Much like other industries struggling to stay afloat in the stormy waters of the global economy, the shipping industry is seeking its own transformation after years of overcapacity and tumbling freight rates.
Generating more revenues oftentimes depends on undercutting competitors’ prices, accepting lower margins and even tolerating losses on certain contracts, especially to keep vessels in transit instead of idling and collecting rust.
However, relative to other industries shipping has been much slower to adapt technology for the purpose of improving profitability and cutting overheads. Despite maritime shipping’s responsibility for nearly 90% of global trade, rising fuel prices and new regulations concerning low-sulfur fuel consumption have forced this historically intransigent sector to rethink its application of technology–if it wants to remain competitive in an age of dwindling margins.
At the center of this advance is an increased focus on streamlining antiquated processes and mining the veritable treasure trove of data collected by these global commerce giants. As one of the most important intermediaries for global enterprise, the maritime shipping industry’s shift towards leaner processes starts with a greater embrace of cutting-edge technologies.
A Step Towards Improved Data Collection
While cloud storage and computing have largely remained outside the purview of the maritime shipping sector, in which paper still reigns supreme, data collection attitudes within the industry are rapidly shifting. One prominent example is navigation, where paper charts are routinely purchased despite the availability of on-demand charting services on a “pay as you sail” basis. Since 2015, Global Navigation Solutions (GNS) has collected over 1.2 billion navigation data points from 75,000 ships thanks to automatic identification systems (AIS) that enable maritime authorities to track ships.
The insights gleaned from this data highlight the sheer amount of wasted expenditures and unused resources that shipping companies could readily eliminate. According to GNS, nearly 70% of the navigational and compliance products that shipping companies purchase go unused, representing a noteworthy area to control costs. Furthermore, onboard navigation software services designed to improve efficiency are often ignored, adding to poor resource allocation. One company planning to fight this waste is Global Spatial Technology Solutions (GSTS) which is focused on route optimization and risk management.
By employing a combination of satellite data management and analysis solutions, GSTS intends to help maritime shipping companies with operational optimization. Through a mixture of big data analytics and artificial intelligence, GSTS plans to insert itself in the decision-making process with a goal of improving navigational efficiency for greater fuel savings. The growing ease with which shipping giants can record and store the immense amounts of data they produce makes cloud services a natural fit for the industry as it puts more emphasis on mining this data to expand profitability.
Delivering Savings and Transparency While Reducing Paper
Of the more antiquated processes confronting maritime shipping profitability, the continued use of analog booking tools and paper contracts remains one obvious area of wasted time and resources. A perfect example is the United Arab Shipping Company, which currently only processes 6% of its booking using digital methods. Although the company plans to raise this figure to 15% of all bookings by 2023, there is still an immense amount of room to improve the adoption of digital booking processes.
The other major pain points that stand out are the Bill of Lading (BoL) and Letter of Credit (LoC), which represent vital documents, but also the greatest bottleneck for the industry. LoC and BoL documentation must still be handled in paper forms that are physically transferable between parties. Any loss of these documents or mistakes can be especially costly and create significant delays for cargo delivery. Cargo reclamation in the case of lost or misplaced paperwork can be very expensive and time consuming, possibly resulting in losses across the supply chain.
Between limiting transparency and representing a potential single point of failure, maritime shipping companies are starting to warm up to alternatives that overcome these paper-based challenges. A prominent example is Brisbane-based CommChain, leading the way for greater industry transparency.
By applying the immutable recordkeeping properties and proof of ownership championed by blockchain-based services, CommChain has developed an entirely digital supply chain service designed to promote compliance, prevent fraud, and reduce inefficiencies.
Although other blockchain solutions like TradeLens have been introduced by IBM and Maersk, fierce competition within the shipping and logistics space and a reluctance to share data have proven major impediments.
CommChain plans to succeed by establishing a system designed to connect all supply chain stakeholders from the commodity miner and producer all the way to the end consumer.
The goal is to ultimately reduce costs for all parties involved by increasing security and transparency while reducing the likelihood of fraud and loss by completely digitizing the chain of custody and all paperwork involved.
“The focus is to bring leading edge technology to the bulk materials industry that will step it away from a paper based system to deliver an improved liquidity position. So many other benefits will evolve, like real-time data to assist all stakeholders in a supply chain to make optimised decisions particularly in multi-user supply chains. Silos of information are holding back industry to efficiently manage data that could optimise capital intensive infrastructure. We are excited about the short term gain of reducing the ‘air-gap’ in commerce that exists after a vessel has sailed and commercial documents are delivered to a bank or a buyer. This will save the industry million of dollars”, said founder and director, Faith Dempsey.
The Shift from Technological Reluctance to Outright Enthusiasm
Whether the incoming fuel regulations or the likelihood of higher costs amid stumbling global trade, maritime shipping faces both internal and external pressure to change its way of doing business. The immense amount of data produced by the industry represents one such opportunity to increase efficiency, especially for deriving insights related to more efficient routing, but also for booking which remains relegated to more analog methods, even for the globes largest shipping firms.
From improved efficiency to better product tracking, along with streamlined lading mechanisms and chain of custody fixes, data and digitization are redefining the shipping industry’s stubborn view towards new technologies. In an era where consolidation and margin compression are a constant threat, growing technological adoption represents more than a race towards greater efficiency; it’s about survival.