Matthew Cook, director of operations at Thompson Clarke shipping consultancy, has proposed a two part-measure to tackle endemic underperformance in the Australian logistics sector.
He was speaking at the recent Shipping Australia New South Wales State Committee Luncheon, held in Sydney recently.
He notes that there are a wide range of questions in the Australia system, such as whether crane rates are good enough, whether terminal charges are too high, whether industrial downtime is hurting productivity. However, he argues, these are all variations of the same question as the system as a whole is underperforming.
“That’s because studies on the individual elements of ships, ports, terminals, regulators, and hinterland operators are the easiest to measure – the space between those elements and the complete systems is difficult. That unknown is treated as too complex,” he told our guests.
A two part method
Thompson Clarke is therefore proposing a two-part method.
Firstly, measure complexity. He argues that the parts of the system which are inherently complex need to be identified and understood from those parts that can be cut. The second part is to treat the complexity by matching controls and capabilities that can manage it.
“Controls are simply the thing you put in place to govern the system. Such as decision rights, standards, confirmation points, published performance and feedback loop. Capabilities are the people and systems that you employ to execute those rules. We achieve success when the complexity of the situation is matched by the controls and capabilities. If complexity exceeds the controls… success rates fall. If you write rules no-one can execute, you get paper. If you have capable people and no shared rules, you get local competence and system-level ad-libbing,” he told Shipping Australia guests.
Mr Cook then argued that’s why a range of new initiatives can raise complexity across the industry faster than organisations can improve their capabilities to handle it.
Five main drivers of complexity were identified:
- Contextual issues – these include geography, institutions, politics
- Sociological – people, incentives, relationships
- Technical – assets, systems, integration
- Managerial – organisation across independent parties, and implemented controls
- Ambiguity – “it is the strongest predictor of under-performance,” Mr Cook says.
Mr Cook argues that Australia’s maritime freight complexity is in the high-to-very-high end range, which is so high that success rates start to drop because complexity exceeds the ability of the system to manage it.
“We already see the signs: Commonwealth and State regulatory friction, fewer companies serving the market, fewer seafarers, landside bottlenecks…, uncertainty around fuels, bunkering, and the Strategic Fleet,” Mr Cook says.
