Nature threatens port centric logistics

Momentum is gathering pace to change the supply chain map of Britain, evinced by a switch to port centric logistics, but is a key factor being overlooked that could make the move disastrous without environmental preparedness? The economics of re-basing logistics parks to port vicinities look cogent. They can eliminate many return empty container trips and allow containers to be fully loaded, and so reduce transport costs and carbon emissions.  But a new, insidious threat, incalculably damaging, beckons, albeit still hedged by uncertainties --- rising sea levels.

By the nature of coastal ports they must be at sea level but the port assets, like wharfs and dock cranes, can at least be placed high enough above high spring tide levels so as to make them unlikely to flood in the next 100 years. The problem is their hinterland. These areas around the new London Gateway terminal, due to open this November, Tilbury, further up the Thames, Felixstowe, Southampton and Portsmouth are all low- lying and mostly marshy. There is nothing much that can be done with existing ports, though where they incorporate huge logistics parks, like that at London Gateway, effective bunds may be needed to counter future flood risks and any future ports might need to consider substantially raised roads and railway banks that connect them to the inland sites so that they will not leave the ports marooned by flooding.

Is the risk from rising sea levels, however, strong enough to galvanise authorities around the world into more forceful and inevitably costly action? A look at the facts leaves little room for complacency. For 2,000 years global sea levels barely changed. Then they began to rise in the late 19th century as the Earth started to warm, helped by industrialisation and its consequences for CO2 emissions and other greenhouse gases. At an eighth of an inch a year sea levels are rising twice as fast as they were a few decades ago, and there is no comforting reason why this rate of acceleration should not quicken. Over the past century the planet's temperature has risen one degree Fahrenheit and the sea level by about eight inches. Only in last May the concentrations of carbon dioxide in the atmosphere reached 400 parts per million, the highest in three million years.

Clearly there is a need for a global effort to cut greenhouse gas emissions but even if we stopped burning all fossil fuels tomorrow the existing greenhouse gases would continue to warm the Earth for centuries, so future generations have been irreversibly committed to a warmer world and rising seas. Even so, that does not negate the case for more stringent gas emission controls because without them the future would be even more intolerable. It must be admitted that in the short-term scientists are still uncertain about how fast and how high seas will rise. Estimates vary between 23 inches and six feet by 2100 and the US Army Corp of Engineers recommends that planners consider a high scenario of five feet. But what is certain is that past estimates have been too conservative, and there is a joker in the pack. This is the huge Thwaites Glacier in West Antarctica, underpinned by a 2,000 ft undersea ridge, slowing its slide into the sea. If a rising sea allowed more water to seep between the ridge and glacier the latter could detach. Such a breakaway would be enough to raise sea levels by 10 ft.

To an extent, the damage is done, and a foretaste of things to come was New York's hurricane Sandy storm surge last year that inundated a defenceless city, killing 43 and leaving a US$19 billion bill. Many coastal cities are now at significant risk, including even those like London which have built hitherto effective barrages. If one uses a conservative estimate of a 20 inch sea level rise then according to the OECD estimates some 150 million people in the large port cities will be exposed to risks from coastal flooding, along with US$35 trillion worth of property. The consequences of doing nothing more effective than at present are too nightmarish to contemplate. Rapidly developing countries like China and India who are spending huge sums on military expenditure and who have the most to lose from rising sea levels should abandon such inessentials and redirect their revenues to meet the inevitable, natural calamities to come.
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Shipping's regulatory framework shames the industry

It would not be unreasonable to ask if now is the time for the International Maritime Organization (IMO) to be administered an effective enema, such has been their egg-bound deliberations on certain maritime safety issues, which continue to exact their lethal, heavy toll. In releasing its findings on the sinking of the general cargo ship, Swanland, in the Irish Sea on November 27, 2011, Britain's Marine Accident Investigation Branch, (MAIB) commented that concerns surrounding safety and high loss rates on similar ships had been repeatedly raised at the IMO. "However, progress to address the problems appears to have been slow," said the report. It is a tardy record that over 2002-2011 saw 248 general cargo ships foundering worldwide with the tragic loss of over 800 seafarers. Some 226 of those vessels were 15 years old or more, and 139 at least 27 years old. But this is not the only issue where the IMO's apparent tardiness has been disturbing.

Structural failures on ships in heavy weather, for example, affects container ships and the key problem here is deliberate overloading of containers to save freight costs and import duties that probably amount to over £1 billion a year. The solution is a simple one and has been under IMO's consideration for some years. Making the weighing of containers mandatory at all ports is the simple solution but the lack of effective, timely action by the IMO adds daily to the risks, which can only worsen as container ships become ever-more leviathans with 18,000 TEUs or more on board.

