We don’t need to get into the details of what’s happening to the maritime industry, right? We’ve pretty much got that covered: a reduced global economic growth rate, a shift in the size and nature of transported goods by ship, changes in the energy market and a surge in vessels hitting the water have put earnings under significant pressure across the industry.
This industry has seen downturns before but past remedies are apparently having less—or worse a negative—impact this time. So, if this is an industry-wide struggle, one which affects us as a group, why are so many still insisting on trying to solve the challenges as individuals?
What we’re facing now is the worst downturn in the market in decades. Looking back, we know the shipping industry has been cyclical, shifting between golden upturns and dark downturn. It’s what we’ve got used to.
Every time we hit bottom of the market we knew we just had to persevere until the next upturn which would wipe out the losses and maybe put us a little ahead again. The remedy was specialization, optimization and cost cutting to survive the aggressive price competition of the downturn.
But this time it seems different. Although many analysts are now reporting that the bottom of the market has been reached and we are seeing light at the end of the tunnel in many segments, it seems that equally as many—Alphaliner recently, for example—are warning investors that something must change.
Returning to the old ways and starting to order more vessels again will only prolong the downturn. This time we are looking at a slump that is predicted to last a lot longer than what we are used to. That puts the old cost-cutting remedy under pressure. And for how long can we survive that?
So, if it is not just a waiting game before we are back in black what is the alternative? There is an old Danish saying that it is tough to make predictions – especially about the future. But it still seems as though there are numerous consultants today ready to stand on each other’s shoulders to tell you what to do.
The advice and paths to salvation promised are multiple, and often contradictory. But one theme many return to is that the way out of this is not just to cut cost, but first of all to drive value for money for the customer.
That’s a problem because, ironically enough, there are signs in the market that this is not what most of us are doing. In our continued search for ways to cut costs we are now in danger of driving down the value for our customers.
This year for example the European Shippers Council reported a significant drop in the service level provided during 2016 by container shipping lines. If we were truly chasing value wouldn’t that improve?
However, some companies are forging new paths. Vessels are coming to be seen not primarily as an asset but also as an important part of a complete supply chain that must drive new and improved value while still maintaining low costs.
An example is Maersk encompassing more and more of their customer’s value chains driving down cost through data insight, partnerships and cutting out middlemen and unnecessary paperwork.
But it’s key to understand that we are only talking about a minority. One would be justified to raise concerns that we are beginning to see the development of an ‘A’ and ‘B’ team in our industry. Those who have seen these new opportunities and are investing in them, and—well—the rest.
So, what do we do as an industry to combat that? It all comes back to my initial question. Why do we insist on trying to do individually what is far more powerful—and perhaps even only possible—if we come together.
What I’m suggesting is a coffee-powered-bi-directional-curiosity-based-value-driving-partnership. Or you could use tea. Tea is also good.
My suggestion is that we move closer to each other. Closer as companies, closer as individuals, closer as organizations. Partnerships is what we need to find. Partnerships are not new in the maritime industry, we’ve been doing them for years. Good business with good guys based on solid business models, but what I am suggesting is a different kind of partnership. What I’m going to call ‘Coffee-powered-bi-directional-curiosity-based-value-driving partnerships’. Or you could use tea. Tea is also good.
So how does a coffee (or tea)-powered-bi-directional-curiousity-based-value-driving-partnership work? Here’s how.
Many years ago, as a young engineer new to the maritime industry I was fortunate enough to get myself a mentor. As head of one of the largest construction consulting companies in the Nordics he was a very successful guy, and one day he told me about the secret to much of that success. Coffee and a great secretary.
Over the years, he had ensured that everyone—competitors, colleagues, customers, partners, etc.—knew that he always had time for a cup of coffee and a talk. No agenda, no appointment and no business case needed. Just coffee and a talk between two people.
Over the years that strategy had brought him not only a lot of direct business and new highly skilled employees but in addition the opportunity to develop a huge network of diverse people where he gained insights into new customer value and thereby new business opportunities.
That’s the model of partnership we need today. Until now we’ve been primarily searching for value within our own areas of expertise, and extended that to the obvious partners who would technically or logically interface to our products or services. But our purpose now must be to identify new sources of untapped value for new or existing customers.
Since the idea of the hundred-headed brain was introduced in 1894 we have understood that if we come together in larger, more diverse teams the number of new ideas will go up. And we need a lot of ideas because as we now also know, most new ideas are terrible. By increasing our numbers we increase the chances that we’ll find that one ‘Egg of Columbus’.
That means we have to get together with people other than the usual suspects, and share. Meet people outside your industry—be global in the true sense, not just geographically widespread.
Meet people in different positions, meet startups and established companies, meet radicals and conservatives. Meet those you consider experts, but also look for those who simply come to you with a great set of questions. You might be surprised at just how difficult they are to answer.
Meet, talk, listen and try to understand the other party, without an agenda, with openness and with trust. And do it lots. That one’s really important.
The worst case scenario is that you get to meet more of the great and interesting people out there. Best case you will come away with new insight into the common ground and complementary ideas you and your new friend have, and how you can develop that into a business model.
I believe very strongly that in the same way that one plus one can equal three in certain cases, this kind of partnership approach could benefit the entire industry.
So, if you’re ready to embark on one of my ‘Coffee(or tea)-powered-bi-directional-curiosity-based-value-driving partnerships’ what do you need to do? Firstly, be courageous. Don’t end up in a Mexican standoff waiting for other players to make a move. If that’s your strategy you’re heading for the B-team. Instead make a bold start by getting out there and building trust. A good friend once told me that the only way to get trust is to give it. So, start there.
Figure out what your company’s core DNA is: the thing that makes your company unique amongst the competition and justifies your place in the market. Then start sharing some of the things that are not part of that. And, by the way, if you’re concerned that you don’t know what that DNA at the core of your company is, then that’s an issue that has to be solved urgently, my friend.
Here’s another tip for you. Join great networks. For me the “Green Ship of the Future” partnership made a really significant difference. Having a safe place to hold these kind of discussions is key, and what develops out of those networks can be important.
At GSF over the coming year we’ll be investigating how we can create a detailed format around how to create these kind of ‘Coffee(or tea)-powered-bi-directional-curiosity-based-value-driving partnerships’. Although I’m not sure we’ll end up calling them that.
Patience is also essential. Don’t expect results immediately, but if you pay attention and listen I guarantee you will learn, and knowledge is always valuable.
And finally, be visible. Yell, wave your arms and invite people in for coffee (or tea). Make sure your door is always open.
But wait, I hear you say, what about the secretary? Well, back in the day my mentor’s secretary was essential to handle his administrative tasks to free him up for his coffee drinking.
Back then perhaps it was harder for those without that level of support to work that way. But now, with instant connectivity, powerful software and the flexibility and intelligence built into the tools we all have access to at work every day, a ‘Coffee(or tea)-powered-bi-directional-curiosity-based-value-driving partnership’ is accessible for everyone.
My door is always open and the kettle is on the stove. Look forward to meeting you, friend.
Follow Thomas Bruun Clausen on Twitter where he’s @ThomasBClausen