Shipping Big Coffee Enters The Fair Debate: "Industrial Chain Management" Is The Ultimate Way To Break The Situation?

"My God! Is it so low that everyone has no confidence in next year? " Mo Jianhui, President of China Classification Society, smiled bitterly at the voting on the stage.

At that time, the screen was a multiple-choice question: "what do you think will be the overall performance of the international shipping market in 2020?" Only 18% of the audience would choose the answer to "get better", and 39.2% will choose the "worse". The 38.4% who choose to maintain the status quo is 8.4%.

This event took place in the largest supporting meeting of the November 6th International Fair annual meeting 2019, and more than 1000 guests participated in the voting. Most of them were senior executives in shipping related industry chain. In the past 15 years, the international maritime year conference has voted to predict the link between the economic conditions and shipping market prospects next year.

Confidence is like gold, but the confidence of shipping people seems to be even worse this year. It is optimistic that only 13.8% of the economy will be next year, and only 18% of the shipping market will be optimistic next year. Since the 2008 financial crisis, the downturn in the shipping market has been going on for ten years. How to solve the problem? Despite the fact that shipping companies are actively seeking solutions to customers, COSCO chairman Xu Lirong believes that the solution of "industrial chain operation" may be more driving and fundamental.

Is this a fundamental solution to the shipping industry?

Rejuvenation of shipping industry

Before joining the annual marine year conference, many executives were relaxed. Because many enterprises have just handed in quite a beautiful three quarterly report card.

In the first three quarters of COSCO sea control, the company reported operating income of 111 billion 617 million yuan, an increase of 35.9% over the same period last year, and the net profit attributable to shareholders of listed companies was 2 billion 116 million yuan, up 145.3% from the same period last year.

In the first three quarters of the first quarter of the year, the business income of Merchants Merchants was 9 billion 810 million yuan, an increase of 34% over the previous year, and net profit of 720 million yuan to the parent company, an increase of 64.3% over the previous year.

The shipping giant Maersk's performance was higher. In the third quarter, the company's revenue amounted to $10 billion 55 million, and the profit before interest tax depreciation and amortization (EBITDA) was $1 billion 656 million. Revenues in the first three quarters amounted to US $29 billion 222 million, and profits before interest tax depreciation and amortization (EBITDA) were US $4 billion 249 million.

How good is the market? Shipping is, after all, a barometer of the economy. When the shipping market was good in the past, it was often caused by the increase in freight volume when the economy was booming. But in the past few years, this year, the overall economic environment has not seen significant growth. What is the reason for the good performance of the shipping companies?

Shipping people admits that reducing supply pressure is good. On the one hand, the new delivery capacity of the shipping industry has decreased compared with the previous year, and the capacity of dismantling has increased year by year, which has eased the supply pressure of the shipping market in the near future. At the same time, the new regulations of the IMO for 2020 years will come into effect in January 1st next year. At present, many ships are accelerating the transformation and installation of desulfurization towers, and the market capacity will be further reduced in the short term, and the entire transport market is also quietly changing.

The move may further stimulate the contraction of future capacity and indirectly increase the price of freight, thus driving the shipping market to pick up.

However, under such circumstances, executives of shipping related industry chain even feel that the market may be worse or maintain the status quo next year. Behind the contrast, it is thought-provoking. During the forum, the economic news reporters in twenty-first Century exchanged with the people in the field, and some shipping financial personages who did not want to be named said that the shipping market in the future would no longer have a cyclical performance like the past.

Ultimate solution path

In the ten years since the shipping market downturn, many shipping companies have made many efforts. If we seek to solve new technologies or optimize transport capacity, we will also seek breakthroughs in business mode innovation and so on.

"The solution of industrial chain operation may be more driving and fundamental." Xu Lirong threw a new train of thought at the annual meeting of shipping. He believed that in terms of the internal and external environment of shipping and the promotion of new technologies, deep cooperation in the industrial chain is the trend and trend of the times.