Yet a third disturbing lack of action concerns the need to overhaul SOLAS regulations regarding lifeboat capacities on cruise ships. The wrecking of the Costa Concordia was a wake up call that seems to have fallen on deaf ears. As this column commented in previous blogs and elsewhere on shipping sites over the last six years, there is a serious shortage of lifeboat places on most cruise ships, averaging 25%, when allowance for rapid listing is factored in. It is not unusual for cruise ships to list quickly and so prevent lifeboat launching on the opposite side of the list. Almost as disturbing is the cost-cutting means cruise lines use by making use of much cheaper inflatable life craft that would be almost useless for senior citizens in a raging sea, especially if they had to jump 50 ft or so and then struggle to get on board. Had the Costa Concordia foundered many miles from shore in a hostile environment the death toll could have far exceeded the Titanic's tragic loss.

The problem of general cargo ships is clearly a regulatory one. As the International Transport Workers Federation (ITF) commented on the Swanland report: "The ITF condemns the lack of effective regulations and control in the international shipping industry that allowed the tragedy to occur. The MAIB report reveals how negligence and cost-cutting led to the sinking of the general cargo ship, Swanland.... with the loss of six Russian seafarers." ITF, therefore, is calling for:

A wholesale review of the general cargo ship safety,
Stricter enforcement of all the existing regulations,
Additional checks and safeguards to guard against the potential, precarious safety of all general cargo ships.

The Swanland sinking shows, as in many ship losses, that there was a cocktail of reasons that became lethal, almost all of which were man-made and without which even in the roughest of seas the vessel would have survived. At 2 a.m. the 34-year old Cook Islands-registered general cargo ship, (1,987 grt) experienced a structural failure when heading directly into rough seas and gale force winds (Beaufort scale 8-9) when on a passage from Llandulas to Cowes, Isle of Wight, with a 2,730 ton cargo of limestone. An underwater survey showed that the upper structure on the upturned vessel had failed in the midships region on both the port and starboard sides.

The investigation found that the major factors contributing to the structural failure were:
1) The limestone was a high-density cargo that had been effectively loaded as a single pile within the central section of the hold. As a result, significant stresses were generated in the vessel's midship section.
2) The stresses in the midship section were exacerbated by the rough seas in which the wave lengths were similar to the length of the vessel.
3) Swanland's longitudinal strength had probably weakened significantly over the previous 2.5 years through corrosion and wastage ("the maintenance and repair of the vessel had lacked focus and oversight and no structural repairs had been undertaken since 2009"), said the report.

Other contributing factors include non compliance with the International Maritime Solid Bulk Cargo code; insufficient loading information; a lack of effective safety management; poor quality of survey and audit; lack of oversight of the classification society by the flag state; and the financial pressure of operating this type of vessel in the current economic downturn. The investigation also identified several safety issues concerning the immersion suits and life jackets on the vessel and sadly none of these issues is new.

Financial exigences can also contribute to the lamentable shipping losses and the Swanland was no exception. Such pressures are common within the shipping industry and the scale of the problem is disturbing.

Swanland was only one of thousands of general cargo ships operating on small profit margins that, as they become older, they also become increasingly costly to operate. Its trading pattern was driven by the spot market, plying around the UK, northern Europe and the Baltic, carrying various cargoes like limestone, salt sand, slag and grain. In 2003 Swanland had been fitted with a self-discharging conveyor and moveable carriage to support a tractor and excavator on the port side of the main deck. Although the vessel's mortgage had been paid off it had not made any profit since 2006 and had incurred a £1 million loss since then. The pressure to cut costs, therefore, was high and so the main reason for switching its classification society from Lloyds Register to the International Naval Survey Bureau was to reduce the classification society's fee by 30%. But as MAIB pointed out, while the savings made on the cost of surveys and audit fees would have been immediate it is recognised that many ship owners also enter their vessels with non IACS societies, expecting their audit  and surveys conducted would be less robust. In effect, significant, long-term savings are possible through reduced costs of repairs and rectification of deficiencies. "It is apparent," goes the report, "that general cargo ships tend towards being entered in class and registered with lower performing societies and flag states as they near the end of their service life." This is what the ITF means when it commented: "The fact that at the time of the accident Swanland had been certified as being in accordance with all applicable statutory requirements makes a mockery of the existing regulatory framework."

Recommendations have been made to the International Naval Survey Bureau to improve the quality of their classification survey, audit and training regimes. Recommendations have also been made to Swanland's managers, Torbulk Ltd, that are aimed at ensuring solid bulk cargoes are safely carried on all its vessels and that crews are familiar with and well drilled in the use of life-saving appliances on its vessels.

MAIB says that there is no justifiable reason why the safety record of general cargo ships should be allowed to lag behind other vessel types such as bulk carriers without vigorous attempts being made to redress the imbalance. In summing up its recommendations, MAIB says: "It is hoped that the loss of Swanland and her six crew will be a catalyst for the work already being undertaken by the IMO to tackle the global issue of general cargo ship safety." If the IMO's history is any guide such a hope seems forlorn and so seafarers around the world will needlessly continue to die and for that the IMO should ask if its hands are spotless.       ------------------------------------------------------------------------------------------    

Will shipping herald next credit crunch?

