You Ain’t Seen Nothing Yet — Shipping’s Disruptive Nightmare
The shipping industry talks about disruption in confused terms. There is small scale disruption when a big ship parks sideways in a narrow channel, but real and big disruption is more than that. It will mean the entire industry is eaten whole, chewed and spat out. Let’s look at what it means, what will happen and how shipping will change forever.
UNDERSTANDING SHIPPING
To understand disruption, we perhaps need to delve into shipping in its non-disrupted state. How does such a small (in relative terms) set of companies and people keep global trade spinning? How indeed do a few hundred thousand ships, a million or so seafarers and a bunch of smartly attired people shift our global stuff?
Well, the answer is simple, because they can. Over centuries shipping has been refining its business models. It has tried, tested and tinkered. It has loved and lost, it has evolved and leapt forward. It has found the answers which deliver what the collective industry wants, profit. It has traditionally done this in a discreet and adversarial way through a network of intermediaries with operations masked by the vastness of oceans.
Commercial shipping is that strange beast, a complex industry but one that is based on the most simple and pure premise. That people have stuff in one place and need it somewhere else to sell or use it. Our planet is a shipowners’ playground. 70% water and almost everyone sat around the fringes of it.
So, shipping has been shaped by that image. It provides the bridge to move. The pipeline for trade. You want it shifted from Zhengzhou to Aarhus? Well, we have the people, the kit and the way to get it done. All at a cheap price, and with a commercial mechanism that protects us all and provides certainty if things go awry. Which they can, but thankfully seldom do. Winner, winner…
UNDERSTANDING DISRUPTION
Shipping has been very successful for a very long time. Sure, there have been peaks and troughs in the markets. As Paul Simon sang in Call me Al, there are incidents and accidents. Overall though, ships have persevered. Shipowners have kept their businesses. There has been very, very little change to the fundamentals in centuries.
What has changed is the visibility of the world’s fleet and now anyone with an app can see where any ship or ships are plying their trade. This level of transparency challenges just about everything in conventional freight enterprises. So it seems as the smart shipping, digital revolution is felt more keenly, then shipping will become simply the elongation of the logistics chain. An elongation which means the likes of Elon Musk will come knocking…with a wrecking ball.
Ok, so we all talk in hushed tones about the likes of Elon and Amazon’s Jeff Bezos. What though is a disruptor, and what will disruptive innovation actually mean for shipping? The term disruptive innovation was coined by American academic and business consultant Clayton M Christensen in his 1997 book The Innovator’s Dilemma.
To be a disrupter is to create a product, service, or way of doing things which “displaces the existing market leaders and eventually replaces them at the helm of the sector”. So, disruptors are generally entrepreneurs, outsiders, and idealists rather than industry insiders or market specialists. They see a way of doing things and understand how they can do it differently to their advantage, and perhaps for the benefit of existing users…but certainly new ones.
MOVE FAST AND TAKE THINGS
Disruptors are often linked to technology, in which the old Mark Zuckerberg mantra of moving fast and breaking things is perhaps useful. Alas, not much cargo gets moved on a broken ship, so some cross-cultural elements don’t wholly translate or apply between Silicon Valley and Akti Miaouli or Broad Street, Monrovia.
That said, multi-Billionaire visionaries have a habit of taking holistic views — perhaps because they spend so much time putting things into space. So, they see the world as it should be, not necessarily constrained by traditions, or the “way it is
With such a view, with an understanding of the need to scale the oceans to move people and things, and with money, power, intelligence and passion, well the shipping industry is ripe for disruption.”
Looking down from the heavens and seeing a blue planet must rather concentrate the mind of megalomaniacs and profit-driven prophets alike. Certainly, there is someone, somewhere who is paid to look at the world as a massive warehousing and distribution problem to whom ships look like the little robots picking and dropping stuff for the next logistics segment.
You may think it has already happened, with big shipping lines all huddling together in conferences and agreements. This is more akin to a bait ball than a fight back. The benevolent predators are eying the business. They are looking at how to change the entire way of moving things. Ships, shipping, business and commerce will all be changed in their bow wave and wake.
WHAT DISRUPTION WILL LOOK LIKE
When Amazon takes over the ocean when Musk Maritime emerges, what will the disruption really look like and what will it mean? It may be a simple question, but anticipating the future is a mug’s game unless you are a bookmaker and have all your bases covered and bets hedged and trimmed.
Disruptive innovation is here to stay, and shipping will come under its thrall soon. Amazingly it has resisted (or been allowed to resist) so far, but it is coming and the big disrupters are merely playing, like a cat with its kill.
Let’s call them the “new shippers”. They have identified the gaps. They are developing technological solutions, which mean a change and which then transform the market dynamic as clients rush to the latest new, amazing wonderful “I want one…” kind of offer.
Disrupters take the old agenda and merely substitute their way of doing things on what had gone before. So yes, we still need to do stuff. However, we need to do it in such a way as people pay differently for it. Once the old models of commerce are changed, then it becomes impossible for the old guard to fight back. Thrown from their financial horse, they are hobbled and can then be put to the sword properly.
BACK TO THE FURORE
It is this issue of control and power that is currently the sticking point. Indeed, it could be seen that the disrupters are merely sitting back and waiting for the “old shippers” to be painted into a corner by things such as environmental demands.
Once the old ways cannot deliver, then the new ways have to be the answer. Faced with rising costs, uncertainty over what technology to use, and constant pressures surrounding pricing. It seems that we could be being pushed to a tipping point. The rocketing bulk freight rates, the demand for tankers, the global shortage of containers tell a tale of an industry that is spiralling out of control and which seems to need the benevolent wisdom of a maritime Messiah.
Throw into the mix the fact that seafarers are suffering and being forced to stay at sea for months. The fact that we are so lacking in female engagement. Further sprinkle on documentaries about how filthy the industry is, and how corrupt and dreadful the decision making legislative models are. Well, it sure seems we are being set up for a fall.
Suddenly, you get an industry that is seen as no longer being the solution. It is an opportunity for others to “do it better”. To think different about shipping is to rip up the way it has been done before. To lilt poetically about the move to smart shipping is an exercise in saying that it used to be dumb! It wasn’t and never has been. However, with the scene being set, it seems that the shipping old guard is set for a final showdown, and the new tech disrupters are set to be the winners.
