Candid Cameron

Outspoken champion of maritime reform helps bring a new, global focus to NITL.

By Jim Thomas -- Logistics Management, 11/1/1998

The National Industrial Transportation League has awarded the McCullough Logistics Executive of the Year Award to Don Cameron, manager of trade policies for Bose Corp., based in Framingham, Mass. The annual award, sponsored by NITL and Logistics Management & Distribution Report, recognizes one executive who demonstrates a record of outstanding achievement, devotion, and leadership to the logistics industry. The award was established in memory of John T. McCullough, former chief editor of Distribution Magazine (now Logistics Management & Distribution Report).

As chairman of the league's Ocean Transportation Committee, Cameron contributed to the passage of the Ocean Shipping Reform Act, a law that will deregulate pricing among ocean carriers and allow carriers and shippers to enter into confidential contracts. Ed Emmett, executive director of the NITL, says that Cameron has been instrumental in expanding the league's focus from purely domestic transportation issues to international matters. "He exhibited vision in recognizing the trend toward globalization of commerce and the need for our organization to represent shippers' interests around the world," says Emmett.

Other NITL executives join Emmett in his praise for Cameron. R.E. (Bob) Bowles, retired director of logistics and supply chain for PPG Industries Inc., worked with Cameron on the league's Futures Committee, which will address the future direction and mission of NITL. "Don's ideas stimulated and guided the committee's discussions and recommendations," he says.

Adds June Youngs, vice president of logistics at Hasbro Inc. and president of NITL, "Not everyone would necessarily agree with Don, but he drove the league to think outside the box, and it stirred up discussion that led us to a direction for the league. He is the type of professional you benchmark with--you find out what he is doing, what his challenges are, and how he is protecting the business."

Peter Gatti, the league's director of policy, sums up Cameron's dedication to the industry this way: "When Don decides to do something, he does so with never less than a 100-percent commitment."

Cameron will receive the award at the league's annual meeting this month in San Diego. Jim Thomas, executive editor of Logistics, recently caught up with him and discussed such topics as innovation, ocean shipping, and the future of logistics.

Q Unlike most transportation or logistics professionals, you already had an interest in the field when you attended college. What was the attraction?

A Transportation was and is a field that presents different problems on a daily basis. That's the kind of thing that makes work enjoyable--and sometimes frustrating. There are always improvements that you can make to any program.

Q You became involved in international transportation early in your career?

A Yes. After my first job, I became a consultant with the Greater Boston Chamber of Commerce. From there, I went to the Cabot Corp., which is a multinational chemical and metals company that had divisions and plants all over the world. We were involved in tanker chartering and import/export activities, and there was never a day that wasn't interesting.

Q Along with the excitement, there's been a lot of change in the logistics discipline.

A In our business, there has been a transition. We used to call what we do physical distribution, we called it traffic, we called it transportation, and now we call it logistics. I think each change brought new challenges. We learned about transport, customs duties, world regulations, inventories, and supply chains. Those who made the transition from traffic to logistics brought innovation to our field in these areas.

Today, some important innovations involve computer systems. For example, at Bose, we recently brought in a tracing/tracking system. A number of years ago, we brought in an automated freight-payment system. The point is that our jobs involve much more than day-to-day [operations]; they are about making the kinds of changes that improve the profit picture for our companies. That's the challenge.

Q And Bose has brought innovation to the field of logistics as well?

A We should discuss JIT II, where a supplier places its person on the Bose floor and that person--in logistics, for example--controls all of the Bose shipments in the supplier's system. We do this with our freight forwarder, the Tower Group; we do it with American President Lines; and we do it with Roadway Express. My boss, Lance Dixon, started JIT II in 1987 in the purchasing field and we copied it a month later in logistics. You could call it insourcing, the reverse of outsourcing. The expertise is right here on our floor, rather than a phone call or e-mail away.

We've worked on controlling the freight in our system. Here in Framingham, we actually track every piece of Bose freight that moves anywhere in the world. We can locate inbound raw materials moving to the plant as well as outbound finished goods en route to our distribution centers and domestic and overseas customers. When you're able to do that, you can divert cargo, you can bring shipments back, you can speed them up, and you can certainly monitor the transport providers' on-time performance. When you understand what's happening in your system, then you're way ahead of the game. Since 1987, we have had the systems on our floor space to enable in-plant representatives from transport providers to do the job. This has only made us better.

Q What does it take to bring innovation into the logistics field?