All is not well in the shipping world, and by extension, the banking industry, as freight rates tumble, shipping companies enter bankruptcy protection and bankers tremble at their multi-billion pound exposures to non-performing shipping loans. The root causes include huge tonnage capacity increases, based on unrealistic world trade growth projections, at a time when the global credit crunch began to bite in 2008. The fall-out of that credit crunch and its body blow to shipping continues to restrain economic recovery today as banks struggle to clean up their balance sheets first before expanding lending to pre-crunch levels.

The ship owners desperately need a boost to world trade, partly because of collapsing freight rates but also because new accounting standards by 2017 are expected to force them to place bareboat charters and time charters exceeding one year on balance sheet, increasing liabilities/debt ratios and causing them to be in default on loan covenants. But how realistic are hoped-for boosts to world trade and, by implication, shipping freight rates? Not much, as we shall see, given the new forces at work which could stymie or weaken any recovery in freight rates long enough to pose a serious threat to world banking almost every bit as bad as the 2008 credit implosion. These forces are impossible to quantify because the future always defies certitude. Before we examine them, however, how parlous is the current shipping-banking partnership?

A perfect storm gathering?

Alarmingly, dud shipping loans are not the only worry for banks. In Britain, in particular, banks have still not come clean on their exposure to dud, multi-billion pound commercial property loans. On their own, these dud loans are containable, with patience, but when combined with huge shipping loan losses yet to be openly declared the fear is that a perfect storm is gathering in the financial markets, and all it would take to ensure it is a mismanaged exit from quantitative monetary easing, a euphemism for electronic money printing.

There is, admittedly, a glaring lack of detailed information about banks' portfolios of shipping loans but what facts can be gleaned make disturbing reading. Most of the banks heavily exposed to shipping loans are north European, including German, Scandinavian and British, and the fear is that most of them are in denial about potential losses. "It is probably the most serious commercial problem that the banks have," opined Paul Slater, chairman of the consultancy firm, The First International Corporation, of Naples, Florida. According to him banks are saying: "Give it time and it will work out," but it is not going to do that, he adds. He is almost certainly right, though for some reasons that he may not have perceived.

So how big are the shipping loan risks? German banks' exposure to them is estimated at US$129 billion, more than double the value of their government debt holdings in Greece, Italy, Ireland, Portugal and Spain. Commerzbank, Germany's second largest, has a shipping loan exposure of Euro 18.9 billion, of which the non-performing part is estimated at Euro 4.5 billion. Its second quarter profits in 2013 crashed 84% on the same period last year owing partly to a Euro 110 million loss on bad loans to build ships. The company is reportedly anxious to cut its shipping loans by 40% but it seems the bids received so far are so low that the necessary write-down would imperil Commerzbank's equity. This exposes all banks' double whammy from shipping loans --- non payment of interest and asset values far below the loans to finance the ships. According to some shipping specialist estimates, large vessels that might have sold for US$150 million in 2008 fetch only about $40 million today. Half of the cargo ships on the high seas, it is estimated, may no longer be worth as much as the debt they carry.

Another German bank, HSC Nordbank, of Hamburg, although only a mid-size lender, is the biggest lender to the shipping industry, with reportedly more than £39 billion  in outstanding loans. Other big players in shipping finance include the DNB Group in Norway, Nordea in Sweden and Britain's Lloyds Banking Group and Royal Bank of Scotland (RBS). Overall, it is estimated that global shipping loans amount to £350 billion and the growing fear is that some of the lenders have yet to confront the scale of potential losses.

The recent decline in freight rates brought on by the glut of shipping and weak global trade is alarming and has even spilled over into the oil tanker market. Rates for non-liquid cargo are half or less than the level needed for shipowners to break even, according to consultants, KPMG. Rates for the biggest crude oil carriers tumbled 68% in the past two weeks. A very large crude carrier holding 2 million barrels could expect only $7,954 a day on August 2nd, having risen to $24,493 as recently as July 12th, according to Clarkson, the world's biggest ship broker. This comes on the heels of America's largest tanker operator, Oversea Shipbuilding Group, filing for bankruptcy in November 2012.  

New constraints on sea-borne trade?

