Research project examines COVID’s impact on globalization and maritime transport
By Georges-Alexandre Courquin and Sacha Rebaudo, Skema Business School — under the supervision of Dr. Kevin McCormack, Northwood University
Editor’s note: The following is a summary of a research paper the authors are publishing this year about the impact the coronavirus pandemic has had on globalization and maritime transport.
Since 2020, the world’s economy has been facing the largest issue of the last decade, COVID-19. Many companies were and still are struggling with this situation (lockdowns, restrictions, etc.), and others are taking advantage of it (e.g. food and health industries, online markets, e-commerce). Currently, the world population and enterprises are trying to deal with the situation while living with uncertainty.
Globalization is here
“The COVID-19 crisis accelerated an expansion of e-commerce towards new firms, customers and types of products,” according to the Organisation for Economic Co-operation and Development (OECD). “This has provided customers with access to a significant variety of products from the convenience and safety of their homes and has enabled firms to continue operation despite contact restrictions and other confinement measures.” Local and international products were shipped around the world; globalization is here.
In Maritime transport sector, demand exceeds supply
The maritime transport sector did not struggle during the lockdown. It was better than ever. However, during the last six months, the transport sector has been facing global issues; container shortages, increases in freight prices and the delay of ships (port congestion).
Currently, the demand for a container is larger than the supply. Most of the containers are docked in Asia and southeast Asia and are used only for long-distance between China and the U.S. & the EU. This is because this is the most profitable route. This directly affects the availability of the containers.
On the other side, lockdowns in the EU and U.S. have resulted in less manpower at ports. At the same time, there is more export from China to the EU and U.S. Shipping companies maximize their profit by accepting only one-way transport from Asia to the EU and U.S. Consequently, there are a lack of returns and container shortages in Asia. What are maritime shipping firms doing to address these issues and how do they see operations in the future?
To answer these questions, we conducted several detailed interviews with global maritime shipping firms and customers. This is what they said:
1. They need to manage safety stock better.
2. They need to build long-term contracts with transporters.
3. They need to have good relationships (trust) with suppliers and transporters.
4. They need to implement Lean Six Sigma management to improve efficiency and improve the process.
Some large firms are taking an expanded approach. Amazon, for example, is purchasing its own containers and leasing dedicated ships. Ships filled with large blue containers with the “smile” on the side are appearing globally.
A bright future following a dim pandemic
Tragically, COVID has impacted the world, but the feedback in our research is surprisingly either neutral or positive, which was very unexpected. The concept of globalization and maritime shipping have not suffered as much as we thought, and have either remained the same or improved during this crisis. Global maritime shipping firms and customers are implementing improved management practices (Lean Six Sigma); building better relationships; and “rethinking” the future and seeing opportunities. Building back better is the way they see it, and the future is bright.