At the first Lloyds List Summit, held at the Royal Institute in London on 9 May 2013, a host of respected and powerful figures from the world of shipping gathered to discuss and comment upon the current state of various shipping markets.
Maersk Line was the social media sponsor of the event, and in the role as the official @MaerskLine tweeter of the day yours truly had the privilege to attend, listen, observe and comment live on the huge Twitter wall in the imposing Royal Institute’s lecture theatre (click here to see the Twitter wall in action).
And now, I would even like to share with you my humble impressions of the day.
The bad news first
Throughout the day, lively debate was evident and the future visions for the industry were as varied as the voices speaking. So let us get the bad news out of the way first.
It is clear to this observer, that as far as the container industry is concerned, the audience and the contributors singularly failed to address the elephant in the room, that of over capacity in global supply.
To me, it seemed that the powerful figures present, out of courtesy and not wanting to be controversial, chose to pay a side-glance at the issue.
Indeed the word capacity was only mentioned once in the whole day!
This absence of a detailed discussion and an agreement on what an achievable set of actions would look like was a missed opportunity.
One of the lone voices for change was greeted with scepticism and his opinion then almost totally disregarded. This is even more surprising, as that voice was Mr Li Shaode, Chairman of China Shipping, whose call for longer term thinking between shipping lines and customers, in order to minimise risk for all parties was given the metaphorical “shrug of the shoulders” by other members of the panel.
The panel noted that 93 ships had been sent for scrap in the current year and an acknowledgement that more was needed to be done was made.
But that, folks, was it!
Taking control of the price conversation
In the second debate, entitled “Back To Basics”, another dynamic voice for change addressed the audience.
Flemming Jacobs, a former A.P. Moller-Maersk senior executive of many years experience, stressed that the shipping lines provided a service and not a commodity.
Mr Jacobs argued that the current situation of the market accepting loss making rates was beyond sense and that eventually it would be up to the shipping lines to take control of the “price conversation” with customers, one which he thinks is currently only being paid lip service too.
He concluded that if the lines continued such a self defeating strategy, it was in fact only going to work against the customers’ long term interests. Lines will be forced to merge, withdraw from routes or even fold – and as a result the customers’ choice would be constricted and prices would rise at a faster rate, than if it were controlled by the lines right now.
Three of the speakers in action, from left to right: Li Shaode, George Economou and Flemming Jacobs.
Photos: ©Philippa Gedge Photography www.philippagedge.com
So the question remains, can change ever be achieved without a concerted and uniform approach from every member of the shipping line community?
Who can transcend the pervasive attitude of self interest and chasing market share at the expense of financial sanity?
As George Economou, the noted ship owner stated, the industry posses many highly intelligent people who consistently act with a “lack of mind”.
Innovation lifting the mood
The afternoon session saw the mood of the Summit lift and the topics for discussion moved away from the commercial reality of the market to a more varied agenda.
The “Intelligent Shipping” debate saw the various visions of how more efficiency could be driven into the process of ship/port operations and how the world of logistics and shipping were merging interests like never before.
Indeed, the Head of Shipping for Shell, Mr Graeme Henderson, gave a fascinating insight into how large commodity shippers were looking for innovation in service to be a part of any solution they look at.
With 300 ships and 150 barges moving at any point in time, his is a voice many would have listened too.
Mohammad Sharaf, the Group Chief Executive of DP World, talked about how port developments and the associated operations were being undermined by the shipping lines and ship operators “closed” thinking approach.
He gave a powerful example of how shipping lines order bigger ships but do not discuss with Port operators the implications of such new larger vessels. He strongly argued that a more constructive and open policy would enable port operators to innovate and change, as to enable portside time to be significantly reduced, increasing efficiency and driving profitability.
Mohammad Sharaf (left) listens as Graeme Henderson of Shell explains how they value innovation in shipping services. Photo: ©Philippa Gedge Photography www.philippagedge.com
The pragmatist and the visionary
To conclude there was a highly entertaining discussion between the conservative and the innovator, as we saw technology take centre stage. With the audience agreeing that innovation is currently the hot topic and with the imminent launch of the first Triple-E ship focussing minds, a sharp contrast of opinion was noticeable.
39% of the audience agreed that “ECO SHIPS” were nothing more than a marketing ploy and they would have their “five minutes in the sun”.
The effervescent Gerry Wang, Chief Executive of Seaspan, presented a picture in which the Chinese and Korean shipyards could present him with the most efficient and technologically advanced ship in the world, however his opinion was that the value this innovation brings does nothing but add cost.
For Mr Wang, with ships having an ever shorter lifespan, the economic reality for him was that they made no sense.
At this point, I thought it correct to point out on Twitter that Maersk Line saved $1.6bn in bunker costs due to environmentally led changes in operations!
On the other side of the debate was Oskar Levander, from Rolls Royce – Marine. Mr Levander presented a vivid picture of what could happen, with crewless ships, new forms of energy recovery systems and radical design changes.
Oskar Levander (left) and Gerry Wang during the session on innovation in the shipping industry.
Photo: ©Philippa Gedge Photography www.philippagedge.com
It is fair to say, the audience did not share Oskar Levander’s enthusiasm, but as we all know it is often the visionary whose perception becomes reality over time.
It remains to see if the issues raised at this highly creditable event reach the point of affecting corporate behaviour, however the view that the market would not return to a position of strength until 2016 may give further encouragement to the need for change argument.