Embrace Industry Disruptors

By Carly Fields

The relentless march of new technologies stops for no man, MPV, forwarder, or carrier. The next “big things” or self-proclaimed “breakthroughs” are popping up on the radar with worrying regularity. Not all will be as unsettling as they proclaim to be, but woe betide the breakbulk industry stakeholder that underestimates the one disruptor that really does have the ability to live up to its moniker. Accurate assessment of which to cast aside and which to integrate into forward strategic planning will be critical if the industry is to prosper from this inevitable evolution.

Disruptive changes in technology and business environments have already transformed many sectors. A cursory glance at how the container lines and geared bulk carriers have aggressively targeted traditional multipurpose cargoes aptly demonstrates how influential an outside force can be on a business. So is it only a matter of time before the breakbulk industry is turned on its head by sources of both innovation and disruption?

The scope is broad and finding that one innovation with potential is no mean feat. Expect the emergence of disruptive technology anywhere innovation or process improvement can reduce cost, illuminate risk, or increase certainty of positive outcomes, suggested Bechtel’s Dennis M. Mottola.

Anything that can be lifted from the ground can be subject to disruptive technology, adds Etienne De Vel, commercial manager of European services and director of Fednav (Belgium). “If we could know today which one it could be, we would take actions, but a lot will depend on politics, international rules and regulations, rates of exchange, environmental issue and production capacities.”

Some disruptors are closer than we think. The breadth and depth of available project information has exploded through Big Data. It’s not about logging on anymore, it’s about stakeholders having access to constantly streamed data. And drones are becoming a reality for some shipping companies, albeit early tests have been limited to transporting cookies to ships.

“We see technology taking a larger share of our lives, and we need to recognize this as an important dynamic which also influences the way we do business,” said Raymond Fisch, senior vice president of public relations at BBC Chartering. “We are always interested to learn what the meaningful use cases for our industry are, and where such disruptive potential may turn into promising new opportunities.”

But there’s a caveat: the saying “whatever can be digitized will be digitized” can be read two ways, he said. “This saying indicates a process but it also indicates that digitization cannot be forced. Next to maturity, it requires vision and eventually much energy to create businesses that will eventually add value on such basis; certainly this is not for everyone.”

As an example, the booking process is one example that might hold some potential, but by itself, it cannot become disruptive without being tied to a service infrastructure, i.e. the vessels and their associated operations.

René Bomholt, a change management specialist in the shipping and cargo industry, sees opportunities where others may not. “I think it is inevitable that something will come about and shake up the industry, and this will likely be driven by somebody from outside the industry that is able to see through the ‘we’ve always done this’ cloud,” Bomholt said. He believes this disruption could come from anywhere; it just takes someone with the right idea and enabling technology to “spot a hole and plug it.” That said, it’s unlikely to be one big disruption, but rather a number of smaller ones each targeting a specific area of the industry.

The main areas ripe for disruption, in his view, are accessibility and accuracy of quotes, linking of the multiple stakeholders involved in shipments, and contracting and finance transactions. At its core, shipping is about transporting cargoes from A to B, and that comes with two basic prerequisites: there needs to be goods to transport and a means of transporting them. The rest, said Bomholt, can potentially be changed, so any and every technology comes into play.

If an Uber-style service was created for heavy-lifting and transportation – in essence a crane company without any assets – it would have a significant impact on asset utilization and investments and ultimately value for breakbulk cargo owners. Breakbulk companies should have considered this development, but few have likely discussed it.

Wider Issues At Play

Outside of the immediate industry there are examples of technological advancements that could, with a bit of imagination, be applied to any industry, including breakbulk. Advanced robotics, autonomous vehicles, and advancements in materials – such as graphene – all have a role to play.

Maturing cloud technology is a development to watch, according to BBC Chartering’s Fisch: “Although the project cargo industry innovates at a comparably slow pace, cloud technology will bring new levels of information sharing, analytics and collaboration to the industry, and we are interested to learn where this can affect our business and represents an opportunity.”