Global trade will strengthen but that does not necessarily mean a concomitant growth in freight rates that shipping and banking so desperately need to keep that sinking feeling at bay. Some of the factors holding back growth are obvious enough, like the uncertainty about banks' true financial health which fosters mistrust among institutions, making them reluctant to lend to each other, and is partly responsible for a shortage of credit for businesses and consumers. Other reasons, however, are less obvious, impossible to quantify but which only the foolish would ignore. These include:

1) Development of inter-continental, rail-based land routes
2) Super-sized container ships whose economies of scale will undermine smaller box ships
3) Trends to re-shore manufacturing back to homeland countries or nearby
4) Green issues, which in part could spawn hybrid gas/sail vessels.
5) Technical developments like 3D printing and very much cheaper assembly robots
6) Shale oil developments in major oil-importing countries.

Good examples of continental, rail-based cargo transport are the German rail operator, Deutsche Bahn AG, which has started another direct train link on the Europe-China trade route, extending its reach into a domain dominated by shipping companies like Moller Maersk and Hapag-Lloyd AG. The journey takes just 15 days compared with the 30-40 days container ships need on the Asian-Europe route. This has two significant advantages for businesses. Ships should be viewed as floating warehouses and like all warehouses they put money to sleep. If the transit time can be drastically cut then that means stock can be converted into sales so much quicker. The second advantage is that electronics and automotive companies, particularly, find that the value of goods lost during the longer sea journeys is relatively high.

The super-sized container ships of 18,000 TEU or more coming on stream add further to the container shipping glut but because of their economies of scale they are likely to undercut much smaller box vessels and drive them into the breakers' yards.

The trend to re-shore manufacturing may only be a trickle so far but it is gathering momentum and now has new allies to bolster it. In the rush two decades ago to outsource manufacturing to the Far East where labour rates were much lower, certain hidden costs, if perceived, were ignored. These include rampant, intellectual property theft, natural calamity risks that severely disrupt JIT supplies, inflexibility to react quickly enough to changes in demand, poor quality issues and long production runs. To these must now be added rapidly soaring labour costs in China which can now make even the cost of high end apparel cheaper to produce in Britain than in China.

The new allies promoting re-shoring must now include developments like 3D printing and much cheaper assembly robots. These mobile robots will be able to perform basic assembly tasks and move around humans safely for a cost of about $25,000, compared with the $225,000 or so for welding and paint sprayer robots.

All these forces could restrain world growth based on ship-borne trade, and so depress freight rates for years to come but will that be enough to herald a second global credit crunch? Undoubtedly, the huge suspect shipping loans are a worry but when combined with heavy exposure to non-performing commercial property loans they put some big banks on a knife edge. Britain's tax payer-funded RBS and Lloyds Banking may show signs of recovery but it could be a false dawn. The UK commercial property market remains a major threat, with £38 billion of the £190 billion UK book in negative equity, and £93 billion on a loan to value ratio of more than 70%. RBS and Lloyds, according to Britain's Daily Telegraph in November 2012, have the largest exposures of £69 billion and £64 billion respectively. These banks are now under regulatory pressure to come clean on their dud property loans. Meanwhile, Commerzbank has dumped the UK commercial property market by selling Euro 5 billion of holdings.

The most likely scenario is that the first credit crunch will continue agonisingly for a few more years, along with rock bottom interest rates which are key to propping up the shipping industry, domestic and commercial property. What can be in no doubt, however, is the hell that awaits shipping lines and, perhaps, ship building yards. Soon, an inevitable financial cleansing will require the financial institutions to cease hiding the real value of their assets and that, in turn, could force governments into more bail-outs. Then, as the ancient Chinese curse goes, they will live through interesting times.
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Male violence against females castrates economic development

Over decades many billions of pounds have been spent on aid to developing countries which many question as failing to be efficacious on any meaningful level, and all too often worsening a local situation. Many are the posited reasons for this tragic shortcoming, such as ubiquitous corruption at every level in the recipient countries, the curse of tribalism and sectarianism, civil and international war and the huge loss of revenues through global corporation tax avoidance, aided by an international tax regime badly in need of overhaul. Trade practices by developed countries, which discriminate against exports from developing countries, also add fuel to the fire. But one key issue that seems to have been overlooked and is crying out for robust reform is male (mostly sexual) violence against women and girls.

This age-old problem in developing countries has been highlighted by the second report from Britain's House of Commons International Development Committee, "Violence Against Women and Girls,"* released on June 13, 2013. It calls for the Department for International Development (DFID) to review its funding channels so as to raise funding to women's organisations. Additionally, it asks that DFID makes violence against women and girls a central focus of its humanitarian operations, ensuring that the protection of women and girls is a priority from the outset. It specifically asks that refugee camps be designed to be a refuge not a place where women are at risk of rape and other forms of violence. The "DFID must also get tough with multilateral aid agencies who fail to prioritise this, as too often they do," recommends the report.

