Introduction
Market disruption refers to significant changes in the industry due to the impact of external factors, such as changes in technology, economics, or a change in the regulatory framework (Pedersen, Ritter & Di Benedetto, 2020). Due to the global operational nature of businesses in the shipping industry, they were exposed to challenges including unpredictable fuel prices, changes in environmental regulations, and supply chain disruptions. This report illustrates several examples of disruption in the market and how it has affected ship operations management. The report includes discussions on logistics and supply chain management, crew management, fuel procurement, and the integration of digital technologies within the operational areas. Finally, the analyses of the modern-day challenges in ship operations and provide thoughtful recommendations to answer those challenges are highlighted.
Main Body
Overview of Market Disruption
Market disruption in global shipping means significant changes in an organisation's operating environment due to other external forces. According to Notteboom, Pallis, and Rodrigue (2021), the outbreak of the 2008 financial crisis resulted in order postponements or cancellation of 140 ships. The key forces that result in market disruption in the shipping industry include technological innovation, changes in trade policy, environmental regulations, and pandemics (Nwokedi et al., 2021). The identified forces are not in control of the supplying industry businesses and have a huge impact on the effective operations of such businesses. Kalantzakos, Overland & Vakulchuk, (2023), highlight the market disruptions caused by the outbreak of COVID-19 in the shipping industry resulting in shortages of crew, port delays, and fuel price volatility due to increasing geopolitical tensions. It was determined that major factors currently disrupting the shipping market are supply chain challenges, geopolitical instability, decarbonisation pressures, and digital technologies (Kalantzakos, Overland & Vakulchuk, 2023).
Furthermore, market disruption can also result in the positive development of the industry when considering the growing need for innovative technologies. Di Ciccio, Meroni and Plebani (2022) state recent market disruption is the influence of digitisation with the introduction of Blockchain that allows shipping companies to track cargo and automate many processes. Such a situation forces shipping companies to adapt fast and come up with innovative strategies to better compete and operate resiliently in the market.
Impact of Disruptions on Ship Operations Management
Market disruptions are drastically impactful on logistics and supply chain management within the shipping industry. Herold et al. (2021) reported lowering profits and revenues of Logistic Service Providers (LSP) including global shipping companies due to the outbreak of the COVID-19 pandemic causing market disruption. The market disruptions caused due to the outbreak of the pandemic have caused port congestion, increasing geopolitical events, and trade route changes causing the shipping companies difficulties resulting in delays or inefficiency in cargo handling. Furthermore, Dirzka and Acciaro (2022) identify that during a global crisis like the COVID-19 pandemic, it was evident how vulnerable shipping operations were to crew availability disruptions. With the impact of the pandemic, restrictions on travel and quarantine regulations led to crew shortages, extended deployment times, and mental health issues that began surfacing in crew members of the ship.
Kim et al. (2020) highlighted provisions of strict environmental regulations along with the adoption of technology equipment that needs to be followed by shipping companies while operating globally. The contemporary changes due to the integration of new regulations and technologies are altering training and safety provisions within the shipping industry. It is determined that with the introduction of new technologies, the company management needs to arrange special training programs that result in additional costs. Pandemics have already redefined most of the health and safety protocols and shifted them more to infection control, on board medical support, and preparedness for emergencies. Such challenges, therefore, lead to operational inefficiencies and safety risks when they cannot promptly be solved.
Australian Government (2024) reports the introduction of various new policies on Australia’s fuel security by working with global industries to strengthen their resilience of critical inputs through secured supply chain management. IMO (2021) clarifies the importance of using cleaner fuels under regulation the likes of IMO 2020 that force companies to invest in alternative fuels that may be low-sulphur fuel, LNG, or even biofuels. The introduction of contemporary regulations caused market disruption within the shipping industry, as volatility in the market and strict environmental regulations rise, fuel procurement has come under the stringent scrutiny of shipping lines.
Furthermore, the latest regulatory disruption is IMO 2020 which capped sulphur content in marine fuel (IMO, 2021). The introduction of this new regulation leaves shipping companies with three choices: upgrade to cleaner fuels, add exhaust gas cleaning systems, or invest in entirely new vessels, possibly capable of being run on some alternate energy. Sure, using sustainable fuels decreases one's impact on the environment, but monumental operational and financial challenges come with it. According to IMO, (2017) Ballast Water Management Convention implemented in 2017 resulted in changed regulations requiring shipping companies to adjust operations to adapt to the requirements of a new regulation. As a result, shipping companies require a lot of investment in new technologies to meet environmental requirements.
