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WHITEPAPER
Then the storm hit in 2008, and the well-fed and frankly somewhat spoiled companies had to adapt – fast. The last couple of years have been about reducing operational costs, handling the order book, managing the financial constraints and focusing on operational and tactical matters. While these days are not yet over, most shipping companies predict better times ahead as global trade is slowly picking up again. It is thus time to evaluate the damages of the big storm and decide how to navigate in this new reality. In short: Welcome Shipping Strategy 3.0. Not that this is an established term, but in our view it implies shipping strategies that are more focused, more global, more professional and more customer-driven. In Shipping 3.0, companies still pursue opportunities aggressively, but the growth will come from current core competences in the form of segments and/or selected parts of the value chain. It is “growth from the core” more than growth “for the sake of it”.
and consequently the shipping industry, had proportions beyond anything seen before. “We have been hit by the crisis and things will never be the same again” one manager said. But it is one thing to be ready for, and even hope for, radical change. It is quite another to pinpoint what this “new reality” might look like. Here, the jury is still out; some managers believe that the industry will change fast and in many ways, while other managers say that the current business model and strategic logic in the Scandinavian shipping industry is so advanced that the correct answer to the many challenges is “more of the same” and not something totally new. Our point of view is this: we believe that the Scandinavian shipping industry five years from now will be very different from today. It will not change through a radical paradigm shift but through a step-by-step transformation. Each step might seem to be within the current way of doing things, but seen over time, the changes will transform the industry in Scandinavia.
This sounds like a kind of level 1-2-3 lifecycle transformation of all shipping companies – that is not the case. Some shipping companies are still struggling with the traditional mindset of a Shipping 1.0 company, while other companies are firmly moving toward 3.0-mode already.
Does that sound like a small thing? In our view it is not. In Shipping 1.0 strategy was guided by tradition and in Shipping 2.0 by chance while strategies in the era of Shipping 3.0 are about choice. This is a major change in the industry. It implies setting clear targets, prioritising and focusing efforts and designing the optimal business model. It builds on decades of experience but while it respects history, it is not limited by it.
It should be noted that we are not saying 3.0 is for everyone, and we are not saying it is now or never. However, we are saying that this is the trend and general direction of the Scandinavian shipping industry.
Structure This whitepaper contains three sections:
This whitepaper presents four major external trends which push the companies toward Shipping 3.0. The degree of urgency differs due to the companies’ different histories, segments, focus and current strengths, but the trends are clear and unavoidable; continued volatility, financial market constraints, increased importance of new geographical markets and further customer consolidation. Most CEOs we spoke to felt that, yes, indeed these are new times. The vehemence, the surprise and the sheer magnitude of the shift from record-setting markets to downright awful ones have made everyone consider future strategies. Even for an industry used to radical changes and rollercoaster-type cyclical ups and downs, the crisis that hit the world economy,
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Section one describes the key external forces and trends that drive the need for change. We have identi- fied four main drivers.
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Section two describes the companies’ key strategic directions and business model. This is supplemented by our take on future business model archetypes. Some time and effort is spent on describing the areas in which shipping companies will be different in the future.
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Finally, section three rounds up the whitepaper and points toward future areas of interest.