Impact of Digital Revolution on Shipping

Transcription

1 Impact of Digital Revolution on Shipping Marine Money China Ship Finance & Offshore Summit Arjun Batra Group Managing Director, Drewry Shipping Consultants Limited 9-10 May 2017

2 We are in the midst of a revolution Industry 4.0 Source: Various 2

3 We are in the midst of a revolution Industry 4.0 Steam power, electricity and computers defined the first three industrial revolutions while the fourth will be shaped by sensors and artificial intelligence. When compared with previous industrial revolutions, the fourth is evolving at an exponential rather than a linear pace. It is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management and governance. Klaus Schwab, founder and orchestrator of the WEF Davos Source: Mjølner Informatics, WEF 3

4 We are in the midst of a revolution Digital Disrupters! What will Artificial Intelligence bring? "Uber, the world s largest taxi company, owns no vehicles.facebook, the world s most popular media owner, creates no content.alibaba, the most valuable retailer, has no inventory.airbnb, the world s largest accommodation provider, owns no real estate. Something interesting is happening. Tom Goodwin in TechCrunch Source: Various 4

5 We are in the midst of a revolution Economic impact of digital revolution Productivity Productivity is likely to grow in leaps and bounds Technology is likely to have a major impact on global productivity. The rise of machine intelligence and robotics will create redundancy in assets, capital and labour. Labour & employment patterns Labourenteringanewphase thegreatdivide Industrial revolutions in the past have boosted productivity with gains split between skilled and lessskilled workers, and between owners of capital, workers and consumers. Industry 4.0 is empowering right skilled individuals as never before and opening up the great divide between the employability and earnings of skilled and unskilled persons as well as capital-owners and labour. Removal of middle income; more hourly paid workers and highly paid skilled and technology enablers. Real estate Disruption of real estate values Less need for shopping malls, parking and roads, and office space need more city fringe warehouses and distribution centres. Source: Bloomberg, Economist, WSJ, Various Consumption patterns Consumers a major beneficiary of the digital age Less disposable income as more hourly workers Higher spend of the consumption wallet online on nonphysical goods Less spending on physical goods Manufacturing technology 3D,andnow4Dprinting Benefits of Economies of Scale disappear Enabling of low-volume manufacturing leading to more near shoring and bespoke production Technology creates a level playing field and allows niche producers to compete Merger / Miniaturisations of devices Physical shipping volumes to decline 5

6 We are in the midst of a revolution Shipping volumes being disrupted Ratio of world merchandised trade volume growth to world real GDP growth, Historical correlation between global trade and GDP is being disrupted Growth in global trade fell below growth in GDP in 2016 for the first time in 15 years according to World Trade Organisation (WTO). However in its latest outlook, the WTO expects trade recovery in 2017 and 2018, amid policy uncertainty. Source: Sources: WTO Secretariat for trade, consensus estimates for GDP 6

7 Impact of Digital Revolution on Shipping Shipping wakes ups to technology 7 Source: Various

8 Impact of Digital Revolution on Shipping Shipping wakes ups to technology Source: CBInsights 8

9 Impact of Digital Revolution on Shipping Shipping wakes ups to technology Fleet Online Sales Platform Agree Freight Freightos Searates Transporteca Cloud-Based Online Forwarder Flexport Icontainers Kontainers Knfreightnet 3PL s Online Forwarding Panalpina ecommerce DHL ecommerce ecommerce Tech Giant OTM SAP TM BuyCo Alibaba Amazon Rate & Service Information CargoSphere Drewry Xeneta Catapult Okargo Portrix Transport Management System Freightgate MercuryGate Kewill WiseTech Descartes Centrolene Technology- Driven Forwarder Network WIN Source: Drewry e-business research 9

10 Alibaba and Maersk partner in container shipping Ocean carriers experiment with new revenue stream 10 As a global integrator of container logistics with the ambition to digitise global trade, we aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry. Ibrahim Gokcen, Chief Digital Officer, Maersk Main revenue streams of carriers Large shippers - direct Medium shippers - direct Medium shippers via forwarders Small shippers via forwarders New: Small shippers via Alibaba Innovations and changes include Shippers can obtain simplified, online shipping via e-commerce sites. Ocean carriers get paid upfront. Apparently, capacity is guaranteed to the shipper. Alibaba-Maersk partnership is morea new revenue stream for carriers than an e-business disruption. CMA CGM and Zim have followed. Cross-border e-commerce is growing fast and attracts a lot of digital innovation in shipping. Alibaba may have bigger plans to control shipping and distribution. Source: Drewry e-business research

11 E-marketplaces in container shipping New platforms provide instant quotes and attract small shippers Fleet Online Sales Platform Searates Agree Freight Transporteca Freightos Innovations and changes include ; Shippers can request instant,simplified quotes and book like an Expedia or booking.com for freight. Forwarders can reach more customers in a cost-effective manner. Replicating the B2C online customer experience. e-marketplaces support a commoditised service and make pricing more transparent. Aimed at small shippers and spot shipments. These platforms target certain markets but not the contract market. Source: Drewry e-business research 11

12 E-marketplaces in bulk shipping New platforms emerge for chartering and brokering to documentation Online Sales Platform Fleet Source: Various 12

13 Impact of the digital revolution on shipping Transparency Level playing field for both big and small shippers and shipping lines Better price discovery Greater ability to manage risks ieincreased Hedging, increase trade finance Productivity and efficiency Disintermediation Less information asymmetry and better decision making Better utilisation of assets: Ships, containers, trailers, warehousing etc. Increased reliability and better visibility of Supply Chains More reliable Supply Chains will mean lower inventories across the system Great efficiency and utilisation of assets will increase supply and thus reduce rates. Disintermediation will result in redundancy of existing channels i.e. brokers, agents 13

14 We are in the midst of a revolution Survival! How? The digital economy is not just about speeding up communication across borders or changing the skills needed by workers; it is about changing the very nature of consumption, competition as well as how industries work. Industry 4.0 is also driving a significant shift in the balance of power between organisations and individuals. Capital, raw materials and human resources have at different times in history demanded an economic premium over the others. Going forward all three will remain abundantly supplied and hence cheap. Innovative human capital will be disproportionately rewarded given the ability to adapt in a rapidly changing economic environment. It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change. attributed to Charles Darwin, British naturalist. 14

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