According to Nozari and Nahr (2022) the evolution of digital technologies such as artificial intelligence, the Internet of Things, and Blockchain have resulted in massive changes in the operational and management patterns of ships, both in terms of opportunities and challenges. Predictive maintenance, real-time analytics, and automated decision-making powers directly positively influence downtime to be at the minimum and, in the shortest possible time, operational performance is improved. IoT has facilitated real-time tracking of cargo and ship performance, giving operators greater visibility and control of their fleets. On the other hand, this causes a skills gap in the workforce and requires a huge initial investment, which only some organisations can afford (Nozari & Nahr, 2022). Most shipping companies need technical knowledge of digital tools, which can be challenging to find the right crew members or even train them. The operation is charged another burden as the companies spend continuously on education and training so that the crews may run the automated systems and digital tools satisfactorily.
Recommended Solutions
Dealing with disruptions such as pandemics and technological changes is very important in the building of crew resilience through well-being programs and continuous training as strategic solutions. According to Kruke, (2021), shipping companies enable higher productivity through implementing mental health support programs, improving the living conditions on board, offer rotation schedules flexible enough to ensure crew welfare is maintained properly. It can be said that the wellbeing of the crew should be a paramount concern since long deployment periods or stressed conditions can create fatigue and mental health problems affecting operational safety. Moreover, it is recommended that there is the need to upskill crew members is vital because they have to constantly update their skills to work with new technologies and respond to the updates in regulations. Therefore, investment in crew resilience and training will create safety but, equally important, help operational performance to the benefit of shipping companies better positioned to adjust quickly to future market disruptions.
With growing needs for digitalisation, the provision of essential digital tools and automation will help improve efficiency and reduce disruptions in ship operations management. According to Ichimura et al. (2022), digitalisation contributes to optimising key processes such as predictive maintenance, route optimisation, and crew management of shipping companies. Tiddens, Braaksma, and Tinga (2022) demonstrate the use of predictive maintenance systems that leverage AI technologies to track the health of equipment on a ship real-time basis before they incur costly breakdowns and delay costs. Therefore, the adoption of updated technologies under the digitalisation approach not only mitigates downtime but also reduces the repair costs of ships. Another area where digital tools can contribute greatly is route optimisation. Durlik et al. (2024) state that the use of AI-powered systems assists in analysing the weather conditions, fuel consumption, and availability of ports to suggest the most efficient route for the ships. This saves fuel usage, lowers emissions, and ensures on-time delivery. Crew management through digital platforms can also be automated for better scheduling, tracking crew wellbeing, and communication, ensuring seamless operation even in the face of a scarcity of crew or a pandemic situation.
Changes in regulations related to fuel use in the shipping industry have caused challenges concerning maintaining the productivity of operations. It is recommended that besides fuel alternatives, wind-assisted propulsion, solar panels, and air lubrication systems can save fuel and money on operations. Chou et al. (2021) highlighted the use of wind-assisted propulsion systems use wind power as supplementary power to the engine, whereby fuel usage might be reduced by up to 5-10%. Solar panels installed on board ships can generate clean energy on board electrical systems and cut fuel consumption further. It can be said that although investing in alternative fuels and energy-efficient technology is a costly overhead during the preliminary stages, it contributes to several long-term advantages, such as adherence to regulatory environmental standards, reduced fuel costs, and superior brand value among environmentally sensitive consumers.
Conclusion
It can be said that the market disruptions had highly influenced the operations management of ships, with impacts on logistics, manpower management, fuel sourcing, and regulatory compliance. The market disruptions caused an impact on supply chain management, fuel price volatility, and new environmental regulations provide a dimension that companies face challenges on all sides. Along with new technologies, companies find opportunities along with a skill gap that must be filled to stay successful. Several solutions have been recommended to solve these challenges. Improved digitalisation through automation and predictive maintenance enhances efficiency. Enabling crews to resist the pressure by creating well-being programs and continuous training so that staff will be adequately prepared for the new technologies. Companies diversify the supply chain and the route to reduce the risks of geopolitical and trade disruptions. Lastly, compliance management systems permit proactive adaptation in the evolving international norm environment.