AMAZON (1)

June 2, 2016

ANTICIPATING DISRUPTION, WHAT TO DO AS A GLOBALINK/GLOBAL VALUE MEMBER?

In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. Within a few years, their business model disappeared and they went bankrupt. What happened to Kodak will happen in a lot of industries in the next ten years – and most people don’t see it coming.

Did you think in 1998 that 3 years later you would never take pictures on paper film again? Yet Digital cameras were invented in 1975. The first ones only had 10,000 pixels, then followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superior and got mainstream in only a few short years.

Some are calling this period the 4 th Industrial revolution, or “The Exponential Age”. Software will disrupt most traditional industries in the next 5 -10 years.

Some more examples are UBER, a software tool. Airbnb, a software tool, is now the biggest hotel company in the world, although they don’t won any properties.

Autonomous Cars: In 2018 the first self-driving will appear for the public. Around 2020 the complete industry will start to be disrupted. 3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster. Does this remind you of digital cameras, as above? The estimate is that by 2027, 10% of everything that’s being produced will be 3D printed.

The future is happening now, and it’s coming fast. In our meetings in Da Nang, I spoke to the phenomenon of AMAZON moving directly into the logistics business. Headlines at the time confirmed that ALIBABA was closely monitoring this move. Some of those headlines are attached.

  • What does this mean for your business in the near term and in the longer term?
  • How can you respond in a proactive way? What can you do now?
  • While it’s clear that FED-EX and UPS aren’t going anywhere, their revenue models
  • have to change because of this trend.
  • There is a long list of large multinational competitors that have also enjoyed
  • revenue from the previous model, which may not be there for them going
  • forward.
  • Where will these groups look to make up this lost revenue?
  • What are your competitive advantages?
  • How can we best anticipate these changes?
  • What should the strategy be going ahead?

The obvious answer is that we have to do something. Our industry is changing both short and long term. To stay the same course, to work the status quo, to stay with what we grew up with, could be the most dangerous course we could take.

And yet, the status quo is the default choice of most independent forwarders.

We intend to spend a full day discussing these near term challenges and opportunities.

And, what about what’s over the 5 -10 year horizon?

According a report last year from the consulting firm STRATEGY &, “3D printing could threaten 41% of air cargo, 37% of ocean container, and 25 % of trucking freight business”

John Larkin, a logistics analyst form STIFEL FINANCIAL CORP, said, “You could see some fairly massive changes to the world’s supply chain if this were to really pick up momentum”. He goes on, “You’re not necessarily moving around raw product and converting it to a financial item in Asia, sending it on a vessel to Los Angeles or Long Beach port, running it in a container over to Chicago, dragging it to a Walmart distribution center in Columbus, Ohio, and then putting it on a truck to its final destination”.

3D printing is likely still decades away from critical mass, but innovations can certainly change that time frame.

So, what is prudent for our businesses, now?

What, if anything, can we do to position ourselves correctly?

What role does the access to information play, and how important is information going forward?

On day two of our meeting we will explore these and related topics.

As we approach our time together I would ask you to take a minute and check on your top 8 industries your company serves. Try to be as specific as possible. For example:

Car Parts, Frozen Food Stuffs, Construction Equipment—tractors, Air Plane parts, wine, etc.

It doesn’t matter if they are import or export, we are looking for the top industrial segments you are working in. Please double check and bring this to the Meeting.

Finally, for anyone who wants to have this Meeting paid for by GLNK, we are happy to oblige. Go to either network’s website. Click on Open Slots. Bring your agency roster or any referrals that might fit those slots and we can discuss these together and how to turn them into members. I am happy to sit with you to review this together.

I look forward to seeing you in NEW YORK for a productive and exciting meeting.

Bill Siemens

President