Recreational sports league and events organizer VAVi Sport & Social Club was looking to make a big splash at its first major international competition, a 20,000-person race Feb. 4-5 in Sydney, Australia.
The San Diego company loaded $1 million worth of inflatable obstacles and other equipment into six shipping containers. It negotiated a bargain through a freight forwarder and arranged for the shipment to arrive a full month before the race was scheduled to begin.
What could possibly go wrong?
on’t ask. Were it not for the help of the San Diego Regional Economic Development Corp. and others it enlisted on VAVi’s behalf, the episode might have been a disaster costing the company one-fifth of its projected sales for 2017.
The ill-fated shipment has taught CEO Steve Stoloff more than he ever expected to learn about the value of tracking shipments, maintaining proper insurance and having well-connected friends — not to mention the folly of trying to save $15,000 by choosing a “slow boat to China” instead of a more direct route.
He can laugh about it now, but it’s probably fair to say VAVi’s big foray into the world of international business did not go smoothly.
“As our insurance company said, ‘It’s a doozy,’ ” he said.
VAVi organizes thousands of events per year, most of them recreational sporting competitions for its nearly 60,000 local adult members. It also puts on mud runs and New Year’s Eve parties. The company was founded in 2002 and employs two dozen people, not including about 100 referees, maintenance workers and others.
A little more than a year ago it started reaching out internationally with obstacle races and burger-and-beer festivals. So far, it has organized events in Australia, Canada and the United States, and is exploring the possibility of setting up happenings in Japan and the United Arab Emirates.
Some 17,500 contestants had signed up for the race in Australia by Jan. 5. The company capped participation at 20,000.
VAVi was presented with three options for getting the race equipment to Sydney, Stoloff said: Charter a giant cargo plane at a cost of $1 million, ship the containers directly to Australia for about $45,000 or go with the “proverbial slow boat to China.”
“We thought it literally was a slow boat,” he said. Not realizing that it meant the ship would stop at virtually every port in eastern Asia, VAVi went with the cheapest option.
The ship left Southern California in November and was supposed to arrive in Sydney in early January, which it might have done if certain stowaways had not come to light.
Authorities in South Korea discovered the ship was infested with cockroaches. It was quietly rerouted and fumigated. Then 80 tons of inflatable obstacle course equipment were set aside and forgotten.
“For two weeks they never informed us our boat was sitting in a dock in South Korea,” Stoloff said.
He called the regional EDC, which had organized the 2015 business pitch competition that provided $10,000 toward VAVi’s international expansion. Perhaps its staff could be of some assistance.
Meanwhile, the clock was ticking. With the event less than a month away, the blow-up obstacles were still sitting in South Korea.
“There was a critical point in time that the company had to make a decision on whether or not to go forward, to cancel the event or postpone it,” said the EDC’s senior vice president of economic development, Sean Barr.
In what Barr likened to an “all-hands effort,” the EDC reached out to the U.S. Commercial Service, which is the trade promotion arm of the U.S. Department of Commerce. EDC staff also worked its contacts in Sydney — and then, when it turned out the replacement ship wouldn’t be going there, to port officials in Brisbane. They agreed to expedite the shipment.
So it was decided: The race would be postponed three weeks, not canceled. Instead of having 20,000 participants, as originally anticipated, there would be about 18,000.
“We’re going to come close,” Stoloff said. “We’re not going to hit the number exactly, (but) we’re not out of the game entirely.” All told, he said, the race will likely come up short by about $200,000 — not ideal, but better than scuttling one of VAVi’s biggest events of the year
Not Done Yet
To help VAVi limit its financial losses, EDC staff called on board members who might be able to offer help. One who did was Linde L. Hotchkiss, La Jolla managing partner at the global risk advisory and insurance solutions firm Willis Towers Watson.
She counseled the company on the norms of international shipping, even though VAVi was never a client. On her advice, Stoloff said, the company decided to pursue an insurance claim it might otherwise not have known about. The matter is still pending.
Hotchkiss said it was the least she could do.
“It’s what makes the San Diego business community so strong, is the idea that we’re going to collaborate, be helpful and do the right thing,” she said. “Community before self.”
Barr said VAVi’s experience was not all that uncommon, in that the EDC often helps out local companies that are entering business overseas and wrestling with logistical challenges.
Stoloff said next time the company will know better. For one thing, it will keep daily track of its shipments — and take no one’s words that things are on schedule.
“Nobody else is more responsible for your own stuff than you,” he said.