The majority of the products developed across the globe are transported by sea using container ships. The shipping industry is facing many challenges. One problem is money. The right ship finance solution can resolve this to a large extent.
Trust issues, use of outdated systems and overcapacity, combined with the use of substandard goods, inaccurate documents and human errors, have together impacted the industry deeply. Moreover, the industry is under pressure to look for newer solutions with more demand for accountability, transparency and responsibility in logistics.
The shipping industry endures significant stress due to the increased frequency of paperwork from writing and managing claims. Moreover, small issues can lead to errors in deliveries, shipment delays or increased costs. Additionally, armed robbery also remains a security threat faced by the shipping industry.
The shipping industry faces many other challenges too:
Challenges faced by Carriers
- Lack of transparency
Not having transparency is equivalent to bad tracking. Tracking issues are related to the movement of goods. Lack of transparency is related to miss handling data. For reasons such as shipment exclusivity, uncertainty or fragmentation, the shipper may not not know what the driver and the carrier are transporting. Security threats
One of the major growing threats in the maritime industry is security. Several incidents have happened in the past related to armed robbery and piracy on ships passing through the Gulf of Aden and the Somalia coast. These incidents have affected the proper implementation of trade relations through these routes.
- Environmental regulations
Maritime transport constitutes 2.5% of global greenhouse gas emissions. Carbon dioxide emissions alone count for around 1000m tons. If proper energy-saving technologies are not installed then these emissions may increase up to 250% by 2050. There is an increasing concern regarding the impact of global shipping activities over marine life and the greenhouse effect.
- Job cuts and labour disputes
Repeated strikes and labour disputes have affected the shipping industry. This has led to a significant drop in profitability. Businesses have had to face delays with product rollouts. The West coach dockworkers’ slowdown led to issues in 2015. This brought the shipping industry to a standstill. In Dec 2015, MUA (‘the Maritime Union of Australia) held one of Alcoa’s (a global mining giant) ships on the shore for around two months. These issues increase pressure on the supply chain and increased shipping rates.
Challenges faced by shippers
- Finding the best options
There are different ways to transport cargo. Many shippers are unsure of the available options. An in-depth understanding of the shipping industry will save time and money.
- Finding the best rates
Without the right tools or processes it will take more time to find the best freight shipping rates. Often shippers must make multiple phone calls or use contracts to find the best rate for a shipment. This problem can be resolved by having a transportation management system in place.
- Compared to the forecast, shipping demands are more
For import/export businesses it can be hard to find the right bulk consignment containers when it is needed most. This can lead to additional costs, delays, strained relations with clients and partners and potential penalties. Also, shippers of sequenced cargo flows or time-definite vessels have to face risks like delays, loss of business and performance penalties, where deliveries can’t be made on time. This makes them consider alternative solutions like air transportation. This can help to make on-time deliveries but comes at higher costs. These can be more than the penalties themselves. Finding the correct balance between the spot market and annual service is difficult and it can have a financial impact.
- Documentation
Shippers may not be aware of the complete process. From choosing freight classes to filling up the bill of lading, one error will lead to delays, surcharges or even customs holding the vessel. Shippers should have the knowledge to get the work done and make sure to stay prepared ahead of time.
One of the other biggest challenges faced by the shipping industry is corruption. Most companies in the industry have effective policies to fight against corruption. Still, corruption remains. It ranges from false checklists and certificates to offering bribes for cleared safety inspections. In 2018, Maritime Anti-Corruption Network (MACN) (who won the 2018 Sustainability SAFETY4SEA Award) received more than 19000 reports related to corruption.
John Sypnowich, Chief Legal and Compliance Officer of The CSL Group Inc. & Chair of MACN, said “Regulation at the international, national, local government, and corporate levels is vital to tackling corruption. Where there is legal and policy ambiguity there is room to abuse the system. But action must go beyond writing new or more laws.”
Summary
Challenges are inevitable across any industry and shipping is no different. Innovative and well-thought out solutions will be able to tackle those issues to a large degree. It is important to understand that innovation can address those challenges and bring about new opportunities in the industry.