A There are two parts to every transportation or logistics problem. There's product knowledge and company knowledge, and then there's knowledge of the logistics field. You always need the two of them together. No matter what field you are in, you have to understand the products involved and the customer requirements.

Take NAFTA [the North American Free Trade Agreement]. NAFTA is very complex, and the only way you can qualify for NAFTA treatment is to know your products, know your bills of material, and know where you buy every part that goes into a finished product. That's just one example.

Q Is there a connection between innovation and deregulation?

A Certainly. We have seen deregulation work in the air, rail, and truck industries. At the time their industries were deregulated, we saw competitive companies emerge, and they became innovative and provided totally new levels of service. Take the trucking industry, for example. It's much more efficient and time-sensitive today than it ever was before. I attribute that to deregulation. The ocean industry today is similar to trucking prior to deregulation. Ocean carriers don't differentiate their services. You may have two steamship lines serving Boston to Antwerp. Both have different transit times--one might be double the other--yet the freight rates set by the conferences will probably be the same.

The contract we use is called a "service contract," but in that contract there are no provisions for service! We talk about rates, products or commodities, and ports. Ocean shipping reform will settle the matter of on-time performance. We will be able to be innovative in contracting with carriers. It will be easier to contract with one carrier, rather than with a group.

The conference system is a shared responsibility. You often need more than one carrier in a conference to carry a rate proposal through. It was the same way when the trucking industry was regulated. We had to appear before rate bureaus and testify and when you think about it, it was a waste of time and money. A lot of people did a lot of flying around to attend meetings. The carriers did the same thing too.

What we're doing is putting the ocean freight industry into an environment where you will see innovative responses to the market, different selling patterns, different kinds of contracts, and different services. We already have seen some consolidation and I think that will continue. We have been looking for a business climate where a conference doesn't just tell you that there's going to be a $300 increase in container rates on May 1. I think that is a negotiable item, and carriers and shippers need to sit down and discuss such issues.

Q So you see deregulation as a two-way street?

A Yes. Shippers need carriers as much as carriers need shippers. We need a healthy industry to carry our freight. If we want better on-time performance, then we have to pay for it. Deregulation will accomplish this. We will be able to do things we haven't done in the past, such as making a contract on a worldwide basis. Imagine having one contract with one carrier over multiple trade lanes. That's just one of many innovations possible with deregulation.

Q How do you respond to critics who claim that the proponents of ocean shipping reform are the larger shippers who just want lower freight rates?

A Lowering freight rates isn't the only way to save money. You look at things such as inventory reduction and on-time performance, particularly for industries with high-value products. You look at practices that benefit both the carrier and shipper. Carriers build electronic systems that might be proprietary, but when you partner with them, you often can receive and send information online in a manner that saves both companies money.

Ocean rates spiraled downward because carriers cut rates to buy market share. If you don't have a different product in the market, if your container is the same as your competitor's container, and your vessel is the same vessel, then how do you sell your service? Traditionally, you reduce rates. There's no question that shippers have taken advantage of the situation. But rates must stabilize somewhere along the line. The innovations the carriers have used--larger vessels, slot chartering, and shared facilities--have all reduced costs in the field and I think there's more to come. Innovation is something that never stops. That's what makes our jobs interesting.

Q Why do you think it has taken so long for ocean shipping reform to become law?

A There have been a number of people who oppose the bill. One group is foreign carriers. That's because the only rates published are those to and from the United States. The rest of the world knows what we are paying for ocean freight. Ocean shipping reform closes that window so foreign carriers cannot see what is happening.

Confidential contracts bring us back to the same business environment we have in other modes. It's going to be both good and bad for shippers and carriers. A lot will depend on how well you negotiate and the service levels you require. However, the total change will be good for everyone. You will see a competitive market. All you saw before were rate wars.

Q How will deregulation affect the ocean carrier conferences?

A Conferences exist all over the world and they all enjoy the same type of ratemaking antitrust immunity. But it's an ancient type of system. Did conferences protect the American shipping business? Have we seen lines born or reborn? The answer is no. We are in a global market and lines of ownership are blurring. We need companies that are free to make competitive decisions. When a country owns a steamship line and subsidizes it, that affects us all. If everyone is competitive, we will see a better ocean transport industry.

Q Non-vessel operating common carriers (NVOCCs) have expressed dissatisfaction with the bill. Will their protests be resolved?

