Managing in times of recession: success through partnership and collaboration

Managing in times of recession: success through partnership and collaboration
Published: Tuesday September 1, 2009
Ibrahim Ajagunna, Director, Academic Studies, Caribbean Maritime Institute (CMI)and Fritz Pinnock,Executive Director (CMI), Contributors
The impact of the recent recession has had a tremendous effect on the shipping industry and Maritime Education in Jamaica.
Both are now downsizing in all aspects of their operations simply because of recession. It is important to recognise that the roots of a recession and its true starting point rest in several quarters of positive but slowing growth before the actual recession.
While this is so, it is also important to recognise other economic change variables such as national unemployment rates or consumer confidence and spending levels, which are all a part of the economic system and which must be taken into consideration when considering a recession.
In an economic environment where inflation is prevalent, people tend to cut out things like leisure spending and spend less on things they usually indulge in.
People will attempt to save more money than they usually do and sometimes they do so through wrong investments that yield super profit in a short time period. As a result of this people and businesses start finding ways to cut costs and avoid unneeded expenditures which will eventually lead to decline in the Gross Domestic Product.
As experienced recently in the shipping industry and other businesses in Jamaica, unemployment rates continue to rise because these companies start to lay off workers to cut more costs.
This however occurs because consumers are not spending like they use to do. These combined factors according to experts help to drive an economy into a state of recession. Economists also believe that this set of circumstances, coupled with the ability of people to get access to greater amounts of loan money, creates a cycle of unsustainable economic activity which may eventually grind an economy to a near halt existence.
Rough tide
These views are not different from experiences in Jamaica over the last few years.
The Hellenic Shipping News recently revealed the rough tide for shipping lines globally for which there has been sharp reduction in cargo volumes worldwide. The last six months for example have seen a huge amount of capacity changes in the container industry, including the lay up of vessels.
According to Hellenic Shipping News, many shipping lines have responded to this tide with job cuts, and increases in freight rates have sharply plummeted in the last few months since the meltdown started.
The chief executive officer of Maersk Line, Eivind Kolding, in an interview with Hellenic Shipping News said that more job losses are likely at Maersk Line in 2010. Also, as part of the economic recession fallout, the AP Moller-Maersk subsidiary has indicated it will charge $300 more per 20-foot equivalent unit (TEU) on its Far East to Mediterranean and Northern Europe lanes with effect from 1 July 2009.
There is no doubt that this will extend to the Caribbean making the cost of goods to the consumer skyrocket. The question is, could this be an opportunity for shipping lines to cut costs and increase their revenue using the recession as a yardstick? Can partnership and collaboration help resolve the present bottleneck? The answer to the last question may probably be yes based on the following.
Partnerships and collaborative arrangements amongst all stakeholders in the shipping industry is one effective way of achieving success in the industry. Partnership and collaboration is a process of joint decision making among autonomous and key stakeholders of an inter-organisational domain to resolve problems of the domain and/or to manage issues related to the domain. It occurs when a group of autonomous stakeholders of a problem domain engage in an interactive process, using shared rules, norms, and structures, to act or decide on issues related to that domain.
Future challenges
It can lead to better decisions that are more likely to be implemented and, at the same time, better prepare agencies and communities for future challenges. Partnerships and collaborative ventures can help to unite the multiplicity of interests throughout all sectors of the diverse shipping industry.
To realise the growth potential of the industry, it is important to develop a high-quality, profitable and sustainable activity, through a partnership of industry, government and other stakeholders. Such a common arrangement will allow the private sector to work in conjunction with the public sector on a wide range of issues, for example, policy formulation, infrastructure development and provision, the development of maritime facilities and amenities, marketing and promotion and the development of skilled personnel for the industry.
By developing interpersonal and inter-organisational linkages, managers can be better informed and make choices about future directions that are more likely to solve the problems at hand. Collaborative decision-making and on-the-ground partnerships can enhance the capacity of agencies and communities to deal with problems in the future.