We are faced with the perfect storm in the next few years. Many will conclude it is all the fault of President Trump, but in fact it is actually nothing to do with him. If anything, he is going to enable the industry to think smarter because he is also bringing change. The perfect storm is the one confronting the maritime industry. It is one which will disrupt all elements of the shipping industry – is technology-driven and in some cases, is also self-inflicted.Previously:
If you follow the maritime press or listen to the various presentations on smart shipping you cannot have missed the calls for shipping to change its business model. There are also the grandiose claims made for the broadband revolution that will somehow pave the way for smart operations and the coming age of unmanned ships.
Let me be clear. I don’t doubt change is coming and I think broadly the various ideas have merit. I also think the maritime industry knows it needs to change. However, let’s inject some reality into the discussion and distinguish between the blue sky and the blue ocean. Have we ever paused to consider how these changes will play out within the context of the maritime and shipping industries and to reflect on the true implications?
I anticipate several defining or Kodak/Blackberry moments on the horizon and the possibility of a totally new model of shipping, in the maritime industry. I distinguish between maritime and shipping deliberately, as I see them as representing different things.
The maritime industry is about ships and ship operations; shipping is about the carriage of and logistics related to cargo. Shipping is the business of end-to-end delivery of goods by whatever means whether by road, in the air or at sea. This is an important distinction because the adoption of technology and the application of solutions is happening in quite different ways in these segments. I would venture to suggest because of financial values, the competition, the advantages resulting from technological change in shipping supply chain are far greater than in the maritime industry alone.
The retailers of the world including the likes of Alibaba, Amazon, Walmart are now starting to shake up the shipping world, especially in the parcel delivery industry. These major e-commerce players are starting to disrupt the shipping space, as they strive to take greater control over logistics and directly over transportation. Until recently they have focused on last mile logistics and delivery. Until now the e-commerce players relied on specialist delivery/shipper companies like FedEx and UPS. The ‘first mile’ of the ocean shipping was largely ignored.
In 2015 Christmas holiday season, FedEx and UPS delivered only 95 percent and 91 percent of packages on time. The e-commerce retailer, not the shipper, got the blame. The e-commerce retailers are seeking on-time delivery and costs savings, as well as access to data about consumers. In two words, they are doing it to achieve customer satisfaction. How does this encroachment into the transport sector of shipping impact the maritime industry and what does it imply?
As Amazon moves into the shipping business, it is signing leases for aircraft and beginning to compete with FedEx and UPS. Between the three they have over 700 aircraft under lease. Amazon has also expressed an interest in acquiring an airport in Germany. Walmart is looking to take control of its own shipping - even on ships. We have also seen in recent weeks, Alibaba sign up with Maersk, CMA CGM and Zim Lines.
Clearly the line between the logistics, e-commerce companies and the shipper is beginning to blur. For years FedEx operated its planes and delivered packages. Now they will face direct competition from the e-commerce companies.
The natural progression would be for global shippers to start to lease their own assets in the maritime industry, challenging the traditional maritime business model. If they lease planes, own airports and manage their own logistics, then why not ships, ports and port operations? For the container and parcel delivery segments of the shipping industry, it is easy to imagine electronic cargo booking and digital port operations, with the e-commerce giants owning ships, owning ports or sections of them, controlling the complete logistics chain....MUCH MORE
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Shipping: Maersk, Alibaba Team Up To Offer Space On Container Ships.