Time for a Second Box Revolution: Maersk

Are we seeing a second container revolution taking shape? Eivind Kolding, the chief executive officer of the world’s biggest container shipping line, who was in Singapore recently, believes if it isn’t, it is high time to trigger the movement on a worldwide, industry scale.

Kolding has taken the task of initiating change upon himself. The Danish shipping line has been in the forefront of significant shifts in the way container shipping has operated; one of them being the progressive increase in vessel size. Not surprisingly Maersk Line has been the first to order the first batch of the gigantic 18,000 TEU ships that could not have been fathomed even until recently.

Revolution, as we understand it, is a grand term implying changes of epic proportions. We talk of the French Revolution or the Russian Revolution or the Communist Revolution in China in the political arena and the Industrial Revolution or the Internet Revolution to express tectonic shifts in economies and societies. A revolution, good or bad, rips open an existing foundation and transplants it with a new and entirely different base. Over the years the term “revolution” has been bandied about with gay abandon tagging it to events and occurrences not really measuring up to the stature for which it is intended.

So, what is the revolution that Kolding is envisaging? He rightly pointed out to us in the media that the invention of the container over 50 years ago was revolutionary. The steel box in which consumer goods, break bulk and even dry bulk could be packed, sealed and stacked on deck, transported across oceans and on road and rail right up to the doorstep of the receiver’s warehouse, changed the face of liner shipping. It also facilitated the flow of global trade.

Container shipping is about 20 times more efficient than traditional liner ships, Kolding said. With 90 per cent of international trade in consumer goods and commodities moving in ships, the container revolution played its part in the extreme growth in global trade over the last 30 years that has led to prosperity worldwide.

“So it is not only helping shipping lines, but also the societies that we serve,” Kolding said. For those 30 years, he noted, the world population has grown by two billion people, still there has been 500 million less poor people. This tells us the true value of global trade. “A lot of that has been facilitated by the revolutionary invention of the container,” Kolding declared.

In the aftermath of the box invention, however, container shipping has not changed much. “When we look around us, customers have changed, businesses have changed, but container shipping is conducted more or less in the same fashion,” observes Kolding.

The hardware, of course, has changed. We have larger, better, safer and more durable ships with built-in environmental safeguards. Mammoth, automated cranes service these goliath ships. To take in big ships, approach channels and berths have been deepened and greenfield ports offering generous stacking and storage space have mushroomed. All this, however, is more a logical, technological progression to serve a compelling need. Certainly not revolutionary stuff.

“The question is since its inception how much has changed in the container shipping industry?” asked Kolding. “I would argue not that much,” he added.

He is clearly disappointed that compared to the changes in other businesses over the last 30 years, notably telecommunications and airlines, where on-line bookings have for the first time brought airlines and customers in direct contact, container shipping has lagged behind. And there has also been a sea change in the way packages are moving around the world with service providers even offering next-day guaranteed deliveries.

What irks Kolding is that shipping has been a mute, supine witness to the winds of change swirling around it.

Kolding has identified the contours of the coming revolution or more appropriately changes that need to be brought in if shipping is not to be stuck in the quagmire of stagnation. The three pillars of change are reliability (ensuring that containers are delivered on time), simplicity (one-click shipping as Kolding calls it) and environmental responsibility.

Not that these have not been identified before, but Maersk and Kolding have brought in a sense of urgency in terms of implementing these fundamental pre-requisites of efficient service and operations.

Through the release and dissemination of its manifesto for “changing the way we think about shipping,” Maersk hopes to pull the industry and the stakeholders behind it in initiating change.

“If we are not changing ourselves someone else will do it for us,” says Kolding.

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