W.W.V.D? Even before the pandemic hit, global supply chains contained an estimated $176 billion of inefficiencies.
There is an innovation opportunity begging for venture attention. It lies in an industry with deep-rooted inefficiencies but of integral importance to our global supply chains - the maritime sector.
Once glorified as a frontier of discovery, the ocean has found itself overlooked by innovators, side-lined in favour of less-established transportation empires. And it’s not hard to understand why. To an impatient global population looking for faster gratification, the maritime industry gathered dust while technological advancements blossomed all around.
Yet the ocean still offers unchartered territory: innovation within the supply chain for greater efficiency, and a ripening opportunity to further reduce global emissions.
The maritime industry is worth investing in. Backed by a trusted legacy, centuries-old oceanic logistics could be the most exciting modernisation opportunity.
Toilet paper had more media coverage and better travel miles in 2020 than anyone would’ve guessed. When the pandemic hit, toilet paper sales in the US alone went up by 845 per cent, and startups with a focus on the challenge scored investments from the likes of Mark Cuban, Gwyneth Paltrow, Ashton Kutcher, Guy Oseary, and Hadi Partovi.
While most rolled their eyes at the hoarding practices of a few, an oft-overlooked aspect of our globalised world has come into view: supply chains.
These timely investments in localised sustainable products are admirable. However, supply chains offer a time-sensitive opportunity to invest in technological advancement. This type of investment can have an inordinate impact on a global scale.
With consumers restricted in lockdowns to no-contact online shopping, and the seas becoming the only dependable means of transporting goods, demand exponentially increased alongside delays in delivery.
The relatively unexamined interdependent global supply chain has suddenly become an unignorable problem of international importance.
It would be a missed opportunity if venture does not turn its attention to maritime inefficiencies ripe for innovation. Not only can we invest in enhancing existing infrastructure but we can re-invigorate the sector with new perspectives.
Asia has been quick to recognise this. In June of this year, Enterprise Singapore’s SEEDS Capital, along with six appointed co-investment partners including Rainmaking, announced plans to inject $36 million into more than 50 maritime technology startups. When realised, the impact will be substantial, especially when you consider Singapore is already the busiest port in the world in terms of shipping tonnage, with more than 130,000 vessel calls annually. Bridging East and West, it sits at the centre of trade routes connecting 600 ports in over 120 countries.
The global economic significance of having dependable and efficient shipping supply chains are undeniable. But existing inefficiencies were easier for consumers and investors to ignore while an absence of serious disruptions (such as a planet-spanning pandemic) meant minimal additional strain on the legacy systems.
The last half-decade has seen an enhanced focus on sustainability across all sectors. With 80 per cent of global trade volume moving by sea there’s a juicy prospect of reducing 11 per cent of the 2.2 per cent of global greenhouse emissions contributed by maritime through better port orchestration. This is huge and absolutely an attainable goal.
Additionally, up to three-quarters of accidents in the maritime sector can be attributed to human error. It’s clear there is plenty of room for improvement. Applying modern digital disruption to legacy infrastructure could overhaul and refresh the industry.
We’ve already seen US-based Flexport become the first maritime unicorn - who’s next? And, perhaps more relevant to my venture peers, who will be backing it?
With few competitors and these areas for improvement as just the starting points, there are clearly huge rewards for those bold enough to venture into this space. The maritime industry is an attractive play for entrepreneurs.
It’s easy to accept the fallacy that the maritime industry is too big to change. After all, hitting the emergency brakes can take as long as twenty minutes for a fully laden cargo ship.
Change the perspective, however, and you can see the established processes and extensive regulations as a solid foundation. Startups can inject innovation when supported by the trusted expertise that exists in this legacy industry.
But time is of the essence. Since hitting rock bottom in February, just six months later China’s domestic aviation industry is almost back to normal operating levels.
August figures show activity at worldwide ports similarly returning to a normalized pre-COVID-19 level. With such swift recovery speeds on the horizon, maritime innovation is ripe for the taking now, before the industry grinds back to its business as usual modus operandi.
With the right approach, we can create more streamlined supply chains which could go beyond reigniting the global economy - those who dare could also play an active role in a sustainable recovery by lowering emissions.
As international trade starts stretching its sleepy muscles there really is no time like the present. As China’s shown, normalization will happen fast.
Who will be backing maritime’s rehabilitation?