In my business, a mix of consulting with a smattering of writing, I’ve spent hours puzzling over the differences between things like carbon intensity and actual carbon emissions (explained succinctly and understandably on the recent Capital Link webinar where the replay is available at http://webinars.capitallink.com/2020/imo/ ). But, with decarbonization and that other D-word, digitalization, there are formulas (usually starting with the ∑ sign and then devolving into numerators and denominators full of Greek letters) everywhere, with new layers of experts and influencers circling around what was once a traditional business. 2020 will go down in history as a pivotal year on many fronts. Though paling in comparison to the horrible pandemic, here’s another trend: all the innovation percolating out there has given rise, by necessity now, to a different type of “middleman”. Unlike shipbrokers or even commodity traders, geography is not a constraint- it’s really what world you come from. So, now, there are buffers between the shipping folks and the environmental types and data scientists (more on that later).
From where I sit, as an “industry veteran” finally- it’s been a long uphill climb, there are tremendous opportunities to get into this new buffer zone. I’ve written quite a bit about decarbonization and the need for what are politely called “Market Based Measures” (MBM) to come to the fore, incentivizing shipping’s path towards lower greenhouse gas emissions. As a consultant on markets- hoping to keep my place among the various buffer boffins, I have quite a way to go. One example- just for fun, I’ve been reading through formulas- learning the difference between AER and EEOI (hint- look at the ballast legs) trying to wrap my arms around how to combine this with my interest in maps, or how to tie these in to the inevitable MBM/ carbon trading that’s moving in our direction. Freight futures, forward freight agreements (FFAs) and various swaps and options(with their quaint quant alpha and beta jargon) are just a warm-up of what’s coming.
But there are mixed views about experts, especially those not grounded in the business. Through the years, shipping folks, or at least those fellow veterans that I’ve been hanging around with, have learned to fear name-brand management consultants. At least that’s been my experience, as companies have been busted up, or led astray in one way or another by prestigious names. So it is that McKinsey has recently published a new article, with the title “Data will decide success in the next normal of bulk and tanker shipping.” The article is very well written, once you get past the sub-editors’ confusion between “vessels” and “vehicles” (whoops, sorry guys, wrong article). There is a lot to unpack here- and future columns will nitpick it just a bit more. What they seem to be after is consulting work in developing what they called Marine Operations Centers (abbreviated “MOC”- just like the predecessor of that onetime tanker giant in New York which operated very well, for decades, on instinct and market smarts). The MOC, a concept which the authors acknowledge has been highly developed in the container sector (hence the “vehicles” slipping into the article- which is not about car carriers or ro-ro’s), has not come to tanker and dry shipping in a big way. On the bulk side, ship managers, and a few of the more forward-thinking tanker folks, seem to be already steaming in that direction- though I question the authors’ implicit view (and my inference from reading the article) that AIS and “Big Data” can conquer all, once you get out beyond several months. But, to my fellow boffins (where the veterans begin to cross over)- go for it.
