Industry Insight: The Shipping and Bunker Industries' Resistance to Change

Apurva Mali, Trading Manager, Ennero. Image Credit: Ennero

Discussions within the shipping industry on disintermediation, incorporating automation and technology are growing and getting louder, and even louder are the knee-jerk reactions of traditionalists who remind you that it's a relationship-based business and that a robotic touch can never feel as good as a human touch.

The purpose of this blog is not to merely talk about more of the same, but rather dwell a little deeper into this phenomenon called 'Resistance to change'. A lot of the technology required to automate systems and processes in the shipping industry is already available and has been for many years now.

The maritime industry and the broader ocean supply chain, especially in the dry bulk and tanker sector are suffering from major and costly inefficiencies which arise out of ineffective data sharing and poor cross-industry collaboration. If that were not enough, factors such as gross overcapacity, severely depressed freight rates, fragmentation and lack of financing means the industry should want to embrace technology and embrace changes in the way things could be done, and the way it is possible to get things done with automation and the latest technology.

But why has the shipping industry so far lagged behind in embracing automation? Could be many things but the needle tilts to the following in my opinion...

The loosely defined ocean shipping industry which includes ship owners, brokers, agents and other stakeholders is an old one -, traditional, conservative and historically known to have been resistant to change. People and corporations are bound to resist change when they perceive it as a threat. The operative keywords here are 'perceive' and 'threat'. This threat need not be real or large for resistance to occur. The obvious 'threat' in this case is people losing their jobs, companies losing their relevance or their roles being marginalized. And we're not only talking about entry-level workers or low-wage clerks who collect and process data whose jobs will be on the line, but a more macro level consolidation in organizational structures even with 'high-paying-jobs'.

If the healthcare and banking industries are one of the first to adopt the use of automation, the efficiencies stemming from it have also resulted in thousands of employees losing their jobs. Ocean shipping and its related supply chain is probably one of the last industries to embrace automation and digitization, and people in commercial shipping should feel relatively safe about their jobs, because right now resistance is winning over the change.

The question that we should really ask is, why has disintermediation not fully been accepted and adopted by the industry on a full scale although a few attempts are being made.

In my opinion, the Resistance can only broken by forces from outside the shipping and supply chain industry. We are already seeing this in the container liner trade, where Alibaba and Amazon have done away with freight forwarders, assumed the role of ship brokers and are increasing their involvement in the supply chain. Intermediaries and brokers will always have a place in the shipping and supply chain industry, although these intermediaries will soon lose their human form and be replaced by online platforms.