Need for change / Changing the way we think about shipping

Change is in our DNA

Once we were the drivers of change

Containerisation revolutionised the world because it fundamentally overturned the ingrained ways of thinking about global transportation.

We had to change everything. Stevedores and longshoremen had to retrain almost overnight. A whole new class of ship, truck, equipment, and port terminal machinery had to be built. And suddenly unimaginable complexities of schedules, equipments and timelines had to be factored in.

It took time, effort, money and a belief in the future
– and huge amounts of potential were unlocked, for both ourselves and customers.
We all benefit from that change every day.

Has the time come to radically
change the way we operate
our business?

Total number of votes: 4768

86% Agrees

14% Disagrees

CASE: Music players and mobile phones

What happens if you can't see what's coming next and just try to hold your existing position?

Music players:

For 20 years, the personal music player market – be it cassettes, CDs, and later mini-discs – was filled with a wealth of similar products and where market leadership was decided on brand alone.

While music was shared and stored in physical formats, these brand leaders had an unassailable edge. Until, they missed a new way to think about portable music …

Mobile phones:

Ten years ago, almost overnight, mobile phones in the developed world went from luxury item to everyday essential. The major players jostled for position behind the industry leaders and were focused solely on the now traditional, and back in 2005 the presumed only, design of mobile phone.

What they all failed to see coming was a totally new way to think about mobile phones ...

What happened?

In the space of a few years, Apple twice gave customers what they had always wanted before they themselves knew that they had always wanted it and in the process, they completely stole both the music player and mobile phone markets overnight.

In the face of competitive innovation, every successful and well-established service business in the world is only one surprise product launch away from being left behind.

How likely is it that the shipping industry
could be revolutionised by an innovative
surprise launch similar to the
mobile phone and music player
industry?

28%

16%

4%

18%

34%

POLL

Total number of votes: 4706

We have an aggressive plan now. But if you go back a few years, the market changed suddenly and we were not fast enough changing with it. Kai Oistamo - Executive Vice-president Mobile Phones, Nokia - The Guardian, 2 September 2009

The customer is king
…occasionally

We need to rethink

We have a whole new generation of customers that expect a different kind of service level from all their suppliers. Our customers repeatedly tell us that other buying factors matter to them besides price such as schedule reliability, money-back guarantees, quick notifications of delays, intuitive self-service wherever possible, and ease of business. They expect that we will serve them.

If we are truly to reassess where we need to be, we must first realise that the old conversation no longer applies. We have to rethink our business focusing on the tremendous value we could add to our customers' supply chains. We really could be so much more. We must make the industry of tomorrow, today.

JOIN THE DISCUSSION

Is it really true that the needs of the shipping industry's customers have changed so much?

135

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GuerreroBeryl27 | Nov 4th · 10.13 pm

"The business loans are essential for guys, which are willing to start their own company. As a fact, it is not really hard to receive a college loan. "

Serguei Netessine | Sep 27th · 11.06 am

"What Maersk is pursuing is a fundamental Business Model Innovation in an industry that has not changed much in many years. What differentiates this innovation from Apples and Googles of the world is that the innovation is NOT around new technologies or products, it is around the Business Model or the way to deliver products and services. We have described many similar in spirit innovations in the recent Harvard Business Review article "How to Build Risk into your Business Model", May 2011 and on our blog http://www.renaissanceinnovator.com. What I see as a fundamental contribution of Maersk here is that it is taking the risk of unreliable delivery away from the customer and upon itself, this is exactly how most of such Business Model Innovations happen. If Maerks can charge customers a little more for the better service, everyone will win. Kudos for figuring out a way to revolutionize entire industry!

