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Transportation keeps the global economy in motion. Without transportation industry, and especially without the shipping sector, it would be impossible to trade, let alone in the scale of our times, goods and services.
The world economy has had such a huge growth over the last half century and that growth has been largely driven by globalization and the consequent increase in trade of goods and services. International trade in goods and services has increased from around $4 trillion in 1990 to $24 trillion in 2014, according to 2015 data from the United Nations Conference on Trade and Development. This increase in trade would not have been possible without a similar rise in the abilities and capabilities of the global transportation sector. Transport, not only is the tool for people and good to move, but also is a key driver of economic and social development. It brings opportunities and helps economies to be more competitive.
The shipping sector has an intimate relationship with the global economy in such way that the risks faced by the industry are influenced by worldwide factors such as increasingly complex markets, disparate regulatory frameworks, the unstoppable march of technology and geopolitical shifts. These factors interact with each other in such complex ways that are difficult to understand, let alone predict, and thus affect the shipping sector as well.
In general, the prolonged economic struggles that the world faces nowadays have made the maritime sector more sensitive to risk than other modes of transportation. Maritime transport providers perceive as their top risks to be, putting aside the common financial and economic risks that ever sector and company face more or less, the digital vulnerability they face and the multiplying potential points of entry.
Global commerce is increasingly operating in world where automation and digitalization are transforming rapidly almost every sector of the economy. While some forms and means of transportation are adopting the new digital tools slowly enough, the total pace of engagment is escalating exponentially.
Step by step, maritime companies are embracing the digital revolution. In fact, digital technology is becoming so important and extensive that many businesses underestimate the extent to which they are now dependent on it. While the opportunities that occur due to the technological advance are too numerous to list, so are the vulnerabilities and risks. Those that manage to find the balance will thrive. Otherwise they will themselves left behind by the changing markets and consumer expectations, or even left vulnerable to the growing army of threat actors.
Authorities believe that the criminal activity is being assisted by the speed, convenience and most important by the anonymity of the World Wide Web. Consultancy firms believe that the global cost of data breaches alone could exceed $2 trillion by the end of 2018. Criminals are clearly flourishing in the unprecedented access and connectivity the internet provides, as the technology advances.
It’s easy to understand that the risks inherited by the accelerated progress of the digital economy are a primary concern that it would increase cost efficiency, collective intelligence and product delivery but it would also augment digital entry points to strategic control centers, information about the commerce and private third-party data. As firms become more and more connected, levels of resilience are increasingly imposed by the weakest link in the digital supply chain. As such, companies have even less individual control to alleviate their digital risks, making in a way security a communal issue. It is a concerted responsibility where every member in all the supply chains is responsible – not only to their own shareholders, but also to their other partners.
Risk is a path to growth. Firms and industries prefer to mitigate the downsides of risk – it has the ability to minimize or even destroy profits, disrupt operations and damage reputations. But risk can also open opportunities for those able to see the promising gain. Smart firms seek out measured risks to gain comparative and competitive advantage. They don’t always follow the safe path. Managing nowadays business risks is a far more complicated process than it was when the responsibility fell exclusively to financial managers and the structural engineers. Today, the assessment of the risk landscape is almost as important as the alleviation strategy, although ideally the two should mutually support and deliver the corporate strategy.
As a matter of fact, in an era where risk is becoming more slippery and obscured, the emphasis has shifted toward the preparation process for and the response to any possible events, rather than the development of some static strategies that could possible mitigate the individual risks. The new complicated, co-depended risk prospect requires a thorough, knowledge-based response that is coordinated from the boardroom, where corporate strategies are planned.
The transportation sector rates the risks correlated with the digital vulnerability almost as eminently as they do those in the geopolitical circle. The largest stand-alone threat across all modes of transport is the threat that springs from new and emerging competitors, with expanding competition across all known modes of transportation: land, sea and air. As transportation adopts the technological advancements of the digital age, it must build jointly risk strategies to ensure that all systems in the global value chain are secure and reliable.
A survey conducted by Willis Towers Watson found that the extended economic struggle of modern world have made the shipping sector more prone to risk than other modes of transport. Maritime transport providers perceive several digital risks, in the form of data privacy breaches. But shipping companies have also almost zero protection against the complexities of globalization.
Every mean of transportation could benefit from the development of propulsion technology and more efficient fuels. Currently, ship owners face significant regulatory and technical uncertainty, which is raising the investment risks. Some are using advances in computational fluid dynamics and models to streamline hulls and bow structures to design more efficient propellers in order to achieve roughly the same end.
But amongst all the automatization, the digitalization of business processes, the cascade of emerging technologies and the continuously shifting markets and consumer trends, probably the maritime industry’s biggest opportunity lies in the competition for talent. People are the connecting factor between corporate strategy and goal achievement. As technology rapidly changes, the importance of retaining and retraining the associated skills to manage the systems, tools and assets of the industry will not vanish. Even artificial intelligence and robots will need programmers. Those who have the market intelligence to align the skills of their workforce with emerging technology will have grasped an extremely significant opportunity.
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