Opinie Archive

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McKinsey: Whats going on with shipping rates?

 

McKinsey’s Steve Saxon and Jaana Remes discuss why container shipping costs are surging and give their take on what lies ahead for the industry.

Video: https://www.mckinsey.com/Videos/video?vid=6266804341001&plyrid=HkOJqCPWdb

In this video conversation, Steve Saxon, McKinsey’s Shenzhen-based partner leading the Travel, Logistics & Infrastructure Practice in China, and Jaana Remes, a partner with the McKinsey Global Institute, discuss this puzzling phenomenon.

Watch the video to learn more about:

  • how changing consumption patterns in the United States are driving up demand for shipping and causing congestion in ports and the surrounding hinterland infrastructure
  • how the COVID-19 pandemic has led to port lockdowns and container ships being taken out of service, resulting in an overall reduction in shipping capacity
  • why the industry’s response of aggressively adding supply may not be the wisest move
  • the longer-term implications of the boom-and-bust cycle of shipping rates and when rates could be expected to normalize
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BCG: The Digital Imperative in Container Shipping

The time has come for the container-shipping industry to join the digital revolution. Digital opens the door for carriers to strengthen their direct relationships with end customers, further reduce their costs (including for fuel, vessel operation, and customer service), and pursue new revenue streams beyond traditional shipping services.

Only a few leading carriers have applied digital technologies toward enhancing their commercial and operational activities. Box tracking, empty-container repositioning, document management, network design, and pricing are among the activities that these carriers have started to digitalize.

Although the rewards of a digital transformation can be significant, so are the challenges to making it happen. To succeed, carriers must adopt a structured approach to defining a digital vision and integrating new technologies, capabilities, and mindsets into their traditional way of working. It is not too late to get started. The industry is still in the early stages of digitalization, and most carriers have yet to achieve significant progress. Carriers that approach a digital transformation with the right ambition, resources, and scale can leap to the forefront of adoption. Within 18 months, they can achieve a step change in their digital capabilities that strengthens their competitive advantage. Quick wins are achievable within 12 months.

Rough Seas Demand Digital Adoption

In BCG’s November 2016 report Sailing in Strong Winds: The New Normal in Global Trade and Container Shipping, we discussed the industry’s then-current challenge: slow growth in global demand coupled with a persistent oversupply of vessel capacity. Although global container demand did improve in 2017, moderate long-term growth projections combined with a new round of vessel purchases indicate that overcapacity will remain in the range of 6% to 9% in 2020.

Even as the economic challenges of the new normal persist, carriers face an increasing threat from digital attackers. A variety of players—including both traditional logistics players and new entrants—are adopting digital technology to provide seamless, end-to-end services. If these companies’ business models succeed, carriers run the risk of losing direct contact with some of their most profitable customers—primarily small and midsize freight forwarders and beneficial cargo owners (known as BCOs). In this scenario, the carrier’s role could be reduced to providing commoditized ocean freight services.

One of the strongest threats is from players that are adopting digital technology as the basis for an assetless business model that lets them compete with a much lower cost base. Recognizing the opportunity, e-commerce giant Amazon has obtained a license to operate as an assetless cargo forwarder between China and the US. Startups are also gaining traction. For example, Flexport is a technology-based freight forwarder that, as of October 2017, had attracted more than $200 million in venture capital investment. Flexport is not alone in attracting venture capital. In the past six years, more than $3.3 billion has been invested in digital startups in the shipping and logistics sector.

Fortunately, carriers have many opportunities to apply digital technology—not only to maintain their direct customer relationships with acceptable costs but also to improve their operations and grow their businesses. Seven digital trends have emerged as especially valuable in the shipping industry. (See Exhibit 2.) These trends are contributing to performance improvements across the full scope of carriers’ operations.

More: BCG.COM

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BCG Report: Are You Making the Most of Your Relationship with AI?

Management Review suggests that in order to see significant financial returns, organizations need a multidimensional, complex relationship with AI—one that involves several methods of learning and different modes of interaction.

Businesses everywhere are recognizing the power of AI to improve processes, meet customer needs, enter new spaces, and, above all, to gain sustainable competitive advantage. With this recognition has come an increased adoption of—and investment in—AI technologies. A global survey of more than 3,000 executives revealed that more than half of respondents are deploying AI: six out of ten have an AI strategy in 2020, up from four out of ten in 2018. AI solutions are more prolific and easier to deploy than ever before, and companies around the globe are seizing on the opportunity to keep up with this exciting trend. Yet despite their efforts—to hire data scientists, develop algorithms, and optimize processes and decision making—most companies aren’t seeing a significant return on their investments.

So, what allows a small number of companies to stand out from the crowd?

