advanced stage discussions for a number of potentially substantial projects concerning the supply of Starcom's various devices for the tracking and monitoring of containers and related items. Should these be successfully concluded they could provide significant revenues over the next few years, including SaaS revenues. There can be no certainty that these negotiations will lead to final contracts or if they do, what the final terms and value will be. However, certain potential clients have indicated their desire to reach an agreement with Starcom for its technology and the Board is hopeful to conclude one or more contracts before the end of this year. The recent raise of new capital will help to meet short term cash needs and to increase our marketing spend to take advantage of the new opportunities.
We do see major opportunities to expand our business over the next year or two and intend to promote our new brand and positioning aggressively on a worldwide basis.
The change of name will coincide with a rebranding of the Company's various products and technology and a relaunch of the product range as part of a revised strategy that focuses on the container and freight market. This strategy, and the rebranding that it represents, is intended to leverage the market opportunity that has been presented by the major problems currently being suffered in the shipping and freight movement sector. We believe that the substantial increases in freight costs and the disruption to supply chains increase the need for our superior tracking and monitoring technology as shippers seek real time information to better control their assets in motion.
Just refer back to previous comments over the course of the last 3 months concerning the new rail routes from China to the EU through Belarus, Kazakhstan and Russia with ships being rerouted to the Baltic Sea ports. Weâve mentioned the various proofs of concept which Starcom have been conducting with several rail companies operating along these routes. If these have now been successfully completed then we could be looking at some seriously large contracts as the mooted $2Million contract referred to last year was with their Russian Distributor who was heavily involved in all of this with the Russian Federated Railways System who were overseeing this project
There has been some strong buying this morning in a lower price range. Possibly the sp has been manipulated into the lower range in order to accommodate this. Depends upon whether this represents several buys or a large shareholder patiently attempting to build a substantial stake
Agreed. I see the current fluctuations in sp as nothing more than short term traders looking to make their 10/20% profit on their trades. It can be frustrating at times but there is a large pool of AIM traders who operate in this manner.Iâd love to know the trader/investor proportions.Last time I checked AIM attracted approx 25/30% of retail investors which is a much higher proportion than the mainstream markets and we simply have to accept that this is a symptom of how this market functions .
Itâs largely irrelevant because if Starcom can deliver on the contracts front then it will eventually be recognised within the sp.
Donât really know what all the small trades are. Am inclined to think itâs the MMâs balancing their books. Donât know if it was noticed but there was a much wider spread recently than weâve witnessed for some time. Whenever there is a smaller and less consistent amount of buying and selling activity MMâs widen the spread to lower the risk that theyâll get caught with a high proportion of money-losing shares and to help them make more profit when dealing.
If youâre impressed with their product links, you may like to take a look at their list of business contacts. Yosi Schwarztuch is Starcomâs Business Development,After Sales and Logistics Director. Approx 6 weeks ago when I last looked, he had in excess of 400 business contacts. When I reviewed this list yesterday I noted it had increased to 994 business connections.Many of those contacts are from CEOâs , CFOâs and R &D Directors at some very large businesses. The scale and diversity of those businesses is huge.
Many of the new contacts have arrived since it was announced that Lokies had won the tech competition organised by DHL so itâs probably fair to say that winning that competition has brought them to prominence within the IoT sector.
If we also throw into the pot that there are potentially a couple of huge contracts, certainly in relation to Starcomâs current annual Revenue then Iâd struggle to guess where this might take the sp in the short term.
Thereâs no doubting the quality of their product offerings which are interchangeable if that is what customers require.Otherwise they can be acquired on a bespoke and stand-alone basis.
Due to the recent availability of cheap labour there hasnât been much pressure on the global Logistics players to invest in and embrace the new technological advances and to be fair to them their customers havenât probably demanded this type of service. However, the Covid pandemic and the associated issues which have now come to prominence have completely changed this landscape. Customers are now demanding visibility of supplies due to the impact it is having on their global supply chains.
Iâm also advised that these changes are being demanded as a result of the change in demographics. The baby boomers are well into retirement ,Generation X is now moving in that direction and the Millenials are beginning to take centre stage in many global businesses. This is the tech savvy generation whoâve grown up with computers,iPhones and their like. It is this new generation of consumer who will drive consumer demand forward and they will embrace 5G and these new technologies. Companies such as Starcom are ideally placed to capitalise upon these changes and hopefully our BOD will take advantage of this.
Theyâre fully aware of whatâs driving this and thatâs probably why theyâre about to embark upon a rebranding exercise.Economies of scale probably prevented this in the past but now they can see the potential of this new market, the dynamics have changed and therefore it makes perfect sense to make this considerable capital investment because of the potential rewards available.
Thereâs some speculation that the large contract in the wings is not associated with the businesses previously close to the company,such as, CropX, Zero, DHL etc. If it proves to be one of the large North American IoT operators,and Iâm not saying it is, then the whole dynamic will change overnight and weâll see a radical change in investor sent
Maersk are now diverting their large ships away from the UK, in large, due to our port congestion,especially at Felixstowe. The average container is in the port for over 9 days before collection and the delay in returning containers for pick-up is behind their decision to divert their large ships.This backlog is preventing new ships from berthing and unloading.
The problem for retailers apart from failure of deliveries is that their containers are buried somewhere in Felixstowe but they donât know the exact location. To make matters worse theyâre incurring additional costs in the form of demurrage and detention fees as a result of these delays.
The positives from our standpoint is that retailers are now beginning to appreciate that their inability to replenish stocks is depriving their businesses of much needed cash flow with the resultant risk that their businesses may collapse. Consequently, theyâre seeking urgent solutions and are finally accepting the need for transparency within their supply chains and that they must make an investment in track and trace in order to survive.
The BOD and their Distributors now have a willing and captive audience. It is down to them to convert these sales leads into firm orders. Theyâll never have a better opportunity or so many willing participants
The Port of Felixstowe is our largest international rail facility with connections to 16 inland destinations throughout Britain. Rail freight accounts for over 25% of the portâs throughput but it needs more investment to improve infrastructure on the Felixstowe branch line so that they can increase the number of freight trains serving the port. This will enable it to significantly improve itâs rail terminal capacity and we should be investing in rail which is an environmentally alternative to road haulage
Apparently the ports vehicle booking system is described as being a shambles which is costing everyone time and money . This is impacting upon forwarders, warehouse operators , hauliers and importers and exporters.Rail providers can only take full containers out of the port and empties must be diverted inland or diverted to other ports. Some carriers have had to take their empties to Liverpool.
Furthermore, managementâs attitude has been described as contemptuous with the current system not permitting the port to function at full strength.Sounds as though management needs the proverbial kick up the a..e