Disruption takes many forms
COMMENT: I recently attended the Terminal Operators Conference in Singapore where there was a lot of discussion about digitalisation, and blockchain - it was not clear to me whether the audience really understood the meaning or full implications of either, writes Ben Hackett.
To me, neither seem like disruptors, but are just the streamlining of the excessive paperwork generated by the shipping and port industry into mega databases that would allow for intelligent data analysis and better productivity at the interchange points. The beneficial cargo owners and 3PLs have understood this as a result they already operate a much more efficient business.
Containerisation started in 1956 with the Ideal X carrying 58 containers; today, we have ships with a capacity of over 20,000 teu. For ports, this has been a major challenge over time with massive investments to deal with the ever-larger ships and worse, the larger volumes per call resulting from alliances. To some extent this could be seen as a disruptor but it is more an operational challenge than a revolution.
For the cargo sector, it certainly has been a disruptor as containerisation penetrated beyond normal liner goods into the bulk markets with refrigerated good, grain, sugar, scrap, steel and large outsized cargoes increasingly being moved by containerships.
Another real disruptor that can seen in the piracy and kidnapping prevalent between the Middle East Gulf and Djibouti, in West African waters, the Malacca Straits and more recently in the Sulu Sea. This particular disruptor forces the diversion of ships to different routings which has an implied cost and in some cases forces the cancellation of services.
According to Lloyd’s Intelligence, piracy attacks against merchant vessels off the coast of Somalia in particular is very costly, as the model here is kidnapping for ransom. According to The State of Maritime Piracy 2016 report published by NGO group Oceans Beyond Piracy, despite no vessels being hijacked in this region in 2016, the economic cost caused by groups in Somalia increased to $1.7bn in 2016, from $1.3bn in 2015.
These may not be the disruptors that conference presenters are referring to today, but they are equally, if not more so, challenging to ports and ship owners than the more favoured disruption-related topics of the day.
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