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THE
damned if you do, damned if you don't paradox
in megaship building may well be resolved
if we think outside the box - that is, look
at the factors and not in ways we so frequently
do - closing off promising channels because
they seem impossible in light of our experience.
We
all know the basic dynamics - one must build
bigger box ships to bring down slot costs
to compensate for falling rates brought
on by overcapacity that more and bigger
boxships create.
The
way out is typically seen as kick-starting
European growth and/or having a more consistently
robust US recovery. But let us instead contemplate
the current situation as a "new
normal", together with "low oil"
in which not much changes in the two consumer
powerhouses.
More
cheerfully, there is a highly exploitable
new affluence developing well beyond the
developed world - that is to say pretty
much everywhere else - south Asia and south
East Asia, South America and Africa, not
to mention China.
But
by deploying our old operational paradigm,
there is no way out. Just as the father
of the container revolution, Malcom McLean,
contemplated the wastefulness of breakbulk
handling, and conceived of containerisation,
so we must today. What McLean did was bring
down costs per stock-keeping unit, and we
must do the same today and to the same extent.
But
not so much in terms of hardware. That's
pretty much been taken care of with the
megaship, though more work could be done
on shoreside automation of container handling,
but the problem is less technological and
more a problem of man-made institutional
barriers.
The
problem is also the regulatory, the red
tape jungle, erected by largely parasitic
agencies like the United Nations, and a
host of environmental busy bodies, health
and safety agencies, inspectorates and legions
of compliance officers - both in-house and
out-house - whose only contribution to the
supply chain is the profit sucking expense
they impose.
What
must be challenged is the rise of the scaredy-cat
world which elevates every conceivable fear
and risk to such importance that they must
be regulated and policed by expensive agencies
and technology.
This
is a direct attack on the free market where
deals would be otherwise be contracted between
consenting parties. Today, the process is
now beset with regulators who make the choices
they would make if they were theirs to make
and they end up being far more expensive
than taking the risk and suffering the consequences
if things go wrong.
If
the worse is not the surest, then ensuring
against the worst creates waste. So much
so that the chances of accessing these new
emerging markets is reduced if not eliminated
if we are ruled by the fusspot world of
fashionable fears. To regain access to borderline
markets, we must identify and eliminate
those costs, and more importantly agencies
that impose them.
What
is required is a return the fundamental
principles of the container revolution -
that which was first realised by Malcom
McLean when he saw the waste of breakbulk
cargo handing on the New Jersey waterfront.
McLean
saw what can be seen today, a different
approach that would radically change cost
structure of shipping. Reduce cost and you
increase access to goods and services poorer
people would not otherwise have.
Then
as now, the way we do things seemed fixed.
Throughout most of the 1960s and most of
the 1970s, cargo handling seemed immutable
to even intelligent people, who doubted
the efficacy of the shipping container even
into the 1970s
And
these agencies that impose costs, do so
with impunity, usually based on various
unexamined assumptions under the rubric
of health and safety or the environment
or gender equality and lately national security.
All of these, under such buzz words
as "corporate social responsibility"
have gained powers of near invincibility.
We
could start with Maersk Line CEO Soren Skou,
who spotted a big problem, the ceiling
on crane moves, giving it a maximum of 40
per hour.
But
is this a hardware problem. How is it fixed?
Do labour unions dictate the pace of work,
or are there technical barriers on how fast
today's technology performs? Perhaps wholly
automated yard and quay cranes could double
or triple throughput operating 24/7. But
one tends to quail at the thought of how
unions would react and what mayhem they
would cause, and immediately drops any idea
of reform.
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