Bomholt sees 2016 as a “breakthrough” year for virtual reality, but feels that innovations will be driven by the business-to-consumer sector before its potential can be realized in the breakbulk industry. Developments in artificial intelligence algorithms may be a more pressing area to watch. Artificial intelligence, or AI, could eventually be deployed to establish the best market equilibrium based on supply/demand and improve relationships between carriers and shippers. “Wouldn’t it be great to replace the gut feel pricing and personal relations of today with a powerful calculation engine that could get it right with more stability, less fluctuations, and possible longer term planning than today?” said Bomholt.

Under the AI bracket, Deep Learning is being phased in for Google’s search algorithm, replacing what was formerly done with rules. Think of this as Google search moving up to secondary or high school, akin to a maturing teenager with an insatiable thirst for knowledge. Machines, it seems, are coming of age and there’s no shortage of machines in the breakbulk industry.

Advancements in and the evolution of technology are not the only potential disruptors looming over the breakbulk sector. Political and environmental issues also have the potential to severely disrupt business. The Paris climate accord and increased environmental responsibilities; the refugee crisis in Europe; political issues in Russia; and civil unrest in Northern Africa, to name but a few, all pose a significant threat of disruption. Geopolitical risks cannot be ignored in a global business.

With regards to the global refugee crisis, Bomholt said: “In a number of places this migration brings them onto water, notably in the Mediterranean Sea, in vessels that are not seaworthy. This puts pressure on the carriers as their vessels may be called upon to assist in the rescue of these people, which from a pure planning and financial aspect is a disruptor to daily business. “I think the first call for help is a no-brainer, but once a company’s vessel has been called upon multiple times, it does become a financial/ethical dilemma whether to continuously allow these disturbances to operating a business, and my fear is that we will see vessels ignoring calls for help if the situation continues or worsens.”

Willingness In Short Supply

Disruptive innovations, technologies and developments are not going away, yet there appears to be limited willingness to pursue the “what if” angle in the breakbulk industry. This could prove to be a pivotal error. The argument is that if the industry does not take the lead on technological improvements, however disruptive they may prove to be, someone else – perhaps with an entirely different agenda – will.

“There are many opportunities,” said Mammoet CEO Jan Kleijn. “They require us to think differently. If we don’t take action somebody else will and be disruptive to us – despite all uncertainties, that is something we can be pretty sure of. Should we worry about the next Uber Transport or Google cranes? I think we should. Should we embrace technology for innovation and improvement of safety in our industry? I think we must.

“The key question is: are we driving change, or does change happen to us?” he continued. “We must dare to change perspective and urge ourselves to rethink our business models. It is an obligation we have for the companies we lead, our customers and the communities we work in. Fact is that disruptive change is here to stay and eventually will affect our industry too. We are challenged to embrace new kinds of thinking that help us innovate with the use of new technology.”

According to Bomholt, many in shipping have a hard time seeing this need for change and often only see it too late. “One trait of disruptive technology is that it develops exponentially and not in a linear fashion, so when you finally spot the rising water you’re already drowning,” he said.

But just because the appetite for these changes is weak, the arrival of such technology needn’t be viewed as negative. As Bechtel’s Mottola puts it, any disruptor that provides cost, risk and positive outcome improvements should be welcomed in an industry not known for its keen acceptance of technology or innovation improvements. “I’m not concerned about the arrival of disruptive technology in the breakbulk and project cargo industry, I welcome it,” he said. “The sooner the better.”

Bertling’s CIO and COO Andre Wedtstein recognizes the resistance to change, but believes that as an industry with engineering at its heart, breakbulk and project cargo businesses have a hunger for curiosity that will allow them to adapt to whatever is thrown at them. This flexibility is the result of some tough lessons learned. In the past the breakbulk industry has been criticized as being too focused on specific segments, in relative ignorance of the technologies emerging in other segments. Wedtstein highlights the failure to foresee the depths of the global downturn in oil and gas as an example of how narrow the focus has been in the past; the same can be said of disruptive technologies.

“The difficulty with disruptive technology is the exponential spread in the market – many new technologies appear on the market; it takes a lot of effort to identify those with ëdisruptive’ potential plus to maintain the flexibility in our organization to line up for the probability that it will change the world we are dealing in,” Wedtstein said.

Images via Shutterstock; Photo illustrations by Catherine Dorrough