Navigating the changing tides of perception takes openness and a conviction in values, argues Nick Arthur from BLUE Communications.
Structural challenges are altering the big picture for shipping. Freight rates and secondhand values remain low, while, despite a slowdown in newbuilds, oversupply remains an issue. The industry continues to lick its wounds and collectively hope for an upturn in global trade dynamics, which – unless it ends before 2021 – will soon constitute the industry’s longest economic slump since records began.
Ramifications can be seen well beyond the yards. Many of the large German shipping banks have billions in outstanding loans at stake; and as we saw when ING and ABN Amro withdrew funding from Flinter Group and Abis Shipping at the end of 2016, forced large-scale consolidation is a reality. Numerous banks have exited the market completely.
Rationalisation is urgently needed in many sectors, but the spectre of Hanjin haunts every proposed merger or acquisition. As Janet Porter wrote in January’s Containerisation International, one of the major reasons that 2M ultimately chose not to admit HMM as a full member was due to concerns from Maersk and MSC’s customers about the prospect of their cargo being loaded onto the ships of a line that’s perceived as “financially vulnerable.”
Conventional wisdom suggests that there’s no smoke without fire. It’s wrong; many things will smoulder long before reaching their ignition temperature. The challenge is knowing if or when they’ll ignite. Who really knew, for example, what was going on behind closed doors at Rickmers or Hanjin?
Without the transparency that comes from a credible communications strategy, there will be a natural opacity to what the public knows. If limited knowledge prevails, tensions rise. Risk – whether real or perceived – multiplies, and negative assumptions go unchallenged.
In such a climate, reputational challenges can easily be interpreted as a sign of commercial instability, and business can gravitate towards companies with stronger reputations, that embrace transparency, and who are proactive in their communications. This can be no better illustrated than by Maersk Line’s recent willingness to ‘stand up and be counted’ in communicating around the cyber-attack that decimated its ordering systems.
Times like this require a steady hand on the tiller. Our industry may suffer from cyclicality, but that doesn’t mean it will be predictable. Navigating the changing tides of perception takes openness, conviction in values, and the ability to see that sticking ones head in the sand, regardless of the challenges above ground, rarely ends satisfactorily.