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Sustainability & Shipping: Missing the boat

There is no industry where the impact of a global movement or business trend is more immediately experienced than in container shipping.  Yet the industry seems to be arriving to sustainability rather late, and quite possibly missing the biggest implications of related trends altogether.

Sustainable business and sustainable design initiatives were initially limited to product manufacturers and retailers.  Now, in the midst of an ever-expanding understanding of the interconnected nature of our world, every industry, including shipping, is paying attention to their energy, resource, and waste management activities.

In exploring sustainability in shipping initiatives, I came across much the same approach that has been applied to the automotive sector.  Every solution assumes steady growth in the demand for shipping.  Initiatives are focused on equipment redesign, fuel efficiency, alternative fuels, and the possibility of a carbon tax (or its equivalent).

While these programs will certainly help the environment and minimize fuel, tax, insurance, and legal costs, they do not address the core challenge facing transportation and logistics providers: a potential drop in shipping demand due to emerging technologies that will supplant or reduce the shipping function in business operations.

One example of such a technology is the evolution of 3D printing. The reality of on-site printing with technologies like Fused Deposition Modeling (FDM) have the capacity to significantly impact the need for shipping finished products.  BMW is already using the application for rapid prototyping and is using FDM for some direct digital manufacturing.  The body of the Urbee hybrid car was printed using 3D technology and demonstrates this disruptive technology at work and its growth potential beyond rapid prototyping.

There are many, many more dMASS-related trends that will result in companies delivering more benefits to their customers with less mass.  That means lighter, smaller products with less packaging.  Autodesk is teaching designers about lightweighting, there are daily advances in nanotechnology and dematerialization, and continuous innovations by companies who recognize the mutiple benefits of finding ways to give customers the function they want while reducing numerous costs associated with resource use.  For example, Xerox's sustainability initiatives include the inkless printer project. The inkless printer would use a new type of paper that could be written on and erased (multiple times) simply by applying light of a certain wavelength to it, eliminating the need for ink and reducing paper use.

Companies like Waste Management and Xerox are actually helping their customers use less of their traditional products or services.  Waste Management found that more of its clients were expressing an interest in zero waste, something that could threaten its core business.  The company responded by offering services to help their clients achieve zero-waste status at facilities.  It embraced the idea that waste is valuable and is shifting its business model to take advantage of new opportunities.  Both Xerox and Waste Management are moving toward a more heavily-based service model to manage the risks and opportunities associated with the growing importance of sustainability.

Companies are already actively working to improve the resource performance of their products.  Shipping companies that wish to lead in the future need to position themselves to help their clients succeed in this, to deliver more with less.

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Doing business “invisibly”

Businesses are increasingly flexible and ethereal; it's a trend that's not going away.

The concept of “cloud companies” or “cloud operational structures” is not new.  Consider intelligence agencies.  They have used this idea for decades.  Our ability to make ourselves less vulnerable is dependent on employing an invisible operational structure with trust-based networks of productive agents.  This is similar to how living systems work.  The material aspect of an organism is ephemeral, temporarily employed to maintain the organism's essential organization.

Spurred on by the acceleration of innovation in areas like social media, bio-mimicry, and nano-scale materials, companies are using technology to mimic (knowingly or unknowingly) the fluid nature of intelligence networks and living systems.

One of the most striking examples of this structure working successfully before the recession (and perhaps one of the first large-scale models of a distributed workforce as a viable alternative to one concentrated in a physical office space) is Wikipedia.  A non-profit whose campus encompasses an ever-changing array of workstations in coffee shops, libraries, and office buildings around the world, Wikipedia has generated a massive amount of credible content without a traditional home base and with minimal office maintenance, commuting, printing, or other resource costs.

While start-ups in the 90's were associated with the "garage model" (that is, a poor entrepreneur with no resources building a business from a parent's garage while developing and strengthening local sales relationships), the start-ups of the 21st century have quickly moved towards the Wikipedia model.  People all over the world with rapid-fire 3D communications are collaborating online.

Unfortunately, both national and international legal, accounting, and tax systems have not caught up with this trend.  These systems still expect businesses to be physically located in a permanent place.  I have encountered one company that was turned down for business insurance because they worked in a shared office space.  An even more powerful example is the current controversy with the release of classified documents by the organization Wikileaks.  Without a physical office space to raid, how does one go about investigating or taking legal action in this kind of situation?

It would not be surprising if the Wikileaks controversy and how it is managed internationally sets the precedent for future businesses operating with a "digital nomad" or "location-independent" structure.

Businesses and their products are increasingly flexible and ethereal.  This is a trend for a reason, and it is not going away.  The problem is with the systems supporting businesses, not with companies' weightlessness.  It's time (and there's an opportunity) for business services to catch up.

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The headache of thinking in parts, not wholes

"E pluribus unum," it said on each coin I paid out for a bottle of aspirin.  Latin for "out of many, one," it's an excellent reminder to look at the unified process of your business, rather than at particular actions performed by particular people acting independently.  Apply your intellect to your business through a unified perspective, and you can work a miracle cure.  The container-based shipping revolution is a good example of such a miracle, as it affected the price of everything, including the aspirin that I bought. In the 1950's, medicines required far more mass in their handling and transportation as they were packed in boxes, stored in warehouses, packed in pallets, manhandled into a ship's hold, unpacked, stored, removed from storage, and packed on a truck.  Each transition, from factory to truck to ship and back again, was complex.  Marc Levinson, a former editor of The Economist, wrote:

A pharmaceutical company would have paid approximately $2,400 ($18K in today's dollars) to ship a truckload of medicines from the U.S. Midwest to an interior city in Europe in 1960.  This might have included payments to a dozen different vendors: a local trucker in Chicago, the railroad that carried the truck trailer on a flatcar to New York or Baltimore, a local trucker in the port city, a port warehouse, a steamship company, a warehouse and a trucking company in Europe, an insurer, a European customs service, and the freight forwarder who put all the pieces of this complicated journey together.  Half the total outlay went for port costs...

Why were port costs so high?  Mostly due to the logistics of moving product from truck to ship.  On the dock, longshore workers packed cargo on wooden pallets.  Inside the ship, another group of workers moved the cargo into secure spots using carts, forklifts, or their own muscles.  The work was slow.  At each step of the shipping process, warehousing was essential.  Truck drivers and ships' captains lost time and money waiting around for the process to complete. Attempts at fixing parts of the process, like better forklifts or larger hatches, did little to fix the situation, and transportation remained the largest cost of manufacturing--in fact, it made selling internationally simply not worth it.

Enter the container revolution.

Malcom Purcell McLean tackled the problem, to his own vast profit, in the 1960's.  He took a system-wide approach from the start, seeking a method to keep the container intact as it rolled from truck to shipside and back.  He succeeded, bringing down transportation costs one hundred fold.  Today, medicines go straight into a container that is trucked to a ship, then lifted back to a truck, and delivered to a store's shelf.  Think of the resources no longer needed because of the improved process, from the tons of fuel needed to move pills from point to point to the tons of fuels and materials required for building, operating, and maintaining the warehouses.  

When you're able to look at a process as a whole, it's easier to discover dMASS opportunities, either in design or logistics.  Though our founding fathers' were thinking of political unity when they incorporated "e pluribus unum" into the great seal of the United States of America, its appearance on every penny, nickel, and dime in your pocket can serve as a good, daily motivator to improve the business processes that cost you money: more unity, less mass, more wealth, less headaches.

For further reading: The Box, How the Shipping Container Made the World Smaller and the World Economy Bigger, by Marc Levinson.

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