For them, AI isn’t just a path to automation; it’s an integral, strategic component of their businesses. To achieve significant financial benefits, companies must look beyond the initial, albeit fundamental, steps of AI adoption—of having the right data, technology, and talent in place, and organizing these elements around a corporate strategy. Currently, companies have only a 21% chance of achieving significant benefits with these fundamentals alone, though incorporating the ability to iterate on AI solutions with business users nearly doubles the number, to 39%. But it’s the final stage of AI maturity, of successfully orchestrating the macro and micro interactions between humans and machines, that really unlocks value. The ability to learn as an organization—by bringing together human brains and the logic of machines—is what gives companies a 73% chance of reaping the financial benefits of AI implementation.

More: To embrace AI’s full potential, companies must recognize that humans play an equally important role in the equation—and reshape themselves accordingly. Download the Full Report

Authors: Sam Ransbotham, Associate Professor, Boston College/MIT Sloan Management Review; Shervin Khodabandeh, Managing Director & Senior Partner, Los Angeles; David Kiron, Executive Editor, MIT Sloan Management Review’s Big Ideas initiatives; François Candelon, Managing Director & Senior Partner, Global Director of the BCG Henderson Institute
Paris; Michael Chu, Partner and Associate Director, Data Science, Silicon Valley – Bay Area; Burt LaFountain, Managing Director & Partner, Boston

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Athens Journal of Business & Economics

We are glad to announce that the January issue (Volume 7, Issue 1, January 2021) of the Athens Journal of Business & Economics (AJBE) has been uploaded: https://www.athensjournals.gr/ajbe/v7i1. Below you can find the table of contents. The AJBE sponsors the following academic events:

  • 14th Annual International Conference on Global Studies, 18-21 December 2020, Athens, Greece (https://www.atiner.gr/cbc)
  • 8th Annual International Conference on Business, Law & Economics, 3-6 May 2021, Athens, Greece (https://www.atiner.gr/ble)
  • 16th Annual International Symposium on Economic Theory, Policy and Application, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/economics)
  • 19th Annual International Conference on Management, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/management)
  • 19th Annual International Conference on Marketing, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/marketing)
  • 19th Annual International Conference on Accounting, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/accounting)
  • 19th Annual International Conference on Finance, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/finance)
  • 8th Annual International Conference on SΜΕs, Entrepreneurship and Innovation: Management – Marketing – Economic – Social Aspects 26-29 July 2021, Athens, Greece (https://www.atiner.gr/sme)

You are more than welcome to submit a proposal for presentation. Please note that the program of the December conference on Global Studies is available at: https://www.atiner.gr/2020cbc-pro. Late submissions for this event will be accepted by the end of November. ATINER has decided to offer the option of remote (online or pre-recorded) presentation for those who cannot travel for objective or subjective reasons. If you need more information, please let me know, and our administration will send it to you including the abstract submission form. Finally, you are welcome to contribute to the AJBE with an original research paper.

TABLE OF CONTENTS
Download the entire issue (PDF)
Front Pages i-viii
Labor Productivity in France: Is the Slowdown of its Growth Inevitable or are there Levers to fight it?
Catherine Bruneau & Pierre-Luis Girard
9
The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?
Carlo Klein
41
Sustainable Governance and Knowledge-based Economy – Prerequisites for Sustainable Development of the Developing and Transitional Economies
Kristina Jovanova
67
Outcomes from Building Transparency in Governance in a Smart City Project in India: A Case Study of Panaji, Goa
Mridula Goel & Sheetal Thomas
85
The Sustainable Development Goals and Leading European Retailers
Peter Jones & Daphne Comfort
105

Dr Zoe Boutsioli
____________________________________________________________
Dr Zoe Boutsioli  Vice President of Publications ATINER (A World Association of Academics and Researchers).
25 Years of Non-Euclidean Improvement “Our city is open to the world, we never expel a foreigner from learning or seeing” “τήν τε γὰρ πόλιν κοινὴν παρέχομεν, καὶ οὐκ ἔστιν ὅτε ξενηλασίαις ἀπείργομέν τινά ἢ μαθήματος ἢ θεάματος” Pericles’ Funeral Oration from Thucydides, “The Peloponnesian War”. Come to open to the world Athens to learn about Democracy in the city where its theory was first developed and taught and see the place (phnyx) where it was first practiced.

Please note that as a world association of academics and researchers with a very specific mission (please see our website), ATINER is based on the voluntary work of our members and friends. This includes the toil of sending this email to you, so please let us know if you are not interested so that our work is not in vain. If you no longer want to receive emails from us, please click unsubscribe below. This way you will avoid the nuisance of receiving emails from ATINER.

