Shipping: Blue Ocean Strategy for the global sector

Of the revolutionaries of history who have done good, few are less known than Malcom McLean, who invented modern shipping, the foundation of a thriving modern economy. Young McLean has a low start. College was not an option for him during the American Depression in the 1930s, so he bought a used truck and hauled empty cigar barrels. Not really a promising start.

When the United States entered World War II, its military faced the challenge of transporting tanks, trucks, and equipment across the Atlantic and Pacific oceans. Shipping logistics would have to change quickly or Allied’s efforts would end in failure.

McLean noticed that containers were the solution. They had to be large enough to hold trucks and tanks, but they also had to be small enough and the same size to be loaded directly by cranes from wagons onto ships. He wonders if the same idea might work in commercial shipping. In 1956, he launched a line of container ships from Newark, New Jersey, to Houston, and in 1969 he extended it to Hong Kong and Taiwan, then, in the following years, to Singapore, Thailand and the Philippines.

McLean’s containers became an economic revolution. Cranes reduce loading costs by 97%. Large ships can be unloaded and then reloaded in hours rather than days. The threat of strikes by port workers has been reduced. Ships only make money when they’re at sea, McLean wants to say.

On the horizon

McLean’s legacy can be discussed with the chairman of Maersk, the world’s largest container shipping company. Jim Hagemann Snabe did not rise in the ranks of the maritime industry. His background is completely modern: it’s all about software. Jim Hagemann Snabe was formerly co-CEO of SAP, the German company that specializes in enterprise IT.

According to him, the global shipping sector has seen many revolutions: from sails to diesel, from paddles to propellers, from manual loads to containers. According to him, the next two revolutions of global shipping has arrived. The first is digitalization, the second is decarbonization.

“What is happening now is the digitalization of the industry. Now, there are papers everywhere. In fact, customers pay more for paperwork than container shipping. Take, for example, an avocado grown in New Zealand and eaten in Hong Kong, he says. Shipping costs are less than 10% of the store price of avocado. Double the cost of administrative documents.

“So now when you pay a hundred dollars to move the container, you often spend two hundred on paperwork. Maersk is transforming the industry by digitizing all aspects of it, including booking and tracking. Even the ship is digitized so we know how much fuel it uses, exactly where it is and when it will arrive.

“The digital twin of a transportation network allows for better customer service. It reduces costs and is more predictable when we scan documents. Everyone underestimates that. They think, the world is on the road to digitalization. But for many traditional industries, such as shipping, this is just the beginning, “he said.

According to Snabe, the decarbonization of ships is another revolution that is just beginning. This will not happen overnight, he says: “If you put batteries on a ship from Asia to the United States, the batteries will take up 60% of the ship’s capacity. So it doesn’t work. The sails don’t work because you can’t provide the necessary accuracy to the supply chain. What to do? We believe the answer is to turn green electricity into green fuel. We know how to do it. And we were the first to do it ”.

Translated article from Forbes US-Author: Rich Karlgaard

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