The maritime trade industry is a complex behemoth. The industry transports more than 80 percent of global merchandise in terms of volume, and over 70 percent in terms of value. Between the sheer volume of cargo, the number of stakeholders involved, regional bottlenecks and global regulations, there are always a number of moving parts that require constant management and monitoring. This delicate balancing act has been further complicated by a global pandemic, adding pressure to an already stressed supply chain infrastructure. It’s understandable why the backbone of globalization once taken for granted is now getting its time under the spotlight.
Pandemic-induced disruptions in maritime trade have underlined the importance of strengthening maritime transport efficiency. Unlike with passenger transport, cargo needs to be packed, moved, cleared and scrutinized. For this, you require dedicated specialists fulfilling various specialized tasks in the value chain. Further, in order to unlock short-term productivity in a significant way, each of these players must have the ability to share, analyze and action information dynamically.
We presently see a number of digital transformation initiatives among large players across the industry. However, in order to adopt Supply Chain 4.0, the larger ecosystem must also be onboarded in a standardized and inclusive way. The International Maritime Organization’s Facilitation (FAL) Convention took a step in the right direction and made it mandatory for national governments across the world to implement electronic information exchange between ships and ports. Yet, a global survey conducted by The International Association of Ports and Harbors in October 2020 found that approximately a third of the ports globally have not commenced the process of implementing respective electronic data exchange systems. Based on the observation, the report states, “Low conformity rate with the FAL requirement stresses the need for accelerating digitalisation to mitigate the impact of crises such as the Covid-19 pandemic.” Therefore, the verdict in favour of digitalisation is undisputed.
In a relevant survey, McKinsey & Co. observes, “Operational productivity—especially the interface among ships, ports, and hinterlands—is central to the creation of value in the container-shipping industry. This data can improve the coordination of arrivals at port—a major benefit, since 48 percent of container ships arrive more than 12 hours behind schedule, thus wasting the carriers’ fuel and underutilizing the terminal operators’ labor and quay space”, not to mention the constant pain and inventory pressure faced by the customers – all while causing unnecessary harm to the environment.
The harnessing and usage of data will only bring further acceleration in productivity. Shipping companies can witness the transformation in today’s aircrafts which generate around 1TB of data per flight. Additionally, with the ability to capture more data points through IoT sensors placed on vessels and cargo, real time optimization of voyages can now create significant enablement for customers as well. End-to-end visibility of the supply chain is a huge benefit for all stakeholders as it helps to accurately calculate a container’s ETA and further strengthens efficiencies in supply chain planning and management. Ventures such as Maersk & IBM’s Tradelens are doing just this by utilizing blockchain to efficiently share information in real time through onboarding the larger supply chain ecosystem.
A truly integrated end-to-end flow of cargo would make the industry considerably more efficient by decreasing handovers, waiting times and unnecessary communication. The study from McKinsey further quotes, “The real-time visibility of all container movements, reliable forecasts, and integrated flow management will pave the way for flexible, dynamic supply chains that all but eliminate waiting times and inefficiencies. This achievement will be especially beneficial for industries (such as automotive) that have increasingly complex supply chains or for those with special needs (such as cold chains)”.
The enhanced use of advanced technologies such as data science and automation will certainly facilitate upskilling of the industry. In contrast with the common misconception of job reduction, the technological advancements would instead enable more exception management which require human intervention and problem solving. A major pain point for people working at operations and customer service positions, especially in logistics companies, is the large amount of repetitive and mundane tasks. By replacing these tasks with automation, an employee’s bandwidth can be directed towards enhancing moments of customer delight and improving overall customer experience.
In conclusion, advancements in technology will certainly be a driver of enhanced customer experience and subsequently, provide a multiplier effect on manufacturing processes and consumption behaviour. The growth of e-commerce and the entry of new tech-enabled start-ups in the logistics space have infused the industry with the urge to overcome hurdles via continuous innovation. A major factor to enable transformation, however, lies with the large legacy players with gargantuan networks and infrastructure moving towards a mindset of inclusion and standardization. At a time when maritime trade has to function by complying with various regulatory, environmental and safety norms to keep the wheels of the global economy moving, digitalisation will help to strengthen the resilience and sustainability of the maritime supply chain in a big way.
The author is Vaishnav Shetty, Executive Director, ECU Worldwide.