Liner Shipping 2025 How to Survive and Thrive

Transcription

1 SeaIntelligence Consulting Liner Shipping 2025 How to Survive and Thrive Lars Jensen, CEO SeaIntelligence Consulting

2 Agenda Is liner shipping going to be disrupted? Tactical versus strategic challenges The nature of business relations Exception management at the core Process management The impact of transparency The advent of yield management The complexities of network design The impact of consolidation and future for niche carriers Automation, digitization and Big Data Impact on ports and terminals Impact on cargo owners, freight forwarders and NVOCCs What should industry stakeholders do in 2017?

3 Is liner shipping going to be disrupted? We have a confluence of developments occurring at the same time We are here Phase 3, maturity Phase 2, growth Phase 1, start

4 Tactical versus strategic challenges Tactical challenges: Structural oversupply Reverting to profitability Integrating acquisitions Reducing costs 2016: Record scrappings, TEU New deliveries 2016: 1 Million TEU Which technology will prevail?

5 Tactical versus strategic challenges Strategic challenges How can we make money in a commoditized environment? How do we deal with transparency? How do we implement automation and digitization? How will this change the way we run the company?

6 The nature of business relations A key challenge is the un-enforceability of business relations for both shippers and carriers This will change, with enforceability becoming the norm. And with new non-enforceable products also appearing

7 Exception management at the core Drives service quality Resilience Exception handling Exception management will be THE key to competitive differentiation Automation Must be prioritized almost above all else Drives commoditization

8 Process management Automation is not about IT If you are frustrated about the paperwork, just building an IT system won t help Get process management implemented first and foremost but this takes time and effort, as process management is not just the writing of SOPs. It is a pervasive cultural change in the company

9 The impact of transparency Transparency is already here and it will become all-pervasive in the shipping industry as well Wrong question: How can we control/manage information? Right question: How do we act in the face of full transparency?

10 The advent of yield management It is not just about the price! The complete interlinkage of: - Cost transparency - Pricing - Uptake management - Capacity management 2-5% improvement potential Exogenous versus Endogenous forecasting Auto-rating engine Dynamic reallocation What to do with sales KPIs?

11 The complexities of network design Weight optimization parameters: Total cost Vessel use Terminal synergies Customer focus Strategic weighting of: Transit time Service frequency Direct vs. transshipment

12 The impact of consolidation and future for niche carriers The consolidation in was actually in line with the long-term consolidation trend Long-term prediction: 6-8 global container lines by major alliances in 2025, but with expanded geographical coverage Key question for main global liners: Do you plan to be the acquirer or do you plan to be acquired?

13 The impact of consolidation and future for niche carriers Feeder lines to grow larger 2-3 main feeder lines in each of the major geographies European feeders: US$250M in hidden value from concentrated feeder usage Space remains for niche carriers provided they abstain from competing on scale Critical questions for niche carriers: What will happen to your value proposition once the market becomes fully transparent? What is your plan for digitization and automation? What are the key sustainable strengths you will build on to counter the digitized products from the main shipping lines?

14 Automation, digitization and Big Data The most important part first: Automation needs process management Multiple impacts from automation: 3D-printing is actually more to be likened with near-shoring. Negative impact on global demand growth in TEU*Miles Autonomous vessels unlikely in any important capacity in Highly likely: Semi-autonomous vessels Full automated digitization of back-end processes. Consequence: jobs will disappear, primarily in service centers Consequence of automation: Commoditization Big Data: Be careful to avoid fishing expeditions

15 Impact on ports and terminals Network design will result in a concentration of transshipment in fewer but larger hubs Severe overcapacity resulting from upscaling and automation in the face of slow growth, and negative transshipment growth

16 Impact on cargo owners, freight forwarders and NVOCCs Cargo owners need to adopt the processes to match the main commoditized systems or use niche carriers Freight forwarders/nvoccs are subject to the greatest strategic risk from a combination of transparency, simplicity and carrier shift to automation combined with exception management

17 Company culture will change All these aspects we have discussed can only happen if the underlying culture is changed Unless this change is addressed explicitly, the underlying company culture will counteract the necessary changes

18 What should industry stakeholders do in 2017? Create a plan for process management Do not look for ideal solution pilot test many solutions Plan for full transparency Do not fight commoditization plan to thrive in a commoditized market Plan for integrated yield management What is your culture today and how will it be changed?

19 SeaIntelligence Consulting Liner Shipping 2025 How to Survive and Thrive Please join the book signing in the foyer from 2:15-3:15 Available on Amazon.com