An unprecedented crisis of maritime industry is here and every company is facing it alone. While everyone is striving to remain competitive and just make ends meet, most are involuntarily making the same steps and common mistakes. The statistics is an evidence of that. We have conducted a research to understand the roots of problems and create a relevant software solution.
Navigating in a Perfect storm
In september 2016 we conducted a market research of european maritime companies to detect the acute industry challenges. In the output of the research was the task to point out the main problems in order to find a way to solve them through software.
The research conducted among shipping companies of Western Europe, has shown that the current situation has the strongest impact on operational spheres of companies, e.g. logistics, chartering and management. The research was conducted via phone and email surveying.
The research included analysing the companies’ goals for the upcoming year, actual problems and the ways to resolve them. Special attention was paid to the matters of software, for the current competitive environment is forcing companies to give up the old ways and start using comprehensive software.
Most respondents showed unanimity providing identical answers regarding the primary industry threats, short-term expectations and their plans for the foreseeable future.
As their primary challenge 53% of respondents indicate the current critical situation in maritime industry. Baltic Dry Index is at its lowest since it was founded. The crisis is reflected not only in low chartering rates and shrinking credits for shipping companies, but also in the increased competition, mentioned by 44% of respondents among their foremost threats.
Another stark example of crisis is the bankruptcy of the seventh-large container shipping line Hanjin, which transported 3% of the world cargo capacity. The collapse of such a large market player has also interfered with the plans of importers and exporters who had been using Hanjin’s services at the moment. This event came as a huge blow to the network of maritime alliances and relationships, indicating the need for new legal mechanisms to protect carriers, shippers and consumers in global trade.
There is a chronic overcapacity within the shipping sector that is not going to go away anytime soon, especially with lots of new ships due to come into service.
Jeremy Penn, CEO at Baltic Exchange, London
The present situation is a natural consequence of the industry growth, ending up with a dramatic collapse at the end of 2008. Even the partial recovery that followed in 2010 and 2014 could do nothing to change the negative tendencies. In times of growth lots of new vessels were built, which eventually led to the present oversupply. Another significant challenge is represented by the so-called ‘zombie ships’, that keep operating just to cover the interest on debts, but hardly repaying the capital of the shipowners.
What is damaging shipping is a zombie fleet, which accepts freight at maverick prices just to keep going.
James Kidwell, CEO at Braemar Shipping, London
Also most respondents were unanimous on the question of forecasting the current state of industry for the near-term. The situation is likely to remain the same in the upcoming year, making the task of ‘staying alive’ one of the most popular (68%) answers about the plans for 2017.
Nowadays we are observing a global tendency to merging of companies. Large companies keep growing, swallowing the smaller ones that cannot manage the strain. Those who want to stay afloat and keep their flag, have to find the ways to increase their competitiveness, e.g. become more flexible, cost-effective and unique in offer. In this regard one should not underestimate the role of software, that can significantly increase the company’s operational efficiency by automating the routine processes and speeding up reactivity to inner and outer challenges.
Another important problem worth mentioning is client satisfaction. 31% of respondents pointed it out as their foremost challenge and over 80% agreed about its importance. Chartering and operational personnel is continuously engaged with numerous clients to supply fleets with orders. In an increasingly competitive environment, the speed and effectiveness of client management is the key to success. In this regard, the best choice will be a specialized software wherein one can keep and manage a customer base, updating client profiles, performing search by tags and grouping clients accordingly to the current operational objectives.
The survey regarding the software toolkit the respondents use, shows that 55% of small shipping companies still manage their client bases in spreadsheets like Excel. Spreadsheets might look familiar and comfortable, but they never speed up operational activity, eventually leading to the loss of opportunities. This approach reduces the company’s competitiveness, equaling suicide in the context of the current market situation.
A sound alternative to spreadsheets will be a CRM system with a broad functionality, that require no manual updating. But in order not to unduly burden operational specialists with excessive tools, CRMs need to be integrated into the enterprise system, linking different departments into a single programme environment.
Only 15% of companies report using In-house software to handle most of their tasks. 13% respondents (all large companies) use bespoke software solutions developed by outer vendors. 72% of operational specialists use up to five software tools in their everyday work. In the highest demand are flexible and multipurpose systems, combining the functions of tracking cargo, vessels status, finance management and crewing.
Responding to the question about the ways software could possibly help in solving the acute problems, the respondents’ opinions were equally divided. 48% believe that software is able to help them handle their problems, 48% are doubtful about that, and 4% found difficulty in replying to the question.
The problem is that most companies had faced only readymade software solutions, which could never cover all of their needs, offering in most cases an excessive functionality with a high risk to remain unclaimed. In this regard, the specialists are forced to use numerous software tools, switching between them and thus losing the speed of performance. The creation of a software that will really help, is always preceded by a preliminary assessment of key objectives of the company, thorough analysis of its business-process and all the aspects of activity.
Apparently, the present crisis of maritime industry is a macroeconomic factor, none of us is able to directly influence. However, we can, and must cope with its consequences, spreading like waves in all directions. If you do not want these waves to capsize your business, you need to be able to quickly adjust its course, reacting to challenges and avoiding dangers. To make it through the perfect storm, a ship needs an experienced captain, skilled crew and reliable equipment, meaning the need to pay a close attention to management, human resources and software of the company.
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