August 31, 2018
Why our bet is on collaboration.
Abstract: Our industry is seeing fundamental changes. Technology does enable new business models and challenges existing ones. Automation will impact traditional processes and eliminate simple information arbitrage through asset light models. Virtualisation of services will change the way logistics companies are organised. Differentiation in the market will be based on other criteria and the traditional value proposition will need to adapt. Approaching these challenges alone and on a local or regional level only, will not suffice, a collaborative approach with a global perspective must be the answer.
Earlier this year, we started an initiative with OceanX, the foundation of a new network, within which our intention is to assemble great companies and people that jointly find new ways to approach common challenges and benefit from each others specialised strength.
For the perceived role of a network in the shipping and forwarding industry is somehow predetermined by those already in existence and which have been a facilitator for international bilateral cooperation for many years, we continue to meet misunderstandings.
What is happening?
A great shift has started in our industry, as technology is providing new tools to leverage communication, information flow and data analysis. While fundamentals of our business, have not changed (as we continue to „move stuff from A to B“), the tools to do that or the ways we interact in doing that with our customers or partners throughout the supply chain, are shifting.
Similar as in other industries (e.g. banking and insurance), these new technologies allow to question old practices, as services have the potential of what we call „virtualisation“. In fact, services that traditionally had a strong local component, be it through physical document flows, relationship sales, preferred communication means or business custom, have the opportunity to be conducted in new ways in the future. This is also challenging the traditional ways of overseas cooperation, be it between own branches or international partners.
The tech enabled consumer, that is driving innovations in retail and the last mile, is also an employee. The younger generation is pushing the gig economy, questioning the traditional place, means, ways and measurements of work, at a time when roles and tasks are changing.
In this environment, the traditional NVOCCs, freight forwarders and logistic companies as organisers, coordinators and information centres in the supply chain, will have to evolve.
We are convinced, that this evolution will happen in two directions: competence and capability.
- Competence: Specialisation on the basis of know how, experience and ability, creative solutions, delivering value by consulting customers, which can be best described in an advanced 4PL role.
- Capability: Focusing on own product and asset based, specialised abilities, in the role of a carrier. While carrier in our understanding involves any role physically touching, storing, handling and transporting cargo.
This requires a focus on individual strengths and development of those, to be competitive. And we are certain that it needs collaboration of these abilities, across individual companies to achieve coherent and strong end-to-end products and services.
What is OceanX for then?
We believe that we should embrace what is coming and actively adapt towards it, grasping the opportunities within these changes. Protection of a dying business model never worked, reinvention will be required.
The intention of OceanX is to build a community of logistics firms and NVOCCs in the seafreight sector that do differentiate themselves through leading capabilities and competence in specialised areas already today. In fact, a peer group of exciting companies and individuals, interested in exploring new ways to work on multilateral solutions for some of these challenges and build on their individual strength.
While OceanX will provide all the basics, of a traditional network, from payment guarantee to a network portal, in order to facilitate and foster bilateral cooperation between members, its intentions go well beyond, with a strong focus on strategy and future success factors.
For example, one of our aims is also to build the bridge between those mastering the available technologies and those with the need for its application. Becoming a neutral filter through the jungle of innovation and hype, uncovering those with interesting solutions and introducing them to our members. Large, global organisations in the industry can build their own incubators, while we intend to create it in the crowd we assemble.
With a lot of the efficiency focus of the past becoming delegated to artificial intelligence and a level playing field on the tech side looming in the longer term, differentiation in the future, will also be a competition of creative ideas. Assembling successful entrepreneurs, with different backgrounds, expertise and nationalities in our forum, it is at the core of OceanX to pick up interesting needs and ideas that go beyond one organisation and can have multilateral benefit. OceanX as a neutral platform, thereby becoming the driver for those ideas, turning them into solutions and initiatives that members can opt-in to be part of. We know that there is no one fits all solution and thus the projects springing from the network will have different supporters at times.
Defining service differentiation for the new age, we aim to establish standards for business excellence in certain specialty fields with our members. In a time when customer experience and convenience have become key differentiators in the end consumer world and partly last mile logistics, we try to jointly conceive ways of defining it for B2B shipping and logistics services.
The fundamental change of sales in our industry, the development of digital sales channels and the ascent of freight marketplaces are creating a new omnichannel environment for shipping. Sales control is no longer limited by geography. OceanX intends to help navigate this new environment, supporting its members to seize opportunities for reaching new customers in different ways and leveraging individual strengths to serve them.
One of the key longterm challenges will be that of overseas networks themselves. Internationalisation of logistics firms and international cooperation in times where services turn virtual. The traditional model of delegating sales and handling to an overseas cooperation partner or branch office will need to evolve, as service offering and communication with customers move increasingly online. What is the value and structure of a branch and what will it be? How important is brand identity for customer perception, when it lastly is shaped by company culture, people and product/service quality? Those are only some of the questions for the time to come, that push the strategy process, beyond the limits of the own organisation.
We see collaboration as the way to finding many of the answers and created OceanX to become the platform for it.
Some things will come faster, others slower, some surprises will happen too. Anyway, uncertainty is part of our time but its certainly easier faced together.
Our bet stands, what is yours?
OceanX is a non – exclusive global network of leading ocean freight providers and NVOCCs dedicated to delivering bespoke innovative solutions, in particular on FCL services, LCL consolidation, dangerous goods and chemical logistics, temperature control, fashion logistics, as well as project cargo handling.