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How to prosper in a “down” market?
The last few years have been good to shipping, for all parties. In such a climate owners and CEOs of private entities within the shipping industry easily forget that shipping is cyclical and there will be a time when cargoes and charters are not so easy to come by.
We feel that this time is coming closer and as the market plateaus, shipowners and all other related businesses in the shipping sector should think about preparing themselves for times when competition will be tough, when not all private enterprises will survive – and when cost-cutting and discounts become uppermost in the eyes of management, even when this is not the only or best strategy available.

At maritimemarketing, we think that when the cycle turns, signals a time of opportunity when the owner/manager who is prepared and ready, can continue to prosper. In business, companies must be flexible and, if necessary, re-invent themselves to suit changing market conditions.
In Asia, especially China, there are many privately owned shipping companies that are family-owned and who operate on the old principles of ‘no debt’. While this is a good concept in good times, in not-so-good times, it increases their financial exposure and limits their growth opportunities.
Furthermore, family businesses are always at risk, as the business has been built on the relationships of the family elder and if the head of the family falls ill, has an accident, passes away – the corporate structure often falls apart due to either lack of succession plans or lack of professionalism, experience or just management ability on the part of the successor, often due to age and lack of practical experience.
Basically there is no “exit” strategy for private owners of small to medium private enterprises!
Internationally and among China’s state-owned enterprises a new business model has been in the making for some time. We call it the “aggregation” business model.
An Aggregation of companies is simply the merging of several like, similar or related businesses into a single entity resulting in a whole that is greater than the sum of its parts – with an immediate and practical exit strategy for entrepreneurial owners.
With respect to the entrepreneur owners of each business, the logic of the combination is "none of us is as good as all of us" and splitting the rewards of a far bigger and better pie means each participant gets more and better pie. It represents an opportunity for entrepreneurs to band together and create great wealth the likes of which will stay outside their reach if they continue to operate separately.
Using proven marketing strategies, economies of scale and access to the capital markets, companies can take advantage a cyclical market at any stage of the market’s growth and/or development.
Next issue we will discuss the make-up of the “aggregated” company business model, how your company can fit in and prepare for any downturn and continue to grow and prosper, while others fall by the wayside.

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Ferdi Stolzenberg is author of this article on Maritime marketing. Find more information about Maritime marketing here.

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