How shipping industry can boost its economic resilience

As a term, resilience is described as a positive ability to adapt to the consequence of change, whether this change is initiated (caused) by market changes, innovation or even natural disasters. The US National Association of Counties (NACO) describes economic resilience as a community’s ability to foresee, adapt to, and leverage changing conditions to their advantage. Doing so, they are best positioned to attract and grow new businesses, retain skilled workers and families and promote a high quality of life.

To create healthy, safe, vibrant and economically resilient communities, communities must think creatively about their local and regional strengths and how to translate those assets into economic growth. Places that are economically resilient are better able to withstand catastrophe, recover quickly and thrive amid changing circumstances, according to NACO.

Taking into consideration the dynamic landscape in the well-established trends of diversity, environmental sustainability and digitalization, shipping industry is only a fragment of the global business world that will have to work on the following areas:

#1 Build climate resilience: More and more shipping organizations are lately striving to meet a management concept for sustainable development, a trend only partly explained by the increasing regulatory requirements. Research shows that green shipping positively affects sustainable economy. The three pillars of sustainability itself -Environment, Society and Economy- are interconnected, which shows how the value of environmental sustainability is vastly linked with long-term performance improvements.

A great example on this is how transparency in sustainability reporting acts as a significant enabler of building public trust in maritime business, thus reputation and long-term legitimacy. Most of shipping organizations and oil majors issue sustainability reports, as part of their CSR strategy to engage and connect with their stakeholders. Another more tangible example is the fact that tax and financial incentives granted to shipowners and attention paid to best practices in environmental sustainability regulations impact companies’ environmental performance. The shipping industry is coming to grips with climate adaptation and resilience, though the urgent need to decarbonize and find alternative fuels to reduce emissions will come at a cost.

#2 Invest in digitalization: The COVID-19 pandemic accelerated the world’s shift to digitalization. A recent report by the World Bank and the International Association of Ports and Harbors (IAPH) showed that better digital collaboration between private and public entities across the maritime supply chain would result in significant efficiency gains, more resilient supply chains, let alone the safety and environmental benefits. Ports have a major role to play in this. Currently, some of the world’s leading ports and maritime communities are testing or applying several technologies, including big data, internet of things (IoT), fifth-generation technology (5G), blockchain solutions, wearable devices, unmanned aircraft systems, and other smart technology-based methods to improve performance and economic competitiveness.

Technological innovations and digitalization provide opportunities to foster a more holistic approach and integrate the port ecosystem, thereby facilitating trusted partner collaborations between government agencies and the private sector and realizing significant efficiencies in port transactions,

…the report reads.

#3 Build on gender balance: “Building back better and greener relies on having engaged workers. The inclusion of women in the workforce and in leadership roles is fundamental to our global economic resilience,” were the exact words of IMO Secretary General, Kitack Lim, in a recent Maritime SheEO event. The financial benefits of gender diversity are also proved in research. According to Global Maritime Forum, countries with more gender equality have better economic growth, while companies with more women leaders perform better. It is not surprising that the UN 2030 Agenda for Sustainable Development has shed focus on gender equality under the 5th of the 17 Sustainable Development Goals (SDGs), “Achieve gender equality and empower all women and girls”.

IMO in particular has long ago publicly acknowledged the importance of more women in maritime as a driver of economic growth and has promoted tangible initiatives to help increase gender diversity. For example, the agency has initiated a Women in Maritime gender equality and capacity-building programme, which encourages Member States to enable women to train alongside men in their national maritime institutes, in order to acquire the skills needed to take the helm, and rise to the top of the industry. IMO’s gender programme was initiated in 1988, when only a few maritime training institutes opened their doors to female students.

A diverse industry is a sustainable industry

…the Secretary-General highlighted at Nor-Shipping 2019.

It becomes understood that economic resilience is not a one-way street; in any factor influencing economic resilience, the level of political commitment is of critical importance. If we don’t use the example of authorities implementing financial incentives for encouraging environmental advancements, we can use the example of the World Bank and IAPH for the implementation of a successful digital program for more economically sustainable supply chains:

“Strong policy reform toward change management, a clear communications plan and ideally a focal spokesman, a supporting legal framework, business processes optimization, automation, and reengineering between government agencies and private stakeholders stand out as immediate essential steps for nations to enhance the resilience and efficiency of supply chain logistics.”