Serguei NETESSINE
The Timken Chaired Professor of Global Technology and Innovation
http://www.netessine.com
INSEAD - The Business School for the World®"

Graziano Previato | Sep 20th · 05.52 pm

"No, it's not so true. Instead I think that only now, thanks to this Shipping Crisis, The Shipping Industrie start to understand that the world changed... 20 years ago...
What they really need? To be efficient.... And this start at least with the 'just in time' warehouse policy... means 20 years ago.
Now we have to ask to ourselves: 'How we can really improve the whole process? How we can reduce our customer's logistics costs, increase our customer's business opportunity and increase our revenue at the same time?'.
This is possible, I think, looking to the 'complexity' as an opportunity to deliver new process.
Your step is the first one. So, thanks to do it.
"

JIM EVERETT, FORMER SEA-LAND SERVICE, INC EMPLOYEE | Sep 12th · 12.53 am

"YES THE CUSTOMERS NEEDS HAVE CHANGED CONSIDERABLY. HOWEVER THE NEEDS OF THE OCEAN CARRIERS HAVE ALSO CHANGED DRAMATICALLY. JUST THE CURRENT COST OF BUNKER FUEL TODAY AS COMPARED WITH 10 YEARS AGO IS ONLY ONE EXAMPLE.

THE SHIPPING INDUSTRY'S CUSTOMERS SUPPLY CHAINS, LOGISTICS AND RELIABILITY OF SCHEDULES NEEDS TO BE ADDRESSED AND THE OCEAN CARRIERS ABILITY TO MEET THESE CHANGES MUST BE MUTUALLY RECOGNIZED AND AGREED UPON."

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OUR OPPORTUNITY…

… we can learn from history

What can the shipping industry learn from other industry transformations?

Lesson 1: Just because a business is established, it may only be a few years from being completely overtaken by new technology.

Lesson 2: Market and customer behaviour is forcing companies to never lose sight of what customers really want – including the needs they are not even aware of.

Fundamental challenges = Fantastic opportunities

The shipping industry is faced with three fundamental challenges: our unreliability, our complexity and our environmental impact. But instead of making excuses we should stop the repair work and see them as fantastic opportunities.

We need to ask ourselves

Why shouldn't we be able to get cargo there on time, every time?

Why shouldn't we make it easier and give customers instant prices and instant confirmation of their booking?

Why shouldn't we hold ourselves to the highest environmental standards?

JOIN THE DISCUSSION

Do you agree that our unreliability, our complexity and our environmental impact are the fundamental challenges in our industry? Or do you think other challenges are just as relevant?

70

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Peter | Dec 2nd · 01.59 pm

"If this would be so easy to define - black or white all would be very happy ... but it isn't. The Shipping world is nuch more complext as your marketing advise of "total reliabilty"... you will see it won't work this way. Customers want the lines to be honest and not promise something with some tricks (adding a few days on top of the transit times) ... this will come out and you will have the blame. Business is more then just American bubble talk. Believe me!"

maskinmester Jørgen skaarup Jørgensen | Oct 16th · 12.43 pm

"reliabilty
ease of business
enviroment ok
other challenges as they are
safety awareness culture leading to appropriate regular maintenance PM +extra but necessary cost innovative thinking to established systems MNC NC etc may be the way forward
complexity ok but lets brekdown the problems and deal with it sensible and resolve the challenges (troubles) to the benefit of crews, owners, clinets (oil majors / shippers) including many others....."

Al | Oct 3rd · 01.15 pm

"An interesting company doing some exciting work on a last minute capacity exchange for Air, Ocean, Trucking and Warehousing.

See www.fr8exchange.com.

Representative of how technology is trying to shape this industry. Time will tell"

RAYMOND LOH | Sep 24th · 01.39 pm

"Hello CEO,

Wish you can look into the awful (red tape/not alert enough ie.geografical knowlege of final port of discharge, didicate more dicision responsibilities to transhipment handling sector of MAERSK. Do not be choosy in nominating feeder vessels. After all MAERSK can never sails their Mega Vessels to all parts of the world but are more than happy to have users via feeder vessel(s). ) In the now competitive market, be flexible & to understand customers need. Not every part of the world has same enviroment, wealth, policies (government) and practices. FOR MOST PEOPLE , ONE DICISION - NORM PRACTICES - MAKES THING EASIER & EFFECTIVE. GREAT BUT NOT IN ACTION.
**** PERSONAL OPINION ONLY ****"

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We can't solve problems by using the same kind of thinking we used when we created them.

The TOC
Conference 2011

Maersk Line CEO, Eivind Kolding, addressed the
container shipping and logistics industry as
the keynote speaker at the TOC conference
in Antwerp, Belgium on June 7th 2011.

See pictures