Aug 15 2005
A new report released today by IBM Business Consulting Services shows that near-term profits in the market for container shipping services are at an all-time high and the market's growing at 8 to 10 percent per year. However, increased market growth and continued customer demand for greater reliability at lower total cost are putting considerable strain on existing industry infrastructure, challenging companies to find new ways to remain competitive and responsive.
The report finds the greatest long-term challenge for container shipping lines in meeting and adapting to new market forces is the potential competition from package delivery providers like UPS, TNT and DHL. They possess the type of business cultures, systems and processes needed to offer the product reliability and visibility demanded by shippers. Compounding this is the existing business culture of many container shipping lines, which are simply not culturally predisposed to modify their mantra that asset utilization is king.
A decade from now, land-based providers will have acquired the capabilities needed to offer door-to-door services with parcel industry standards of reliability -- largely in collaboration with some container shipping lines that are primarily port-to-port providers. Unless existing lines respond to meet customer demands, the package providers will redefine the structure of this industry.
Based on industry pressures and trends, the industry will be quite different in ten years' time. Shipping company customers will continue to seek more integrated providers above and beyond simple point-to-point transportation providers. These customers will demand a high level of visibility and reliability similar to that provided by packaged delivery producers. As a result, significant opportunity exists for shipping container companies and packaged delivery providers to redefine the industry.
"Significant forces are at work in this industry. To remain competitive, shipping companies must rebalance their businesses by offering more time-definite services," said Derek Moore, Associate Partner with IBM Business Consulting Services and an author of the report. "The key to this transformation will rest on an organization's ability to adopt a culture that embraces a business model which more evenly balances traditional asset optimization with product reliability and visibility. This will need to be supported by different business processes, organizational design and supporting business software applications."
The report assumes that trade liberalization and globalization will continue to fuel industry wide growth, in spite of record oil prices and systemic risks such as terrorism, port shut-downs and strikes.
http://www.ibm.com/services/