Britain, says the report, can be proud of its recently increased efforts to tackle violence against women and girls overseas following its 2010 Call to Action on Violence Against Women and Girls. The DFID has a strong policy framework in place to achieve change for women's lives but the UK's international leadership is weakened by its failure to address violence against women and girls within its own borders, particularly female genital mutilation (FGM) from which 20,000 girls within the UK are at risk and 66,000 women are living with its consequences. Despite being illegal in Britain since 1985, FGM has not resulted in any prosecutions, even though there were 148 referrals to the police since 2009. To counter this lamentable record, robust action should be taken against political correctness, urges the report.

The many forms of male oppression against women add up to a colossal loss of economic output, which if eliminated would go far to reduce the need for overseas aid. FGM, for example, has afflicted 140 million females globally, according to estimates from the World Health Organisation. It is generally carried out by unskilled practitioners who use unsterilised instruments and no anaesthetics, risking potentially lethal infection. Other consequences include severe pain during urination, menstruation, sexual intercourse and childbirth and psychological trauma. The problem is not confined to the 42 or so African counties but is also widespread in some Asian countries and the Middle East.

Other forms of violence against women and girls include child marriage and domestic violence. According to a World Bank study, rape and domestic violence are more dangerous than cancer, motor vehicle accidents, war and malaria. Violence also constrains women and girls' ability to learn and flourish, to be active members of their families and communities, and to contribute to their countries' growth and development. If, instead, there was investment in adolescent girls there would be long-term benefits, as women with economic and decision-making power will tend to choose to have fewer children, have them later and invest more in their health and education.

Domestic violence against women takes many forms and among the most fatal are the so-called dowry disputes in India, leading to "accidental" kitchen fires in which the wives are deliberately immolated. Far worse is India's female foeticide and infanticide rates. One activist group estimates 8 million female foetuses were aborted following ultrasound scans over 2001-2011 simply because they were female and so considered a financial burden. India's odious dowry system, a key driver behind female infanticide, that so demeans women was outlawed in 1961 but so rampant is the practice that the law might as well not exist. The results is that the old methods of infanticide which were easily detectable have given way to a 'scientific' approach through such methods of induced pneumonia shortly after the child's birth. Figures for female infanticide are hard to come by but what is certain is that girls under one year are 50% more likely to die than boys, often through negligent homicide. Sadly, the figure for the many forms of female infanticide must run into millions.

The crass parental attitude that favours male children over female are already beginning to pose serious social problems in countries like India and China. India's ratio of girls to boys is one of the world's worst after China and its Prime Minister described female foeticide and infanticide as a "national shame."

The root causes of violence against women and girls are the same; inequalities between men and women and damaging social norms that condone or tolerate the subjugation of women and girls, says the report. Man's sins are many but few can eclipse his base treatment of women down through the ages on so vast a scale. The problem will never be fully solved unless the offending males begin to cherish women instead of treating them callously.
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*Violence Against Women and Girls", HMSO, London, £20

Legal aid proposals threaten British justice

Justice for all on equal terms is the cornerstone of any civilized society and Britain can be proud of its law record but that principle looks set to be undermined if the Government pushes through unamended a second round of money-saving cuts to legal aid, this time aimed at the criminal legal aid budget.

The Government has no choice but to trim its huge deficits and there is no reason why the legal aid budget, now running at over £2 billion a year, should be exempt from examination, for there is undoubted waste and abuse. But the Government should remember that justice is not a for-profit business that can necessarily respond to efficiency drives and that there is a risk that if the proposed changes are not clearly thought through the baby (justice) will be thrown out with the bath water. Indeed, according to Lord Neuberger, Britain's most senior judge, the proposed changes may even lead to higher costs and drive aggrieved defendants to "take the law into their own hands." There is an equally alarming and likely consequence -- an erosion of freedom to demonstrate lawfully owing to financially punitive risks.

Lucy Scott-Moncrieff, President of the Law Society, echoes that view when she claimed: "In several previous attempts the Government has been unable to come up with a workable model for price tendering and we do not see how they will be able to address the fundamental difficulties this time round. We also think it is implausible that tendering will save the sort of sums the Treasury is looking for and there is some doubt that it will save anything at all."

Such comments are probably over egged, for the Government claims that it has already trimmed £350-400 million from the legal aid budget by cutting funding to a range of civil cases, including divorce-related problems, social welfare, debt and housing. But cuts to the civil legal aid budget were an easier nut to crack for they did not undermine justice nor pose potentially very serious consequences. So what is the nature of the threat to justice and why has the criminal legal aid budget, now more than half the total legal aid spend, grown significantly?

First, a look at the historical facts. Legal aid was established by the Attlee Government in 1949, since when millions of people have been given help, advice, support and representation. It ensures vulnerable, disadvantaged people are not denied access to justice because of their inability to pay for it. As such it is one of the corner stones of a fair and decent society. The overall cost of legal aid has grown considerably over recent years, up from £1.5 billion in 1997 to over £2 billion in 2004, in monetary terms, but it has remained steady ever since. There has, however, been a disproportionate growth in the criminal legal aid spend, up 37% compared with the legal advice for representation on civil and family matters, excluding asylum, down 24%.

