Like many industries, the ocean freight sector is caught somewhere between using age-old systems that still technically work, and moving into the digital world. With the latter, carriers are able to eliminate costly manual work, reduce reliance on labor, and streamline their operations.
However, these new systems also cost money, require training, and don’t always produce the return on investment (ROI) expected. With these variables in play, ocean carriers are being forced to make some difficult decisions just as they’re also dealing with a global pandemic, major supply chain interruptions, and new limits on the use of sulfur in fuel oil used onboard ships (IMO 2020).
In Container shipping laden with ‘antiquated processes,’ FreightWaves highlights the need for a “common business language” that would help container carriers operate more efficiently in the global business environment. Until this happens, the Digital Container Shipping Association (DCSA) says important information will continue to be lost in translation.
“When we look at what technology can do for us today, we feel that we are being held back by a number of problems,” DSCA’s Thomas Bagge told FreightWaves. “First, there are many parties involved in international trade,” including shippers, consignees, freight forwarders, and customs house brokers. When it comes to the exchange of information, it is of course problematic.”
Blame the high volume of required documents—invoices, bills of lading, letters of credit, and inspection certificates, etc.—with even further complicating the shipping process. “The ocean container shipping industry is using antiquated processes, from quoting to booking to bills of lading,” Bagge continues. “It’s quite a lot of back and forth. One of our members has estimated they have about 50 email exchanges per one [booking].”
Closing Information Gaps
In an industry where the mismatch between ship capacity and available cargo is a common pain point, Maritime Executive says technology can help solve that problem while also improving freight utilization. “Since carriers are using multiple platforms and spreading their shipping volumes across platforms, shippers cannot get a clear and holistic view of availability and pricing as they have to go into several booking platforms to get the best price.”
Plus, most booking platforms allow shippers to book online and also handle invoicing, but they can’t track the entire transaction lifecycle from price discovery to final settlement. Using shipping marketplaces, all participants in the transaction can collaborate online and have access to information 24/7. “Shipping marketplaces can aggregate capacity supply and demand, as well as standardize and disseminate market data,” it says. “As a result, buyers and sellers can participate in price discovery and execute transactions efficiently, which saves time, reduces costs, and contributes to sustainability.”
Technology can also help streamline and optimize shipping and logistics workflows, while blockchain-enabled solutions can help eliminate paper trails, mistakes, and administrative tasks. Combined, these tools “can help to solve the transparency and capacity challenges endemic in shipping and logistics, increase revenue, and reduce costs,” Maritime Executive concludes.
DB Schenker’s Head of North America’s LCL, Cindy Hornung added, “LCL freight is not historically thought of as having a need for speed, although the nature of the business does lend itself well to technology advancement. However, having said that, most customers in the LCL spot quote market are about getting the cargo off their docks – you need speed to market with your quotations. Our Connect 4.0 option provides that speed of obtaining the quotation, knowing a vessel schedule and at the same time allowing the client to proceed direct to the booking phase, all within the same platform. The booking feeds direct into our operating system allowing our cargo agents to act on it within minutes of it being made. We are constantly expanding our door to door LCL coverage in our Connect 4.0 program and can today offer a client thousands of D2D combinations.”
Ports Get into the Tech Game
Ports are also investing in more technology. Responsible for about 90% of all worldwide commerce, maritime companies are developing the next generation of autonomous ships and leveraging artificial intelligence (AI), machine learning (ML), and more to design 21st-century smart ports, TechRepublic says. “That said, inherent within digital transformation is of course the transformative process itself. Historically, some ports have relied on rather low-tech, manual solutions.”
Using AI and ML, for example, both ports and ships gain access to insights that help them reduce bottlenecks at ports and reduce the risk of accidents both on the water and while in port. For instance, by monitoring the structure and the meteorological environment at the port, officials can adjust the docking and crane operations to increase safety.
“Cranes can be equipped with cameras, an anemometer, and other sensors to monitor the torque of the structure during operation,” TechRepublic explains. “Machine learning can then analyze this data to monitor trends and predict failures before they happen.”
From DB Schenker’s Experts
Cindy Hornung; Head of LCL, North America
“LCL freight is not historically thought of as having a need for speed, although the nature of the business does lend itself well to technology advancement. However, having said that, most customers in the LCL spot quote market are about getting the cargo off their docks – you need speed to market with your quotations. Our Connect 4.0 option provides that speed of obtaining the quotation, knowing a vessel schedule and at the same time allowing the client to proceed direct to the booking phase, all within the same platform. The booking feeds direct into our operating system allowing our cargo agents to act on it within minutes of it being made. We are constantly expanding our door to door LCL coverage in our Connect 4.0 program and can today offer a client thousands of D2D combinations.”
Raymond Tsang; Head of Ocean, Canada
“It’s clear that advancement in technology has made its way into the ocean freight industry. Shipping lines, freight forwarders, ports, etc., have all begun adapting to the world of technology. A combination of the right technologies, supported by enhanced business processes, can give the ocean freight forwarding business a sustainable and competitive advantage. For example, linking purchase order management systems to transportation systems to customs systems and so on. Innovative technology is virtually an “enabler” to improve operational efficiency by automating operations and other transport and logistics processes which ultimately means a more fulfilling customer experience and return business.
Undeniably, automation and digital innovation are a necessity for the freight forwarding business going forward, however, freight forwarders are not going to disappear. Shipments still need people working behind them with experience and know-how, who can handle the complexity that international logistics demand. Going digital can’t replace this, but it can improve it, leaving all the manual processes that may create errors or rework behind.”