Constant Change—Constant Risk of Disruption

Change management is a discipline all its own. Generally, people in charge of change recommend going slowly to give people time to adjust, since people, generally, are not big on change. The business world, and manufacturing in particular, must deal with constant change, which results in constant risk of disruption. The supply chain in a manufacturing operation is an excellent example. Nothing ever seems to stay constant, even if the quality assurance people would like to eliminate change.

So much of manufactured goods, supplies, and raw materials are delivered to factories after they have transited one or more waterways via ship in containers. Deliveries continue through heavy duty tractors pulling the containers on chassis or on trains with some containers double decked. Over the last decade, the cost of a container has varied from as low as $400 in 2016 to ship from China to Europe to over $10,000 in the middle of the pandemic. Alas, all is not downward. It is currently running between $3,000 and $4,000. It has been impacted by attacks in the Red Sea, droughts in Panama limiting the size and number of ships to transit the canal. Higher temperatures have opened routes through the arctic at times. As a result of living through this with manufacturing clients the last decade, I found some interesting insights in a report just published by the Digital Container Shipping Association (www.dcsa.org) and available at https://dcsa.org/newsroom/state-of-the-industry-container-shipping-industry-2024. Here are a few charts and my thoughts on them.

This first chart gives a good picture of the different organizations involved in getting an ocean container from point A to point B. 

This next chart shows the somewhat laborious activities involved in coordinating the shipments. Shipping has been around for millennia, yet so much of it has not taken advantage of the type of improvements in moving data that the trucking industry employs. There is much room for improvement compared to using email and phone.

An earlier chart in the report, provides a detailed view of the flow of information and the scheduling process.

Having looked at this, and having lived through the last 2+ decades of the implementation of telematics and electronic logging devices in trucking, the data in Chart 5 came as no surprise to me. Who gains from the addition of electronics and data interchange? Who pays the bill for the equipment and its installation? Who pays the monthly cost of the subscription? The shipping companies and carriers have to pay a substantial portion of the costs, and receive minimum benefits from it. To increase the use, everyone needs to find a few people that can drastically reduce the cost of fuel and the amount of time the ship is waiting to justify the benefits to carriers.

I suspect the freight forwarders do not want to invest the money and time to change their process to make use of automated EDI (Electronic Data Interchange) to speed up things. Perhaps they think it would both cost money up front and lose them money in the back end. That is a good example of a fear of change.

Insurance companies have many things to worry about, and they want proof “after the fact” not “promises to come.” Even with safety devices in trucking, it is exceptionally rare to get an insurance cost reduction for installing safety equipment. Only after they see the accident claims go down will they give a discount.

Authorities also have so many other things to worry about with unions, in particular. Unions do not want to see more automated equipment added at docks that threaten to reduce the time and labor needed to move containers from ships to trucks and rail cars.

Justifying change is difficult. Paying for change is a challenge. Implementing change is tough.

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