The rapid growth in legal aid expenditure has been matched by a big increase in the overall number of legal practitioners. Between 1955 and 2004 the number of solicitors holding practice certificates rose from 17,697 to 96,757, an increase of 438%. The increase in independent/self employed barristers over the same period has been even greater, up from 2,008 to 11,564, a 476% rise. It has been suggested that, particularly in relation to criminal legal aid, the number of lawyers is a driver that contributes to increases in the legal aid spend. There can also be little doubt that while some of the cost increases are inflationary and some due to rises in work volumes in certain areas of law, much of the increase can only be ascribed to costs rising significantly above the rate of inflation in the rest of the economy. This rise in criminal legal aid spending has had a corrosive effect of cutting the spend on civil legal aid, particularly family-related issues, which is undesirable for society as a whole.

One of the problems with the criminal legal aid bill is the few but highly expensive criminal cases that absorb too great a share of the budget, so the spread of funding is not responding effectively to demand. It is, however, difficult to see how the cost of these cases can be significantly reduced. Undoubtedly, the crux of the cost problem is an administrative one. The administration overheads of funding numerous firms, many of which do only a small amount of criminal legal aid work each year, are placing an unnecessary financial burden on the system and although attempts have been made through franchising to restrict the number of firms being paid each year, the Government's view is that it is clear that a system where only contracted suppliers would be able to undertake criminal defence work was needed to drive out this inefficiency and introduce quality controls. The solution, suggests the Government, is a few, maybe four, super contractors covering a whole county who would be chosen on the basis of price, irrespective of their ability, but what would be the unwholesome consequences of such action and are there less onerous solutions?

Unless amended or rejected in its entirety the Government's proposals would mean defendants would lose the right to choose the solicitors they want to represent them in legal aid cases. This is crucial, on which more later. Criminal defendants living in households with disposable incomes of £37,500 or more would be stopped automatically accessing legal aid. The Government wants to introduce "plea only" advocates. In other words the lawyer who represents you in court is only able to represent you if you plead guilty as they are not qualified to undertake "not guilty" cases and they will not be paid if defendants don't plead guilty, hardly a source of unbiased advice. It is suggested that guilty defendants pay their court costs out of future earnings including the seizure of their cars. There is nothing wrong with that, after all, in China the relations of those executed by firing squad are invoiced for the bullets, but it may prove unworkable in many cases. A residency test is also proposed to see that legal aid does not go to the recently-arrived immigrants. That may seem harsh but for those of a certain sensibility it is an uncomfortable, though little aired, fact that the growth in the legal aid bill owes much to "asylum" seekers. According to Migration Watch, between 1997 and 2010 there were 610,000 applications for asylum in the UK. In addition to the principal asylum applicants a further 24% entered the UK as dependants of claimants. The Home Office refused 72% of applicants but they all have a right of appeal. The legal aid bill for asylum and immigration cases between 2003 and 2010 totalled £824 million. In 2009/2010 alone it was £90 million and that does not include the cost of manning the immigration courts. There can be no doubt that the issue of so-called asylum seekers is a key driver in the rising cost of the legal aid bill. One alternative suggestion, therefore, which would require a change in the law, would be to abolish the right of such claimants to any appeal after they have received a fair immigration hearing. Another suggestion that would at least help preserve the quality of advice is to allow all existing lawyers who specialise exclusively on criminal legal aid cases to keep their certificates to practice, irrespective of any administrative efficiencies that my be imposed.

To return to the issue of lawyer choice, this is crucial because the quality of advice is paramount in achieving a fair trial. There are also some areas of criminal law, like football offences, that require specialist knowledge, which contracted, mega law firms would almost certainly not have. Time spent between lawyer and client is also important for the quality of justice. Under the Government's proposals, rushed solicitors with many cases to deal with on any one day would be unable to provide the necessary time to give proper advice.

The Government is reportedly looking to save £220 million from its second round of cuts to the legal aid bill, this time on criminal cases, but should they be considering any cuts at all if it means that justice is trammelled?It would be disastrous if justice became a two-tier system where the rich only could afford quality representation while those of modest means must represent themselves, hire a lawyer privately, fall on the mercy of charities or accept the lawyers forced  on them. Even those who know that they are innocent may choose to plead guilty because even an innocent verdict would leave the defendants seriously out of pocket as the court costs awarded to them would be based on a table of legal aid costs while the defendant's privately-engaged solicitors would charge much more. This is an example of where the threat to freedom to lawful protest is insidious if not sinister. And so the innocent would go forth branded guilty and all for the want of adequate, meaningful legal aid for the common man. Never, in the annals of British jurisprudence, would justice be so ignobly served on so vast a scale. The Government should look again if it does not want to see a costly rise in the prison population and a descent into lawlessness, not to mention the incalculable damage to investors abroad who prize Britain's legal system that gives them so much confidence to invest in the country.
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For those who feel passionately in meaningful justice for all, their views can be exercised simply by signing the online petition: Epetitions.direct.gov.UK/petitions/48628

