Is it time for shipping industry’s digital transformation?
With less than 40% of commercial shipping fleet using even basic software service, you might think it is too premature to discuss digital transformation. However, change usually happens when no one is expecting it. Sea freight forwarding has stayed the same for too long as compared to the land and air logistics and this is an opportune time for shipping to undergo a transformation to match the customer expectations.
Even though more than 80% of all commercial cargo is transported via sea freight forwarding services, the digitization and visibility as compared to other modes of transportation are very low. All this is set to change as technology enhancement makes it possible to have better connectivity and tap opportunities that were missing earlier.
There is a conducive environment for digitization in sea freight forwarding
Despite being an important cog in the wheel of supply chain solutions across the globe, shipping is yet to adopt the kind of digitization seen in the land-based logistics sector. One of the primary reasons for this was the connectivity issue and the highly fragmented nature of the segment. Technology advances like the launch of low earth satellites that enable constant connectivity and communication between the ship and the shore, and emergence of cloud-based services have made the environment conducive for a digital transformation in the shipping industry.
This is not just about embracing something that is trending, but more about adapting to the new world to ensure a competitive edge in the long run. As the logistics industry undergoes changes and there is a growing need for regulations, it is important that the shipping industry leverages technology to achieve maximum potential.
Let us look at some of the key reasons for the shipping industry's digital transformation
Need for visibility
Shipping is a fragmented and a complex process. Multiple players like ship operators, freight forwarders, cargo owners, etc. need to get complete visibility to plan the next steps. Such visibility is essential for the business, considering the high costs involved. Another benefit of visibility is the speeding up of processes. Better visibility will optimize workflows, streamline custom reporting, enhance compliance, anticipate delays and help in better customer service. Freight forwarders need to track multiple shipments at any given time, digitization in communication, data collection and data retrieval will help them serve their clients better.
As businesses world over are pledging support to Carbon Neutrality, supply chain as an industry cannot stay immune. While there is a direct responsibility to reduce the carbon footprint for the industry, there is also an additional obligation, as no business can be truly carbon neutral without its supply chain being so. Digitization can help shipping companies optimize their travel routes, reducing fuel consumption. Regulations by organizations like International Maritime Organization already expect shipping companies to reduce sulphur exhaust. In the coming years, such regulations will tighten even further as global shipping industry alone emits 18% of air pollutants. Keeping a track of the equipment, routes and machinery will be easier with digital native apps. They can provide regular updates even when the ships are at sea.
Apart from the environmental regulations, regulations by law, requirements by insurers and other law enforcement agencies would require greater transparency and detailed record maintenance. These are possible only with digital tools. Simple, lightweight apps and solutions that can quickly and easily transmit data regularly will be important for shippers. These regulations will force organizations to scramble for digital solutions if they do not invest in them today.
Power of Insights
Last but not the least is the power of data and insights. Data is known as the new gold however, that is only true if you can draw insights from the data that you have. Shipping industry has data or rather there is a data overload. It is time to efficiently sift through the data and glean insights that can help businesses make profitable decisions.
The same is true for sea freight forwarders as well. Digital tools like CRM and lead management tools can help sea freight forwarders identify opportunities. It will also help them close leads faster and ensure that they don’t slip through the cracks. Past data can provide insights about possible cyclical changes that otherwise are missed.
Big steam ship liners like Maersk have begun their digital transformation journey. Predictive AI powered analytics is helping predict accurate arrival times and monitor conditions of the cargo. It can also provide the status of conditions within the containers. The time has come for others to follow suite. It is time for shipping industries digital transformation and it is better to be prepared than to miss the opportunity.