A The NVOCCs are upset because under the ocean reform bill, they cannot contract confidentially with their customers. They should have that ability. But the problem is their identity. They are not steamship lines and they are not shippers. They are somewhere in between. Do they provide a service that you can't get in other places. Yes. Consolidation of freight in the international market is an important function. But I think that before this is all over, when we look at the bill's technical language, we will find a solution. For example, cooperatives will be able to contract under the new law. Will NVOCCs become cooperatives? That's certainly a possibility.

Q In an environment where rates are deregulated across all modes of transportation, what is the next level of innovation?

A The law must be refined and the FMC [Federal Maritime Commission] must set some policies. One key area is rate publication. The National Industrial Transportation League suggested that the FMC not specify how freight rates should be published as long as they are available to customers on the Internet or other media. It is important that we do not hamstring carriers before the law becomes effective.

Education is the next step. Right now the league is planning seminars to teach people that there is a new way of doing business. Seminars will be held in the United States, the Far East, and Europe. There will be a lot of cross-pollination before the bill becomes law, which I believe is on May 1, 1999.

Most shippers would like to see a single rate per box, rather than a base rate plus the surcharges for currency adjustment factors, bunker surcharges, and three separate handling charges. When you look at a freight rate, there could be four to six surcharges on it. Do shippers or carriers really know if these charges are right? It's like the old days with rail when you had to go through five tariffs; it took you three hours to find a freight rate. Maybe we can streamline the rate process for everyone.

There are many laws in the world that need to be changed for U.S. manufacturers, and I see the league taking an active role here. I could cite hundreds of cases where the United States operates as a free trading country. The problem is the rest of the world does not reciprocate. The Europeans have maintained rather high duty rates for consumer electronics. India prohibits the import of consumer electronics. China is a challenge, from hiring your own employees to repatriating profits to high duty rates. U.S. manufacturers need to participate in equalizing the world in free trade. When you start looking at other countries, you realize there is an imbalance, not only in trade, but also in duties, tariffs, and non-tariff barriers.

Q What advice would you give to logistics professionals looking to succeed in such a dynamic global marketplace?

A You need to get outside your company and talk to your counterparts in other industries. Staying inside your company and not joining organizations is not a good thing. There are benefits to becoming involved in industry, the government, and the academic world. Each operates differently, but all three offer new perspectives, challenges, and ideas. We improve what we do by sharing ideas. The Council of Logistics Management plays an important role in education. The NITL takes a more active role; [it] provides education and makes things happen in the regulatory and legal fields. It takes all these to make improvements in our field.

After you become involved, you must voice your business requirements. In NITL meetings, we meet people with requirements that only affect their industry or their company. We all pull together to find a solution, even though it may not benefit our own company. If it benefits transportation or logistics, then it is the right thing to do.

Executive Profile

Don Cameron, manager of trade policies,Bose Corp., Framingham, Mass., a leading manufacturer of audio systems for the home, automotive, and commercial markets

Previous EmployersCabot Corp., Atlanta, Ga.

Greater Boston Chamber of Commerce

EducationUndergraduate degree: Northeastern University's College of Business Administration

Postgraduate: Northeastern's Advanced Management School

Accomplishments & AwardsInterstate Commerce Commission Practitioner

Guest lecturer: Massachusetts Institute of Technology, Northeastern University

AffiliationsTransportation Club of New England: President 1984, Board of Directors 1980-present

New England Shipper's Advisory Board: Chairman 1995-1997

Council of Logistics Management: New England Region Board of Directors 1995-1997

National Industrial Transportation League: Regional Vice Chairman 1994, Board of Directors 1994-present, Chairman Ocean Transportation Committee 1994-present

Fastship Inc.: Shipper's Advisory Board

The John T. McCullough

Logistics Executives of the Year

In honor of Distribution Magazine's former editor-in-chief, John T. McCullough, the Logistics Executive of the Year award has been presented annually by Distribution--and now its successor, Logistics Management & Distribution Report--and the National Industrial Transportation League since 1979. Previous recipients include:

1997 David R. Goode, Norfolk Southern Corp.

1996 Roger Wigen, 3M

1995 John P. Clancey, Sea-Land Service Inc.

1994 Sen. J. James Exon (D-NE),

Rep. Norman Y. Mineta (D-CA)

1993 Don Schneider, Schneider National Inc.

1992 Robert Corcoran, U.S. Steel

1991 Jack Lind, Corning Inc.

1990 James Bartley, National Industrial Transportation League

1989 Joseph Dewey, Kerr-McGee Corp.

1988 Clifford Sayre, E.I. DuPont de Nemours Corp.

1987 Fred Tolan, Tolan Freight Traffic Consultants