Ongoing dramatic change has been the hallmark of the shipping industry in recent years. In a time of heightened commercial pressures, unprecedented technological innovation and shifting macroeconomic realities, owners and operators face the challenge of an industry that seems to be in constant flux.
These shifts are forcing changes in the way shipping companies run their businesses. At the micro-scale, this may be through the introduction of new procedures or technological developments, such as blockchain or digital bills of lading. At the macro-level, it could mean changing operating patterns to work new trade routes created by regulatory or political factors such as China’s Belt and Road Initiative and the re-tightening of sanctions on Iran.
Regardless of size or scale, companies adjusting to this new reality are facing clear, material challenges across the full span of the supply chain. And yet, if you look closely, there are reasons for optimism.
The dry bulk sector, after reeling from some of the worst years in memory, has a renewed sense of optimism buoyed, in part, by three year high growth in demand for bulk shipping. At the same time, container lines seem to finally be on a potential road to recovery, after years beset by losses, layoffs and sluggish growth rates.
No matter what the outlook, one message is clear - the push for greater cost efficiencies is critical, and it is here to stay. New purchasing decisions have deep ramifications for the entire industry. And as the signs of robust recovery begin to take hold, owners and operators are placing greater emphasis on their own supply chains, as a first point of reference as they seek to rationalise their operations.
The focus on sustainability has changed the nature of the relationship between service provider and customer. For ship agents, priorities have shifted: as one of the cogs in the ‘engine’ of global trade, it is more important than ever for them to have their finger on the pulse of the industry.
The way agents operate is evolving. Now relied on more frequently for their expertise, they must be prepared to help customers navigate our complex industry – be that in keeping in tune with shifting commodity flows, or advising on a growing litany of operational and environmental regulations. Ultimately, competent and credible agents can fill this gap and meaningfully contribute to profitable operations.
In some ways, nothing has changed: ship agents have always been integral to the smooth operation of the supply chain. But in the ‘new norm’, there are several ways in which ship agents can add value and streamline operations.
Procurement decisions related to ship agency work are increasingly being decided by the agent’s ability to demonstrate two key attributes: a good understanding of the industry and its changing landscape; and, a proven ability to deliver good service – sometimes despite adverse conditions.
The first step is creating and maintaining excellent relationships with customers, coupled with defining the agent’s role at the outset. Service portfolios vary widely across the industry, so it’s important to invest time to work with customers at the beginning of the relationship to define the agent’s role. For GAC, it’s a familiar approach.
It is also important to craft a bespoke, quality service rather than a ‘one-size-fits-all’ solution. This, taken in tandem with a recognition that customers may well begin to place ‘non-traditional’ demands on their agents, can lead to more profitable operations for both parties. For example, for customers in the container trades, GAC provides husbandry and ship handling. They are services which require GAC’s experts to take a holistic approach and meet all the needs of ship and crew whilst in port. On occasion, that can mean conducting more technical activities at the line’s request, such as re-measuring out of gauge cargo, re-placarding hazardous cargo, or inspecting containers for suspected damage. To deliver good service, all of these operations require intimate expertise of local and global regulations, and a firm understanding of the lines’ business best practises.
Demand for such a service mirrors cost reduction measures operators are taking in response to wider market conditions. For container handling, demand in this area reflects the sub-contracting of tasks which lines traditionally performed in-house.
Adapting to change
Trust is key for owners looking to retain the services of an agent amidst current market conditions. Being able to obtain clear assurance of an agent’s ability to keep vessels on schedule and compliant to the strictest regulatory standards is paramount, as even the most minor of breaches in these areas can carry a significant financial impact.
Such trust is often hard to establish at the outset of a new business relationship. But the best agents understand that it can be inspired through demonstrated transparency in their approach and capabilities. In this way, they can actively mitigate risk and give customers the assurance they seek that their vessels and cargo will be handled to the very highest standards.
GAC works hard in all of these areas, and has forged a strong emphasis on supplier management, ensuring all parties involved are fully compliant with every regulatory and operational element of health, safety, finance and legal frameworks. Meanwhile, an increasingly global industry has – perhaps paradoxically – now driven a direct demand for local knowledge and capacity.
Being able to demonstrate the twin advantages of global presence and local understanding is key – ship agents across the industry must work hard to ensure that customers are receiving the very best ‘agent specific’ experience, rather than a general ‘port specific’ experience. The agent should be able to deliver the same standard of service at a range of different locations if they are to maximise their chances of doing more business with the same customers.
Trust, compliance, and ubiquity of service offering now define best practice for ship agents across the industry. Adapting to this new reality will be fundamental to any agents looking to succeed in the modern industry.
Ship agency must also be recognised for what it represents: a multi-faceted operation which relies on trusted and experienced teams who command a local presence, exemplary training, financial stability, international resources and a robust safety and compliance culture.
The coming years look set to be ‘interesting times’ for our industry. The key driving trends are unlikely to subside in the near future, so it is only by recognising the need to evolve can businesses survive and thrive. And in an industry where trust is a cornerstone, agents who can successfully adapt whilst nurturing long-term relationships with customers will stay in step with the industry, rather than being left behind as it embraces its new future.
Posted on: October 1st 2018