On the one hand, the globalization of industrial chain has become the trend of the times. According to WTO's 2019 report, more than 2/3 of the world's trade is generated by the global value chain. On the other hand, the structure of international trade is undergoing fundamental changes. Over the past 30 years, the proportion of intermediate goods in goods trade has increased from 30% to over 70%. This indicates that the world's major trade goods can no longer be produced and traded by single enterprises in a single country or region, and must be completed by cooperation among all nodes in the industrial chain.

Shipping industry is also promoting this deep cooperation. Combined with the new changes in the trade pattern, shipping services need to have "transport elasticity" between globalization and regionalized trade. In view of the end to end demands of logistics mode, shipping services need to provide "convenience" in the whole process; in order to meet customers' needs for finance, insurance and law, shipping services should be "integrated". These services upgrading is difficult for a single enterprise to accomplish independently.

Transport capacity is still high. The current utilization rate of dry bulk cargo and tanker is about 85%, about 80% of container ships, 70% of container ports in the next two years. The number of active shipyards is about 1000 ten years ago, and now it has dropped to 350. "In the past, loose enterprise relationship can not effectively transmit the supply and demand, and lead to the failure of the market regulation mechanism. The industrial chain management mode is just a kind of remedy." Xu Lirong said that with the deepening of the division of labor and intersections, the imbalance between the "node enterprises" will affect the development of each other.

He also pointed out that technology has provided the possibility of industrial chain operation. New technologies such as big, intelligent, mobile, cloud and so on bring new business opportunities while improving the efficiency of the supply chain. The technology such as block chaining has opened up the industrial boundaries.

Supergiant or birth

The actions of the logistics industry over the past two years also seem to confirm Xu Lirong's judgement. Each shipping giant is extending its industrial chain, such as Maersk's acquisition of Vandegrift, a well-known customs broker in the United States. The company has become the core shareholder of Ceva Logistics, a Swiss freight forwarding company.

COSCO Shipping Group is also clear about the layout of the whole industry chain.

In February of this year, Zhenhua heavy industries subscribed 110 million shares of A shares of COSCO offshore. After the completion of the subscription, Zhenhua heavy industry became the seventh largest shareholder of COSCO sea control.

In May of this year, COSCO Hai FA acquired 3 billion 800 million stake in Qidong lion lion energy container, Ningbo Shengping Energy Equipment Co., Ltd., Ningbo Taiping container Co., Ltd., Taiping container Co., Ltd., Sheng lion container management (Shanghai) Co., Ltd. and Qidong Taiping port limited company. The lion container is the second largest container manufacturer in the world. After completion of the acquisition, COSCO will become the leading company in the global container manufacturing industry.

After a series of buy and sell, COSCO seaborne ports now operate and manage 297 berths in 37 ports worldwide.

People in the shipping industry jokingly called "using their own ships to build their own containers, berthing them to their own wharfs, and loading and unloading them with their own quayside bridges". For COSCO, such a scenario has become a reality. Therefore, does the operation of industrial chain mean COSCO Shipping will become a giant in logistics industry chain?

"We are not doing all kinds of things, but we are keeping up with the downstream industry and doing a lot of cooperation in the service chain." Fu Gangfeng, general manager of COSCO Shipping Group, explained that COSCO is now building an open platform with shipping as its core, and all relevant industry chain partners are included in it. "It is more of a public interest identity to promote global shipping industry chain cooperation."

How to build an industrial chain management mode? Xu Lirong believes that there are three ways: the "supply and demand oriented" mode based on supply and demand, and the "property oriented" type characterized by equity relations, holding, acquisition, merger and acquisition, and vertical integration management. But he also admitted that the three paths had their own shortcomings, such as poor compatibility, insufficient role width and difficult to reflect the binding force. Xu Lirong said, in fact, the combination of several ways may be more common, and continuous innovation portfolio is the quality embodiment of industrial chain operation.