Shipping is a people business. Isn’t it? So, lock down should have been a disaster. So many parts of so many industries have been tested in the recent months of lock down, and shipping does feel that it has had its standard operating models tested considerably, but not necessarily in the ways one might have expected.
Cargoes have been shipped, rates have gone up, rates have gone down. In reality the movement of demand, supply and rates have remained stubbornly ‘old school’ in the sense that in only a year’s time it feels like COVID-19 might be added to analysts’ presentations in the same way that the 1997 Asian crisis, the 2003 strain of SARS, and the 2008 financial crisis were. However, one of the truly remarkable changes that shipping, which so often eschews the changes that other industries have undergone, is one that even the most curmudgeonly change-resistors cannot avoid.
How will everyone go back to the office? What can we not do without and what do we never want back? Not so long ago when any employee brought up the subject of working from home there were murmurs of ‘slacker’ from colleagues, even if they were silently phrased. Getting in early and leaving late were badges of honour. Dressing down on a Friday was seen as forward thinking 20 years ago, whereas today the tie salesmen of London and many other cities sit idly waiting for nostalgic men to buy a dusty relic from the past. The inch-by-inch acceptance that working from home is actually not a charter for employees that like to hide out of harm’s way while drinking tea and watching Netflix was gathering pace. There were serious discussions about the sanctity of being together in the office to become a shared resource for colleagues. And the logic was sound and largely unchallenged that flexibility was good, but not coming together at a central hub was a recipe for long-term disharmony and inefficiency. Don’t we all miss office politics?
Sometimes circumstances dictate that opinions, positive or negative, become irrelevant very quickly with the subject moves on without the necessity for acceptance or action. Lock down meant that those who love to work from home and those who hate it were all in the same boat. So what happened? Ships got fixed, legal cases got heard, brokers worked as remote teams, our Analysts continued to research, review, monitor and analyse companies to assess counterparty risk and credit, and credit risk managers continued to give and not give credit. Bunkers were sold, derivatives were traded, in fact there is not a single part of the shipping business that failed to function when almost every office in the entire industry was shut. So, despite the general slightly cynical take on the industry resistance to change, when the standard way in which almost all sectors did business changed, everyone seemed to adapt quickly and efficiently. This does leave some very fundamental questions though.
The lockdown also managed to highlight many non-essential parts of what makes shipping, well, shipping. When resources have to be prioritised, without wanting to name specifics for fear of personal bias, it has been impressive to note that time and capital managed to focus on getting the job done. But speaking to many shipping professionals in the past few weeks, as people trickle back into offices (and in many cases are not even planning to do so), will we be back to old ‘normal’ ever?
The work from home revolution that has been thrust upon us has largely been a neutral at worst, but largely positive one. Even if productivity falls by 5% for companies that are not suitably geared up to work from home, if costs also fall by 10% then there can be few accountants that wouldn’t approve. Large corporate offices could be somewhat redundant. Living and working in London has highlighted my return to the office as waking 30 minutes earlier to get to the office an hour later than I would start at home for a considerable cost. At home there was no time on trains, no more pricey coffees, no more Pret lunches and no time spent in meetings. In the US, the estimated national average saving of work from home is US$11,500 per person. Again, an accountant would not need to think too hard about that as a better way to improve bottom line.
So what’s missing? Well, for a broking company that we spoke to, one thing missing was a considerable travel and entertainment spend that could be kept in the bank. It was described to us and viscous circle that turned into one of virtue because nobody has to travel and entertain if nobody else travels and entertains. All of these things are direct savings to all, because ultimately the charterers, owners and operators pay for their own entertainment through their commission.
Another thing that is missing though is the interaction around the water cooler that huge amounts of research has shown to be so significant in collaborative breakthroughs. Research by consultancy companies that specialise in creating informal collaborative opportunities in the workplace shows that informal collaborative opportunities through water cooler interactions are important. I guess if you have a lawyer as your CEO you will find the number of lawsuits you are involved in will rise. And what are these collaborative moments within shipping businesses? Hard to say really.
Knowing people in the industry on a social level is the core of shipping being a ‘people business’ though. So it is understandable that taking away a pillar of the industry in shared social experiences might make people nervous that the industry would get, well, boring? This remains to be seen, if either focus moves away from such interaction being important, and actually just there for enjoyment. Would you do it if you paid for it yourself? Now we are getting into the unspeakable part of corporate efficiency for shipping!
What has undoubtedly been somewhat awkward though is the new unformed etiquette of Zoom meetings, Skype calls and Teams hangouts. They are now familiar to all of us in the sense that we have all been involved with them in the past few months. The etiquette of punctuality is an interesting example. Is it acceptable to set a meeting based on ‘if I am not too busy at the allotted time’? Those that do send the ‘sorry I’ve had to take another call’ WhatsApp are treading into unfamiliar territory. Is that OK? Certainly not in person.
Group online meetings are also far from perfect according to many professionals that we spoke to from banking, law, marketing, telecoms and broking. You cannot read a room for body language. You cannot be sure if the participants are actually changing their fantasy football team or doing the online shop. The calls remain largely emotionless and it is very possible that a meeting is finished with some thinking an agreement has been made, others saying yes, but not really sure of the subject or outcome. Feedback shows that dealing with personnel issues appears particularly taxing. Interest levels drop incredibly quickly in meetings if home broadband is slow, there is feedback on the sound, the shared documents cannot be seen properly, voices cut out, people get up from their seats and disappear briefly. And so on.
The conclusion of a partner of an international law firm was very insightful though. He noted that the actual tools to not go back to the office are there and have been proved. Remote communications are not rare in shipping. It is entirely international and we always got by before Zoom. Remote being the only way is new though. Remote communications being the preferred method is also new. But as this partner pointed out for his own firm; we are all assuming that we are good at remote working and communication. We all assume that joining an online meeting is familiar and easy, but we are forgetting that before they were the only way to work they were a very poor relation to face to face meetings. As yet I have not heard even a single rambling off-key anecdote at the end of an online meeting, which often turns out to be the key to understanding exactly what participants are taking away from the interaction. And the speed at which people leave online meetings often gives the impression that they’ve left the iron on.
The positives are absolutely there. The possibility of shaving immense costs from operating budgets is extremely attractive. The improvement in life balance is documented and easy to see. Economic mobility becomes a factor as well. You don’t have to live in a big city to work for a big city company anymore. But what is clear is that the human aspect of how we act, and what is and isn’t acceptable has not been mastered quite yet. And why would it when only those that wanted to live online did so until recently?
The final point from our research though does bring up one thing that every person said; people like to travel and interact. It is seen as a perk in many cases. A conference in Bali? Yes please! As the etiquette and acceptable ways to interact together start to form and reform though, one thing to remember is a story from my early days at a city brokers. It was a swelteringly hot summer afternoon in a packed office with no air conditioning. The chairman appeared from his office, walking onto the trading floor, which he only did to address us all. He told us that due to the extreme heat it was OK for us to remove our suit jackets, which was greeted with joy and relief. Thirty minutes later the chairman reappeared and told us that the break was over and we should put our jackets back on! Things and people do change.