I am inclined to think that there may be less to Maersk’s deal with Alibaba than meets the eye.
Yes, very big online platform ties up with very big liner shipping company to provide an electronic booking service. So Chinese exporters wanting to move LCL shipments can, if they are customers of Alibaba’s OneTouch service, lock in a freight rate on Maersk by paying a deposit online.
It is very easy to see what is in this for Alibaba – it gets them one jump ahead of Amazon in the battle of the big internet trading platforms to occupy the territory known as logistics.
It is easy to see what is in it for Maersk. It is a blow at the forwarders. “See, we don’t need you!”
“Our giant computing power can talk directly to a trading platform’s giant computing power! Tremble in your boots, O un-loved forwarders who have been pocketing some of our freight revenues for doing nothing much except answer the telephone!”
For in the eyes of vessel operating common carriers, forwarders who do not own the hardware “toil not, neither do they spin”.
Gosh. So shippers can now book space in just the same way that they have been able to book themselves an airline ticket for the past several years. Permit me to be underwhelmed.
“Yes, you will say, but this is only the start! Wait and see where this will lead! This will be as big as social media in a few years!” It may indeed become so, but when it does, it will not look like this – a tie up between a giant trading platform and a giant shipowning company, both of them quasi-oligopolies.
In this business, the small guys – and they are legion – all know that the big guys are out to exploit their size to the fullest extent possible, and the small guys stay in business by making quite sure that they don’t. The point is that the collective brain power of the small guys is vastly greater than the brain power of the big guys, who run the risk of looking a bit like a diplodocus surrounded by rodents.
The power to lock in a freight rate by using the internet is not really such an advance on the power to lock in a freight rate by picking up the telephone, and it comes with the rather clunky aspect – which we might even call a drawback – that a deposit has to be paid each time a freight rate is locked in, whereas the user of the telephone can make use of that useful custom, commercial credit.
There certainly is scope for booking space on the internet. But the idea of simply locking in a freight rate is unattractive compared to what must happen next – not simply booking a flight on your chosen airline’s website but flicking through SkyScanner, comparing Meerkats, and finding, not the deal that the liner dinosaur wants you to have – you know this isn’t the best – but the best deal in the market at that moment, with any carrier or forwarder. That’s what’s coming.
I rather suspect that, inside the Blue Kremlin, there are second and third thoughts going on. This move is almost a declaration of war on the forwarders, but it is a very weak one. War has been declared, but almost accidentally. Everyone knows that liners hate forwarders. The hatred between the populations of the two neighbouring states had been whipped up for decades, and now an incursion into the enemy’s territory has taken place. Hostilities have started, and within Maersk HQ there will be quite a few middle ranking people, and a great many salespeople, who are wondering just how the war may develop, for it is certainly a fight to the death.
The forwarders have ample time to think over Maersk and Alibaba’s demarche and come up with – not one response, but tens of thousands of responses. Is your money on diplodocus, or on 10,000 small, cunning, omnivorous, warm blooded, furry creatures? I think I am on the side of the small and cunning. I’m betting, not on Ali Baba, but on the 40 thieves.