Digitalisation in shipping is on the lips of everyone but how prevalent is it really? hongkongmaritimehub asked Vijay Minocha, president Asia Pacific, INTTRA.
To what extent has digitalisation been taken up by shipping companies in Asia and how does this compare with Europe?
VM: The speed of adoption in Europe and Asia has varied, although not for the same reasons.
Conditions in the developed world economies, political changes and environmental concerns have been at the forefront for Europe, which is why that region took a lead in the adoption of technology.
Asia’s lag in digitalisation has also been driven primarily due to the wide availability of cost-effective labour, which means that in the past increasing scale at a lower cost has never been an issue. However, today technology is adopted as a necessity. In the long run, digitalisation delivers value in all areas of operations, optimization, and process integration and in general alters the way organizations conduct business.
Adoption of technology is now gaining pace in Asia. In recent years, we’ve seen a number of start-ups in India and even Thailand bringing technology and digitalisation to the industry. That’s because even with cost-effective labour they are seeing the need for efficiencies that come via the digital route. Additionally, while labour costs traditionally have been lower in Asia, they are now increasing across the region, especially for highly qualified, professional labour. That increase changes the prior favourability of using manual processes and is pushing more carriers towards digitalisation. As carriers and freight forwarders start turning to technology they’ll see how it can help to eliminate waste, improve customer service, reduce manual labour in the system and streamline the industry.
What are the resistance points and how can they be dispelled?
VM: Probably the greatest hindrance to digitalisation is the mind-set of the decision makers and the fact that it has not been a priority up until now.
The focus within shipping companies has always been on two aspects: First, the size of the asset to reduce slot costs; and second, consolidations to achieve increased network and market share, as well as lower costs.
It is only now that it is changing.
At one point, technology initiatives such as Big Data and cloud technology were always best left out of boardroom discussions because of perceived costs; today, however, they are discussed by the commercial teams of shipping lines, something that was never seen in the past. The end shipper asks for transparency and timely information to optimise his processes. If he gets it from one carrier, he expects it from the others.
Market share now is not as important as is profitability, which has eluded this industry for many years. A concentrated focus on technology to bring a reduction of costs and increased service delivery is now quite visible and is growing in importance with Asian carriers.
Today, technology is adopted as a necessity. With tight profit margins, decision makers have to strategically choose from numerous options that are available, such as buying assets and investment in resources, equipment or people, which are all necessary to increase revenue and reduce cost. This is where technology steps in to play an integral role.
What are the main benefits of digitalisation?
VM: A strong business network is an asset in shipping – multiple relationships with agents, partners, customers and suppliers provide for a broader reach. As the industry experiences accelerated digitisation, it means more connections need to be digitized. It may be a lengthy and expensive proposition unless it can be done by digitizing a single connection to a network with a large number of trading partners already on it.
Data exchange and analytics across multiple vendors in one transportation chain will facilitate optimization and increase velocity in logistics through predictive analysis and better planning. Leveraging this network will allow consolidation and harmonization of business processes, ultimately culminating with automation through artificial intelligence.
Digitalisation and a bridged network will allow the integration of the three work streams of shipping – operational, financial and informational. This will trigger breakthroughs in cost reduction and operational efficiency, manifesting as Integration of rates information into operational scheduling and creation of an original, immutable, digital bill of lading.
INTTRA, the largest neutral electronic transaction platform, software and information provider at the centre of the ocean shipping industry, connects more than 60 shipping lines with thousands of freight forwarders and BCOs for booking and tracking of containers. The more companies that join our network, the better value we can provide to the rest of the community by offering connections to a larger number of customers, delivering the world’s largest collection of oceans schedules and efficient data analytics.
Would the normal scenario be for a shipping company to adopt digital processes across the operation or piece meal?
VM: Shipping companies vary in the level of sophistication they adopt in their technology systems, their use of data, as well as system integration levels. There are few that have stepped up in the race to take first-mover advantage.
INTTRA envisions the emergence of packaging of innovation – incremental changes with clear results and faster routes to ROI instead of drastic changes to ERPs that we have seen in the past.
The most advanced players will streamline significant parts of their operations and start building digital networks with other IT-solution providers, increasing profitability and improving service delivery at a quicker pace.
How can INTTRA help?
VM: INTTRA’s assistance comes through information technology driven innovations and from our position as a neutral network at the center of the ocean container shipping industry. INTTRA also helps by:
Delivering products that are designed to eliminate waste, improve service delivery, reduce manual labour and streamline processes, thereby achieving efficiencies and reducing costs.
One product INTTRA just introduced is a new Container Forecasting and Allocation Solutions Tool known as C-FAST. C-FAST is for Freight Forwarders and NVOCC’s and matches the forecast of their customers’ anticipated container volume to carrier capacity availability, and reduces manual efforts by up to 40%.
We also assist through our platform that facilitates seamless connectivity to a growing network, allowing the acceleration of business velocity and improved cost efficiency.
Delivering analytics that INTTRA makes available to its customers, allowing internal optimization through scrutiny of key performance indicators and shipping trends in multiple scenarios.