We ask three experts: In an age of continuous disruption, how will shipping change?
The business environment is changing rapidly. New technology, industry 4.0 and shifting cultures mean that the organisations of the next 10 years will look very different to those we inhabit now. How will those changes affect the industry we work in? Will AI replace humans? Will 3D printing take a bit out of the container shipping market? To see where the industry is heading, we asked three experts:
Lance Younger, Consultant
I think every industry has to change and will change. I think success in that respect is a case of the smart application of digital and what we call the future of work – things like the gig economy through, labour arbitrage, shared services and different ways of working. I think we’ll see that change in shipping. It’s increasingly about getting the balance between acting like a big corporate and having that steadiness of focus on things like financials, but having this like agility and speed to respond to the changes that are coming though. Deloitte, for example, is 250,000 people. It tried to create a culture and corporation that is more agile and niche, which wants to achieve corporate success, but also wants to achieve what individuals want to achieve.
Shipping will have to be a fast follower. Organisations will need to be set up so that they can be fast followers. It’s no good saying you’re going to be a fast follower without having the budgeting, people and the correct metrics in place to ensure that you are a genuinely fast follower.
Simon Potter, Vice President Global Strategic Sourcing and QHSSE at Inchcape Shipping Services
What’s being predicted by a lot of economists is the manufacturing sector moving closer to the consumer. So obviously a lot of the container industry is built on goods manufactured in the Far East and being sold in Europe and the USA. With the advent of 3D printing, that could change – by 2023, the market value of 3D printing is expected to be US$19bn.
This is going to be a huge change for containers because manufacturers are no longer going to be shipping materials from far away, they’ll be going closer to the consumer. That will be a main driver in terms of how technology is going to disrupt global trade, coupled with the increasing cost of transporting things by sea.
Shipping has to see this as an opportunity. Everyone recognises that it’s an antiquated business, so it needs to modernise. There are 25 separate transactions that have to take place to ship container from origin to destination just for the shipping line to keep track of where it is. I know Maersk are investing millions in tech so that they can offer a door-to-door service because the shipping industry is lagging way behind.
Michael Gravier, Associate Professor of Marketing and Global Supply Chain Management
Advancing technology assures that shipping will become more important than ever, and its importance will become even greater in the future. You must experiment and take (smart) risks to discover new ways to use advancing technology. And often efficient, low-cost service comes with lower margins; know which capabilities bring value to customers in order to sustain profitability. The current environment of low margins dictates that shipping companies will have to redefine themselves to assure profitability into the future. The name of the game will have to change for many shipping companies that focus too much on efficiency—the future will go to the companies that innovate and bring value, and efficiency in many ways is the enemy of innovation. International shipping mostly consists of bulk, general, and petroleum. There’s no doubt that shipping of these commodities will grow greatly.
Some foresee a world where advanced technologies such as 3D printing reduce a lot of container shipping needs because all that needs shipped is raw material for 3D printers—coils of metal, plastic pellets, etc. My money is on the increase of container shipping and the tightening of global economic relations as a consequence.
The single greatest explosion of international exchange has been with data, and this exponential growth of data matters to shipping because almost every byte of data and idea exchanged relates to human activity, and human activities require goods. In other words, container shipping will grow, although not at the same pace as during the early era of globalisation.
This article was originally published in the Marine Trader, IMPA’s official journal for maritime procurement and supply chain management, in issue 01 of 2019. Head over to www.impa.net to find out more or simply read new issues on the go with the MT Journal app.
