Logistics And Frieght Forwarding

Amid low global growth, shipping companies need new approach

Throughout history the greatest businesses were creators of the market. Merchants created trade routes, maps, and bridges for communities to harness new markets. They instigated, led wars, or brokered peace agreements to create and safeguard trade routes to new markets.

The Opium Wars and the Anglo and Franco-Dutch Wars were known to have been sponsored by merchants who sought to remove trade constraints. The efforts of many explorers like Christopher Columbus and Marco Polo are known to have been initially sponsored with trade motives. Facebook’s recent attempt to launch a satellite over the African continent was not entirely a cooperate social responsibility exercise as it may have been showcased, but a calculated market leading initiative with the intent to create an enabling environment to harness the economic potential of billions.

It sought to create and present itself with opportunities into an untapped market and thereby ensure its future market leadership and survival. Like Facebook, shipping companies have an expansive reach all over the world. They wield unbridled power to connect producers and consumers.

They are in direct touch with the drivers of the global economic engines; they know the shippers and the consignees. Countries depend on them to move the efforts of their labor in the goods, or bring essential goods home. They are the spine of international trade and have enormous power over national budgets.

With this power, shipping companies ought to play the key role of facilitating and enhancing global trade. They are not to stand idle and become scavenging beneficiaries of an improved global economic climate. They must not abandon this immense power and recline to their traditional role as mere carriers who hunt down the smell of cargo and only show up when the goods become available.

Hoping for markets to return is not necessarily a viable strategy to sustain an industry; the waiting period will drain assets and talent to the bone. In times such as now, when inward-looking isolationist policies are brewing and hampering politicians resolve for international trade deals, standing by aloof and aligning resources heavily or entirely towards internal enhancers could lengthen the wait period and hurt gains made in the industry. If shipping companies are to survive, grow and remain sensitive to the vagaries of the real global economy, they must perform more than just their inward looking role of providing efficient transportation services.

Shipping companies ought to venture into unchartered waters, and make the market happen. Global trade has been at a standstill for several reasons, but global full employment is certainly not one of those reasons. Opportunities exist to cooperate at various global and local levels to crank-up the global production machinery and induce untapped demand.

In this role shipping companies would deepen relationship with producers (exporters and shippers) and buyers (importers and consignees). They would obtain seats at their clients’ table and be respected as international trade facilitators. They would share their knowledge of global and local market changes as their ships and agencies traverse across the world.

They would be prepared to be matchmakers, connecting shippers and consignees. They would be smart to identify opportunities in the market and share with their clients and associations. They would truly own clients’ supply chain processes (not just forwarding and customs brokerage functions) at origin and destinations.

They would develop interactive technologies, which allow clients to be part of the cargo transportation process from booking to delivery. They would lead the nurturing of relationships with and among international trade partners (e.g. banks, government apparatus, trade associations, etc.) Although protectionism is not the root-cause of the slow-down in global trade, it has been one of the visible outcomes of the measures countries have adopted to shore-up economies due to the slow-down in the global economy.

The IMF and World Bank have both suggested the current pace and gestures of protectionist and isolationist policies could break the global economic engine if not halted. Certainly shipping companies would be out of business if this were to occur. Hence it is imperative that shipping companies who are both witnesses and partakers of international trade, insert themselves into the global and country-level discussions where decisions are made, disputes are resolved, and laws are enacted.

And obtain a visible authoritative but collaborative presence in the process. They must seek and obtain seats at bilateral and multilateral trade negotiations. With centuries of experience supporting international trade, shipping companies should be confident and capable of pronouncing themselves into an advisory role on the concerns of international trade and step into the foray of suggestive guidance to allay international trade fears and eviscerate the underpinnings of protectionism by offering counterbalancing ideas, and unveil opportunities scouted in the global markets by their global offices.

Tactically, their global offices will have dual roles: promote and facilitate international trade, and canvass for cargo transportation services. The new role is a strategic assurance and a social promise of mutual benefit for the sustenance of the shipping industry and the communities reeling from, or fearing the repercussions of free trade deals. When shipping companies gain the trust of communities in this manner, they are in the unique position to influence trade policies.

In essence this is a call to action for liner shipping companies to embrace strategies and tactical plans to venture into a global trade facilitation role in addition to their traditional mainstay of carriage of goods.

It is a call to assume a more pronounced role as rainmakers and not just efficient rain harvesters.

Kwabena Apau-Kese[1], Ph.D., MICS, MBA, is a international finance, accounting, operational risk, technology, sales, and business development professional.


  1. ^ Kwabena Apau-Kese (www.linkedin.com)

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