Radu is the Managing Director South East Asia and Global Supply Chain Practice Head at Morgan Philips Executive Search in Singapore, specialising in logistics and supply chain executive search in Asia. He has been living in Asia for the past decade, across Singapore, Indonesia, and India, where he has managed a spectrum of senior level placements and provided support for a myriad of industrial clients.
Radu is also the host of the podcast series Leaders in Supply Chain and Logistics where he picks the brains of global experts, thought leaders and executives in all things supply chain on leading edge technologies, leadership stories and personal success habits.
Maritime Fairtrade (MFT): In your opinion, what is the outlook for the Asian shipping industry?
Radu Palamariu (RP):
More focus on Southeast Asia and less focus on China.
China is already a stronger consumer and less a cheap producer of goods. The annual GDP growth has been falling since 2010 and is now at 6.9 percent. The overall economy is slowing down. There is a strong shift to move production of labor-intensive products (apparels, footwear, textiles and furniture) out of China. This will further accelerate in 2019.
The countries in South East Asia with a good infrastructure are already getting more investments as businesses move their production and manufacturing here. Vietnam may be the biggest winner of this switch, followed by Indonesia, Thailand, Malaysia and Philippines.
The US-China trade war.
The US importers have paid the ultimate price in this trade conflict. Some of them made the final decision of moving production from China during this period. More businesses are considering the same option. The tariffs renegotiations are due to happen in April and May, but the impact is already clear for the trade balance in Asia.
Japanese motor supplier Nidec decided to move some production out of China. By doing this they are joining Panasonic and other companies, some Chinese. Most of them focus either on moving to Southeast Asia or Mexico. It is obvious that they are concerned that the tariffs will make the Made-in-China model too expensive.
Technology is on everyone’s mind.
The overall embrace of technology within the shipping industry will accelerate as there are multiple developments underway by both established industry players and new start-ups.
According to a survey conducted by PwC, digital transformation of shipping is regarded as the solution to their economic challenges by many shipping companies. One such important challenge is fleet utilization. One of the ultimate goal is crewless shipping; the idea of ships controlled from land.
Shipping companies have embarked on projects like box tracking, empty-container repositioning, document management, network design, and pricing; all in an effort to become more streamlined and tech focused.
Better meet customer demands.
Some shipping companies have started to focus on premium services. We can mention guaranteed loadings, faster unloadings, and guaranteed transit times.
Maersk has done a lot of work to become an end-to-end logistics provider. Their executives are very much focused on the end customer. One example is sectors such as fashion, automotive and reefers.
Here, reliability and issue resolution are of highest importance. The timely arrival of goods to make sure the assembly line is on point. Or to put a new fashion line into retail shops is the most important thing. Cost comes further down the list.
Customers have the power and if you want their business, you need to make them happy. This means that more streamlined service attempts by ocean carriers will continue and extend to other carriers in 2019.
MFT: There is a lot of concerns about AI taking over jobs in supply chain. What is your opinion?
RP: Yes it will happen but it will take time. Automation already is taking jobs, look at the new port of Singapore. I expect existing jobs to be redesigned and new jobs to be created. The automation of the yard cranes, for example. Crane operators working at the port no longer need to work alone. They can now work more efficiently as a team in the control centres.
People can do more high level jobs. Maintenance can be done through drones and hence people don’t need to risk their lives or health. Is that a bad thing? I would argue – no!
A recent report by Frost & Sullivan found that shipments of mobile robotics will rise from 4 million in 2012 to 25.4 million in 2020. MHI and Deloitte made a survey where 35% of respondents said they’d already adopted robotics into their supply chains. They are planning to raise it to 74% in the next six to 10 years.
Automation is taking hold in nearly every sector of the economy. Enterprises would be using robotic process automation (RPA) to reduce costs, improve productivity and increase compliance. We have had robots in the supply chain for decades. AI and machine learning enables these robots to become even smarter. They can even teach themselves to operate. The need for human intervention will be reduced.
Both machines and humans are essential. In supply chain planning and inventory management, the combined power of humans and machines will create more value for organizations. AI, combined with advanced analytics, will enable supply chain planners to make more strategic decisions. Less time will be spent on reactive problem solving.
The importance of humans is still there, one that will never stop. The combined strength of the two will better enhance business performance. Both in quality and time management.