The Shipping and Logistics (S&L)
industry is bogged down by a
legacy of aging and inward-facing
technology. This involves significant
manual interactions, multiple
unsynchronized versions of data
and limited automation.
A study1 developed by maritime
industry leaders, Navis and XVELA
points to poor visibility and
predictability, and insufficient data
insights as the reason for S&L
players losing money. Real-time
access to relevant data was cited as
critical to increasing efficiency.
However, while S&L companies'
resistance to change and aging
systems are holding them back,
according to the report, the industry
is at the tipping point of digitization.
This can be attributed to the
consolidation that has occurred in
the industry since early 2016 which
has seen the top 20 independent
shipping lines reduce to 14.
The consolidation, while offering
stability to the industry, has also
created the perfect opportunity to
re-think processes, digitize shared
operations and implement collaborative technologies. It also
paves the path to minimizing highly
manual processes and intercompany
communication.
Freight forwarders, in particular,
are seeing increased disruption by
digitized players who have the
potential to squeeze them out of
the market. They are being forced
to change their business model
and move either towards increased
asset ownership or new value-added
services.
The Perfect Digital Wave
The emergence of cloud platforms,
collaboration and connectivity
technologies, neutral digital
networks (such as INTTRA),
advanced analytics platforms,
Internet of Things (IoT), Artificial
Intelligence (AI) and machine-learning
solutions have increased
opportunities for S&L companies to
embark on some level of digital
transformation.
According to Roland Berger, the
following are the key drivers of
digitization in the shipping industry:
-
Increased competitive pressures
-
Evolving customer expectations
-
Regulatory changes
-
Disruptive digital technologies
In 2016, INTTRA noted that 27
percent of containers in the global
ocean trade were processed
digitally through their platform. In
the same year, an encouraging
change in the regulatory
requirement of SOLAS Verified
Gross Mass (VGM) provided an
opportunity for S&L companies to break away from manual
processes. E-VGM is the result of
INTTRA’s initiative and
collaboration with other industry
groups for a digitized approach.
This indicates that though
approximately half of all
bookings today are still manual,
the industry can adopt incremental
digitization strategies.
Roland Berger highlights eight
pain points as given below in most
shipping lines that will clearly
benefit from digital transformation.
New digital strategies and business models to address these issues may be grouped into:
Customer-facing
digitization that
transforms experiences.
For example, self-service
web and mobile
capabilities that use
innovative content and
design can enhance the
user experience and
prompt customers
to return.
Internal-facing digitization
that automates operations.
Companies can eliminate
manual interactions,
redundant copies of data
and associated
synchronization. The
application of algorithms,
AI and machine-learning can
further support operational,
tactical and strategic
decision-making, including
smart capacity optimization.
Collaboration and
connectivity with agents,
ports, terminals and
depots. Companies can
leverage digital data for
all third-party connectivity.
Their collaboration can be
underpinned with a
communication layer
designed to be embedded
in the inter-entity
business processes.
Digital transformation thus
becomes a progressive endeavor to
introduce new technology and
processes in each of these areas, in
turn or in parallel.
The fundamentals of adopting a
digital transformation strategy call
for a roadmap to becoming a digital
business, and transformation
blueprints for each individual
shipping line. There’s a need for
internal awareness and a change in
organizational culture. Ultimately,
digital transformation is all about
digitally connecting entire
operations, eliminating manual
processes and paper management,
and automating relevant areas
where possible. Such a
transformation can enable smart
carriers to see an uptick in revenue
growth and cost savings.
While both technology and
digitization strategies are
important, the deployment of
analytics, automation and AI
should be complemented by other
measures2. Preparing and training
the workforce will be an
imperative. Customers should be
brought onboard at the start of
the transformation journey.
Speed will be a critical element
while new products should focus
on enhancing the digital
transformation.
Companies with industry expertise
and strong capabilities in business
transformation and process
management can enable ocean
carriers to achieve their digitization
goals. Such partners can
simultaneously focus on the
digitization of both customer-facing and internal operations, including
smart capacity optimization.
Strong partnerships and cloud-based
analytical tools that leverage
sophisticated monitoring and AI
technologies will undoubtedly help
the S&L industry with insights-led
decisions to improve every
segment of the shipment value
cycle — from planning to
operations to execution.
Standardized processes,
streamlined workflows, and
analytical and automated
efficiencies will create a seamless
path to attain a future digital state.
As the digital disruption slowly
upends traditional business
models, the shipping industry
should move quickly to keep up
with the tide.
References:
1. http://navis.com/news/press/global-maritime-shipping-industry-tipping-point-digitization-still-needs-better-data
2. https://www.joc.com/maritime-news/container-lines/digitization-challenge-recovering-shipping-industry_20170815.html