Fundamental Dos and Dont’s in Shipping

 

 

Since the early days of civilization, the need to trade goods and services has been fundamental to the progress of humanity. Shipping has always been crucial in connecting raw materials with production and production with consumption as, despite the dangers, the sea is by far the most efcient means of moving large quantities from one place to an other. Since its humble beginnings, the need for faster, safer, and cheaper transportation has been a major driving force for innovation.

Shipping has gradually but constantly evolved to meet those demands from the early wooden oar powered boats to the modern steel foating megastructures.

This evolution did not occur overnight but took many intermediate steps, all of them requiring major adjustments by the companies that operate in the shipping sector.

Unfortunately, every evolutionary stage had its winners and losers, and while many companies emerged victorious some could not make the transition and disappeared.

Up to now, the stable periods between these stages lasted for many generations but as technological evolution is getting faster and the forces that push for change still exist, it is certain that changes in the future will come a lot quicker, and in contrast with the past we will probably see many evolutionary stages in just one generation.

As a frm we have been close to the Greek shipping industry more than 100 years global ly, 60 of these in Greece. The shipping industry itself changed a lot during this period. Some companies thrived during periods of change whereas others, equally successful operation ally or fnancially up to that point, failed. So, what do successful companies do differently?

Although there is obviously no recipe for success in shipping, we can draw some lessons learnt from the successes and failings of companies in recent Greek shipping history.

Here are, in my opinion, the most fundamental Dos and Don’ts in shipping:

1. Have a clear vision for where you want your company to be in the future, laid out in a specifc business plan broken down into medium and short-term periods. A company cannot let luck dictate its strategy and only by having a clear, and well-defned long-term plan, aligned with its strengths, will it ensure that it is not distracted and sidetracked. A decision to do one thing often means saying no to many other alternatives and this should not be done without considering the master plan as a wrong decision may mean a long term commitment in something outside the company’s zone of excellence.

2. Never dismiss an idea outright no matter how absurd it may initially appear. History of business is full of quotes from famous people who did not believe that a novelty of their era could later become mainstream or of many failed companies that were so convinced that they did everything right and missed once-in-a-lifetime opportunities. Adopting something new often goes against vested interests engrained withing the company which may feel that this new idea threatens their existence and sometimes the impartial assessment of an idea may be very difcult. The consequences of being left behind however are substantial - in some cas es, they are just monetary but in other cases where a company has fallen so far behind that its culture cannot adapt to the new normal, even money will not provide a solution. Every
innovation should be evaluated against the master plan and never dismissed outright be fore it is assessed time and time again as it becomes more mature.

3. Align the interest of the company with its major counterparties such as charterers and fnanciers and therefore remain relevant to them. Each such counter party has its own needs and goals and only by fully understand ing them can a company align itself with them and therefore tackle the changing future to gether with these important partners who provide its lifeblood. Equally important is for the shipping company to be aware of what its counterparties wish to avoid and therefore ensure that it does not make itself unattractive because of its insistence on previous practices. This can only be done through personal relationships based on mutual respect and trust and despite the ever-increasing importance of corporate governance and performance metrics, personal relationships still shape decisions, to a great extent. Being proactive and cultivating the sense of safety to the counterparty is fundamental in periods of change.

4. Engage and empower the next generation early on. Young people are often dismissed as “inexperienced” and are rarely entrusted with real authority in decision making. This is very evident in some successful but aging companies where the status quo is not easily challenged. Young people often feel left out and overshadowed and often grow detached and loose interest for the family ventures. And yet, the next generation is the key to business continuity. Young people can see a problem without the biases of the past and should always be listened to and their opinion properly evaluated. A company should provide a safe environment for initiatives to fourish, by providing good mentoring and giving its young generation opportunities to mature. This may be the only path towards continu ous success that avoids the all-too-common destiny of a company disappearing after its founder retires.

5. Leverage the knowledge of experts - there are few companies that have an in house expertise that is on an equal level to top class outside providers. An outside, top quality service organization has not only the knowledge but the experience to solve complicated problems very efciently as it is subjected to many different clients and their problems constantly. The cost of the expert can be recovered many times over as a tailor made and fast solution from the expert is al ways cheaper than an average and slow one from the inhouse. During the last few years, the Greek shipping industry has shown remarkable adaptability in a very volatile business environment. Economic crises, pandemics, wars, and other disruptions have rattled the world economy and despite what it was said at the time when these events happened, the Greek shipping industry thrived and succeeded. It did so not by coincidence but by staying focused, working hard and by combining love and passion
for shipping with the Dos and Don’ts that – in my opinion – defne effective leadership.

I am not certain what the shipping industry will look like in the next 60 years, but I am confdent that no matter what, Greece and the Greek ship owners will remain strong and leaders of the world trade.

Βy Costas Constantinou,
Managing Partner, Moore Greece
Global Maritime Leader, Moore Global