'Green' issues could help reshape global logistics

The politics of business is to minimise costs but the problem for mankind today, more than ever, is the need to identify hidden or external costs which do not harm company balance sheets but leave a legacy of widespread costs elsewhere -- incalculable, insidious, death-dealing. Once identified, these costs should be carefully considered and fairly apportioned to those businesses responsible. More than that, however, ways and means must be found to cut these internal and external costs for businesses and that may mean changing attitudes towards business techniques like JIT (just-in-time) deliveries.

JIT, of course, is a business boon that allows firms to slash costly inventories which simply put money to sleep and carry other risks. But when supply chains become globally stretched and rely on parts and sub assemblies being airfreighted many times before the whole product is assembled in one place then that, along with other air pollution, carries a huge, incalculable external cost that seriously contributes to killing many thousands and robs economies of billions of dollars, largely through respiratory and cardiovascular diseases.

Pollution comes in many forms, both legal and illegal. The latter is the lesser problem that can be effectively controlled through determined prosecutions but the former is far more intractable and complex. But just how big are these legal pollutions and what can be done to cut them substantially while at the same time enhance corporate profits?

In China alone an estimated 500,000 people die every year from air pollution while many more are left seriously ill. This is not helped by the lack of environmental law enforcement and rampant corruption among big energy suppliers. Cars in the capital, Beijing, use high sulphur fuel which is higher than the national standard. The cost to China is breathtaking. It is estimated that in Beijing and surrounding regions the economy loses between US$19 billion and $39 billion a year owing to the side effects of PM 2.5 pollutants, much of it generated by cars and industry. That is equivalent to a loss of 3.4% to 6.7% of GDP for those regions alone. This air pollution, however, is not confined to China. Toxic-laden prevailing winds dump the insidious threat on South Korea, causing health problems for their citizens.

Dirty ships kill

In northern Europe about 50,000 die prematurely from cargo ships' emissions. This is because cargo ships use high sulphur content oil but as from 2015 all cargo ships plying north European waters must cut their sulphur content by 90%. Elsewhere in the world, however, this specific problem is being unfairly addressed. In Hong Kong smog kills 3,000 a year and much of that can be attributed to cargo ships' emissions. To their credit, container shipping lines like Maersk and 17 other operators have been using low sulphur fuel for the last two years to curb pollution but many others refuse to do so because it carries an extra cost burden and they are under no legal obligation to comply. Clearly, the Hong Kong authorities, who have not met their air quality targets set in 1987, need to act robustly and swiftly to deliver a level playing field. To be fair, they have cut the port charges but that covers only 40% of the added cost of going 'green'. If Hong Kong is to meet its air quality target then it must make all shipping lines comply over sulphur emissions. There may, however, be a problem when switching over to low sulphur fuel because on entering ports ships' engines have cut out, leading to helpless drift and collisions costing millions of dollars.

Around the world many authorities need to legislate for cleaner air but that will add costs to distribution companies, which ultimately will be passed on to the final consumer so it is important to consider ways to reduce their costs. One of those ways is to redesign global supply chains and another is to consider changes to the means of transport.

 Renaissance for rail?

Already, global supply changes are taking place which should favourably impact the air pollution issue and, perhaps, other climate threats. The rationale behind the outsourcing of production to far away countries over the last two decades was simply one of harnessing cheaper labour costs in those countries. But changes are under way which are not only eroding that cost advantage but also reveal the hidden costs of global outsourcing which were not allowed for. These include, for example, rampant intellectual property theft, (especially virulent in China), natural calamity risks that seriously disrupt JIT supplies, inflexibility to react quickly enough to changes in demand, poor quality issues and long production runs. This could mean that global supply chains will move to serving regional areas rather than global as western companies begin to re-shore back to their homeland or nearby countries. That will have a favourable impact on carbon emissions, especially from airfreight, but there are more 'green' dividends to come by changing and developing the means of transport.

A good example of how a change in the transport mode can pay 'green' dividends while also cutting internal costs is the new rail route from Chongquing, China, that passes through Kazakhstan, Russia and Poland before reaching Germany. This 11,179-km rail route will not only help western companies like HP slash transport costs to $10,000 per container, a third the price of air freight, it will halve delivery times to 21 days compared with 40 days by sea. Compared with air transport, rail transport's carbon footprint is only one thirtieth. In Britain, which has a well-developed rail network, the move to establish large container ports like that at London Gateway will see a big switch from road to rail container transport, reducing the carbon footprint by two thirds.