 

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BCG Six Steps to Bridge the Responsible AI Gap

As artificial intelligence assumes a more central role in countless aspects of business and society, so has the need for ensuring its responsible use. AI has dramatically improved financial performance, employee experience, and product and service quality for millions of customers and citizens, but it has also inflicted harm. AI systems have offered lower credit card limits to women than men despite similar financial profiles. Digital ads have demonstrated racial bias in housing and mortgage offers. Users have tricked chatbots into making offensive and racist comments. Algorithms have produced inaccurate diagnoses and recommendations for cancer treatments.

To counter such AI fails, companies have recognized the need to develop and operate AI systems that work in the service of good while achieving transformative business impact—thinking beyond barebones algorithmic fairness and bias in order to identify potential second- and third-order effects on safety, privacy, and society at large. These are all elements of what has become known as Responsible AI.

Companies know they need to develop this capability, and many have already created Responsible AI principles to guide their actions. The big challenge lies in execution. Companies often don’t recognize, or know how to bridge, the gulf between principles and tangible actions—what we call crossing the “Responsible AI Gap.” To help cross the divide, we have distilled our learnings from engagements with multiple organizations into six basic steps that companies can follow.

The Upside of Responsible AI

Concern is growing both inside and outside boardrooms about the ethical risks associated with AI systems. A survey conducted by the Center for the Governance of AI at the University of Oxford showed that 82% of respondents believe that AI should be carefully managed. Two-thirds of internet users surveyed by the Brookings Institution feel that companies should have an AI code of ethics and review board.

Much of this concern has arisen from failures of AI systems that have received widespread media attention. Executives have begun to understand the risks that poorly designed AI systems can create—from costly litigation to financial losses. The reputational damage and employee disengagement that result from public AI lapses can have far-reaching effects.

But companies should not view Responsible AI simply as a risk-avoidance mechanism. Doing so misses the upside potential that companies can realize by pursuing it. In addition to representing an authentic and ethical “True North” to guide initiatives, Responsible AI can generate financial rewards that justify the investment.

A Stronger Bottom Line. Companies that practice Responsible AI—and let their clients and users know they do so—have the potential to increase market share and long-term profitability. Responsible AI can be used to build high-performing systems with more reliable and explainable outcomes. When based on the authentic and ethical strengths of an organization, these outcomes help build greater trust, improve customer loyalty, and ultimately boost revenues. Major companies such as Salesforce, Microsoft, and Google have publicized the robust steps they have taken to implement Responsible AI. And for good reason: people weigh ethics three times more heavily than competence when assessing a company’s trustworthiness, according to Edelman research. Lack of trust carries a heavy financial cost. In the US, BCG research shows that companies lost one-third of revenue from affected customers in the year following a data misuse incident.

Brand Differentiation. Increasingly, companies have grown more focused on staying true to their purpose and their foundational principles. And customers are increasingly making choices to do business with companies whose demonstrated values are aligned with their own. Companies that deliver what BCG calls total societal impact (TSI)—the aggregate of their impact on society—boast higher margins and valuations. Organizations must make sure that their AI initiatives are aligned with what they truly value and the positive impact they seek to make through their purpose. The benefit of focusing strictly on compliance pales in comparison with the value gained from strengthening connections to customers and employees in an increasingly competitive business environment.

Improved Recruiting and Retention. Responsible AI helps attract the elite digital talent that is critical to the success of firms worldwide. In the UK, one in six AI workers has quit his or her job rather than having to play a role in the development of potentially harmful products. That’s more than three times the rate of the technology sector as a whole, according to research from Doteveryone. In addition to inspiring the employees who build and deploy AI, implementing AI systems in a responsible manner can also empower workers across the entire organization. For example, Responsible AI can help ensure that AI systems schedule workers in ways that balance employee and company objectives. By building more sustainable schedules, companies will see employee turnover fall, reducing the costs of hiring and training—over $80 billion annually in the US alone.

More: https://www.bcg.com/

By Steven MillsElias Baltassis, Maximiliano Santinelli, Cathy CarlisiSylvain Duranton, and Andrea Gallego

BCG GAMMA is BCG’s global team dedicated to applying artificial intelligence and advanced analytics to business at leading companies and organizations. The team includes 800-plus data scientists and engineers who apply AI and advanced analytics expertise (e.g., machine learning, deep learning, optimization, simulation, text and image analytics) to build solutions that transform business performance. BCG GAMMA’s approach builds value and competitive advantage at the intersection of data science, technology, people, business expertise, processes and ways of working. For more information, please visit our web page.

Authors: Steven Mills, Partner & Associate Director, Data Science, Washington, DC: Elias Baltassis, Partner & Director, Paris; Maximiliano Santinelli, Associate Director, Data Science, Boston; Cathy Carlisi, Managing Director, BrightHouse, Atlanta; Sylvain Duranton, Managing Director & Senior Partner, Global Leader, BCG GAMMA, Paris, Andrea Gallego, Partner & Chief Technology Officer, BCG GAMMA, Boston