The ocean shipping industry in 2016 confronted two immovable forces.
For the first time in many years, the growth rate of global trade was lower than the growth rate of global GDP, and growth continued its secular shift to emerging economies. Accompanied by already excess inventory, this put pressure on business models across the industry.
Countering this, on the positive side, digitalization as a necessity accelerated beyond the tipping point as evidenced by almost 100 percent adoption of digital compliance solutions for the new IMO SOLAS verified gross Mass regulation — a milestone for the ocean shipping industry. It is the first truly global, industrywide initiative launched as a fully digital process. This is clear evidence of the opportunity and benefit for participants to shift to digital business models.
These two trends will continue to disrupt ocean logistics participants, driving shifts away from historically successful business models to those focused on scale, enhanced customer engagement, and accelerated technology innovation.
Technology innovation has already played a major role shaping the industry. Two years ago in this column, I described an industry separating into “those who have already begun investing heavily in technology, and those who wished they had.” In 2016, as the industry underwent a wave of consolidation, acquiring companies were often those that had made essential investments in technology and efficiency.
The ocean industry trend to technology innovation will continue in 2017. Driven by customer need and cloud technology availability, existing participants and start-ups are rushing to reinvent current processes and introduce new digital products and services. The benefit of industrywide customer networks and connectivity in achieving efficiency will continue. In 2017, we will see heightened impact of these technologies, as the winners continue to leverage innovation and technology for competitive advantage.