Sea shipping, owing to economies of scale, is the cheapest of all transport modes and the least polluting per container but there is scope to cut their emissions and costs through technology changes. A promising development here is the Belfast-based B9 shipping company which will use windjammers with automated sail trimming for most of the voyage, supplemented by Rolls Royce methane gas turbines for when winds are light and for port manoeuvring. The biomass fuel will be from discarded food mountains. The first vessels promised will only be of 3,000 tonnes, though there are plans for 5,000 tonne vessels, but B9 believes there are around 10,000 short-trade coastal ships in this bracket that could be replaced and so deliver a substantial environmental gains.

There are many other reasons to be optimistic over air pollution based around technology changes, like video conferencing and online selling but much can be done to cut distribution's carbon footprint significantly which, alas, has been exacerbated by global outsourcing and JIT delivery techniques.
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Logistics wins the war for Taliban

It must now be abundantly clear that the coalition forces' war in Afghanistan is lost, an outcome that would surprise no one with any grasp of geo-logistics.* It is a dismal testament to the hubris of advanced nations' reliance on their modern weaponry in a hostile terrain where the costly problem of stretched logistics could be turned against the invaders. The war may well go down in the annals of military history as the one that cost so much and achieved so little.

There are, of course, many reasons why the coalition forces could not achieve a military victory, not least Afghan corruption and narco politics, but there can be little doubt that the cost of logistics was decisive -- the most potent weapon in the Taliban's armoury. But why were the logistics costs so high in the first place and how could a relatively poorly armed Taliban wreak such havoc?

To understand that, one must appreciate the prevailing regional politics. To Afghanistan's south and east lies Pakistan, a country of ambivalent feelings with provinces supportive of the Taliban. To the west is Iran, hostile to any American involvement, and to the north the former Soviet Union states and Russia, which would have required the latter's approval for land-based supplies from Europe. That left just two routes, one air and one land. The land route, however, is notoriously hazardous as it means using the mountain passes where supplies could be easily destroyed. Just one attack here destroyed 40 oil tankers. That left air transport as the main option.

The costs of airlifting supplies from Europe to Afghanistan are stratospheric. One tonne of supplies, for example, would cost US$14,000 compared with just $500 if a rail route had been possible. Put another way, the cost of airlifting a fully equipped American brigade would be over $200 million. This helps explain why the coalitions' total costs are running at an estimated $2 billion a week. Britain alone has reportedly spent £17 billion so far but the true cost is much higher as that does not include the cost of supporting the maimed, the widows and their children that will continue for many years after the war. There will also be a costly fallout from those service personnel who can, alas, be expected to commit suicide. In the Falklands War the number of UK personnel who subsequently committed suicide exceeded all the UK fatalities during the war.

Afghanistan's harsh, arid, largely mountainous terrain, honeycombed with caves, make it ideal guerilla warfare terrain, which Russian discovered to their cost during their occupation. These natural advantages were put to good effect by the Taliban whose per capita support costs were less than one tenth of the coalition forces. Their relatively low cost weapons exposed another cost problem for the coalition. In a recent Taliban attack on the sprawling Bagram air base the destruction of six jump jets cost over $100 million. Hi-tech weapons can be cost effective but they come at a very high price and their usefulness in  a guerilla war is marginal.

The horrific logistics cost factor has at last dawned on the British Government, who have announced an early, substantial withdrawal this year rather than 2014. Reports also suggest that the White House wants to reduce its current 68,000 troops to less than 10,000 in 2014. It is, of course, possible that the current, global economic climate has worked in the Taliban's favour, for debt financing of war is not popular back home when ordinary people are struggling under Government cutbacks caused by years of cheap credit binging, leading to unsustainable debt mountains.

So much for the costs so far but what of the achievements? It's true that much of Afghanistan has been free of Taliban trouble and that in the cities women and children enjoy a level of freedom and dignity unknown under harsh, Taliban rule. They do not want to see a return to Taliban rule, but that does not mean they will not get it. Wealthy Afghans are taking no chances. They are already moving vast sums abroad with a view to following the gold because they fear collapse after 2014 when the coalition will leave only a small presence. The only people to have truly gained are the army of foreign contractors replete from lucrative government contracts paid for by long-suffering taxpayers who have only more pain to come.

The world has grown tired of warfare and what the appalling costs mean for the global community. Global investors are, at last, rumbling those Governments who used the debt tap to finance their irresponsible binge spending over decades. They are on notice to rein back their profligacy and a major chunk of that is military related. Each year the world spends an estimated $1.47 trillion on armaments and warfare, depriving help from the sick, the homeless and elderly huddled around their winter fires insufficient to prevent death from hypothermia.

If military logistics teaches one lesson it is that if geographical factors can be harnessed by the invaded forces and turned into a potent logistics weapon against the invader then the latter is in serious and very costly trouble.
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*How geography can impact logistics operations