What has the maritime industry learned from the recent triple crisis of pandemic, supply chain bottlenecks, and Russia's war in Ukraine? And what does this imply for globalization? These issues were discussed in a video call hosted by shipping line Hapag-Lloyd, where four senior industry experts presented their positions on various core industry topics, and delivered their views on the challenges emanating from a rapidly changing ecosystem.
The participants were:
Liz Door, Senior VP, Chief Procurement Officer of Whirlpool Corporation.
Peter Tirschwell, VP Maritime, Trade & Supply Chain, S&P Global Market Intelligence
Siemons Bodewijn, COO, Port of Rotterdam Authority
Rolf Habben Jansen, CEO, Hapag-Lloyd
The video call was moderated by Nils Haupt, Head of Corp Comm, Hapag-Lloyd
From six months to six weeks
There has never been anything similar before. For three years, one crisis has followed the next. And the industry? It has not only survived but has also announced one record profit after another. At the same time, logistics has become more resilient, more responsive, more agile, and more focused on product and service quality. “Formerly, we needed six months to plan a new shipping service. Now it takes only six weeks,” Rolf Habben Jansen, CEO of Hapag-Lloyd, illustrated the industry's ability to quickly adapt to changing circumstances. This was echoed by Siemons Bodewijn, COO of the port of Rotterdam, who spoke of “remarkable progress achieved in shipping by the exchange of data between different industrial actors, which led to a much higher transparency of our industry.”
Such - in a nutshell - was the basic common ground shared by the experts.
The industry is facing a fast-changing ecosystem
However, it also became clear that the good old days, when customers could rely on just-in-time delivery of their goods, are over. Restoring this loss of confidence could take a very long time, Peter Tirschwell gave to consider. Mr. Habben Jansen, meanwhile, pointed out that despite many hiccups, ocean shipping is still the most reliable and environmentally friendly way to transport goods over longer distances. The manager appealed for understanding among customers by saying: “It is hard to build trust when you are confronted, almost every week, with sudden surprises that require new and quick decisions.”
Globalization, localization – or both?
As far as the future of globalization is concerned, there was widespread agreement among the experts that a new phase has begun with still blurred contours.
Touching future investment decisions of western companies, the times when enterprises put most – if not all – of their eggs in a single (Chinese) basket, are fading out. Senior Whirlpool VP, Liz Door expects a growing decoupling trend leading to rising localization of production. This is evidenced by an increasing number of European and North American enterprises, but also firms from South Korea, Australia and Japan, that are winding down their activities in China. The implications for the supply chain are: shorter geographical distances to be bridged, with transport times and deliveries becoming more predictable, she illustrated. However, decoupling is an AND, not an OR, she gave to consider. The decoupling trend is only in its infancy, but it is gaining momentum through Russia’s war in Ukraine, and the massive threats that the Xi Jinping regime is progressively building up against Taiwan.
Intelligence services decide on investments
Ms. Door’s stance was supported by Peter Tirschwell who spoke of a new risk landscape, with the industry doing business in China tending to increasingly knock at the doors of security to assess the risks of investing in China. Nobody can seriously predict the outcome of the mounting tensions, but meanwhile the issue is on the mind of most players, he said.
His words, as well as those of Liz Door, illustrate a mental paradigm shift away from the uncritical globalization policy of the past two decades to a much more cautious investment, trade, and transport strategy. According to the motto: It is wiser to have two suppliers in different countries for a specific product than to rely on just one (Chinese) partner.
No one-sided dependency
The dependency of western enterprises and consumer markets from China is illustrated by the fact that nine of the world's largest ports by tonnage are located there. The only exception is Singapore, positioned fourth. Rotterdam, the largest European port, is only ranked tenth. However, Mr. Tirschwell added to this that dependency is not a one-way street. “China needs to ship its goods to the international markets, but is also dependent on a constant flow of supplies to keep its own industry running.”
Finally, Rolf Habben Jansen took up the cudgels for globalization and made a recommendation: “Globalization eliminated poverty in many parts of the world. This is the great merit of the international division of labor and the exchange of goods across continents. But now it would be time for a strategy of diversification of production, by focusing on Vietnam, Africa, or other regions.”
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