High seas distress

Innovative leaders will play a vital role as global shipping steers through roiling change, especially during the hectic holiday season, Korn Ferry’s Ken Bloom says.

Ken Bloom is a senior client partner.

There’s trouble these days on the high seas for global shipping, with waves of delivery disruptions hitting just as retailers and consumers eagerly await the toys and goodies they hope to buy and give in the holiday season. While the sector woes the public most likely would notice—including $14 billion in goods marooned by the bankruptcy of an industry player—slowly are easing, the industry confronts deep, difficult, and increasingly apparent challenges: too many ships and mounting financial pressures.

Navigating these roiling waters will require both a new strategy for the industry, which can no longer expect rising consumer demand to keep it afloat, and the innovative, technology-savvy talent to execute it.

The tsunami of change struck the sector most recently when Hanjin Shipping Co., the world’s seventh-largest shipper, filed for bankruptcy in late August. Ports immediately denied access to Hanjin ships, keeping billions of dollars in goods offshore and unable to be offloaded, until a court ruling sheltered the firm for now from American creditors.

But no sooner was a respite reached in the Hanjin crisis when the industry was rocked by another development: A.P. Møller-Maersk A/S, the world’s largest shipper, announced it is splitting its operations into two—one for transport and logistics and the other for energy. The move, termed the biggest shakeup in Maersk’s 100-year-plus history, showed how shippers wanted to but could not avoid getting swamped by harsh realities: Global shipping companies are listing in one of the industry’s worst downturns. As the Los Angeles Times observed, “For the last five years, top shipping companies pushed forward with fat investments in more and bigger vessels, even as signs of trouble piled in. The goal was to shore up profits by doing business on a larger scale as global trade bounced back after the recession. But the new business never came.”

The challenges in shipping, of course, are part of big, broader transformations washing across the global supply chain: “omni-channel” retailer strategies, near-shoring logistics that decrease distribution distances, and technology that overhauls how truckers connect with customers and improve shipment tracking. Disruptions also include the increasing possibility that Amazon will increase its efficiencies by becoming not just a retailing force but also a logistics giant.

In shipping and other related supply chain enterprises, the temptation, especially in tough times, is to worry just about the sector’s hard assets—in this case mammoth ships, big trucks, and giant containers. But talent will be equally or more decisive to the industry’s future. As Korn Ferry found in a recent supply chain industry study, there’s tight supply and huge demand for logistics leaders who are innovative, creative thinkers who can blaze the path for the industry to survive and thrive again. These are the leaders who can generate new ideas of how to move goods better, faster, and more efficiently. As the sector clears its decks and charts a new course, it will be well served to recruit, retain, and develop these captains and navigators who will be crucial for shipping and logistics to move full speed ahead.