We’re living through an era of connectivity never thought possible. Through the touch of a button an order can be placed which triggers a flurry of action on the backend for order fulfillment. In just a few days, or even a few hours, a packaged ordered can be delivered right to your doorstep. Robotic automation already dominates many parts of the manufacturing industry, and we’re on the verge of accepting autonomous driving trucks on the roads as well as flying drones for deliveries. Yet through all this, the container shipping industry lags far behind with much of the bookings and work still being done through the phone, fax and on paper.
For a deeper insight into what digitizing container shipping could mean for the industry, we had the pleasure of speaking with Ms. Inna Kuznetsova, President & COO at INTTRA. Her extremely knowledgeable insight into all parts of the industry and her strong IT background has made her a firm believer in the untapped power still waiting to be unleashed for the container shipping industry.
A Firmware Update for the Industry
The container shipping industry is known for its relatively reliable cyclical nature, where there’s undoubtedly going to be good and bad years. However, the downward cycle we’ve been riding has been anything but business as usual. As seen last year with the high-profile collapse of Hanjin and the many mergers and acquisitions that reduced the Alphaliner top 20 list down to just 14 in only about one year.
At the start of 2017 we’ve seen an increase in rates, but it’s not clear how sustainable they will be. With the looming threat of even more mega vessels coming online and making an overcapacity situation even worse, there’s reason to see why some are worried. The business model that many carriers have been working with for many years needs an update; a move towards a more connected and digital industry is the course we need to set.
Ms. Kuznetsova believes that as carriers and freight forwarders start turning to technology they’ll see how it can help to eliminate waste, improve customer service, reduce manual labor in the system and streamline the industry. She said, “It’s been 15 years since INTTRA began as the first portal to provide booking instructions online. As we touch almost 27% of all containers in global trade we have a window into the inner workings of the industry, and we’ve found that digitization is accelerating. However, we’re still at the 50% mark for digital submission of booking and shipping instructions, half of them are still submitted by phone and fax. I believe that much of the losses we see in the industry can be sufficiently reduced by the utilization of proper digitization in the industry.”
A Legacy to Overcome
If transitioning to a more connected and digital industry will help everyone, why hasn’t it happened yet? Ms. Kuznetsova’s believes that the impediments to digitization are not regulatory, it has more to do with the legacy and history that the ocean industry carries. The state of fragmentation the industry find itself in now is one of the biggest hindrances for true digitization to take over. “There’s many areas to consider, like the operational flow for booking and tracking a container on a vessel and the logistics of working with the land operations. You also have a financial flow, where you must provide rates, invoices, bill of ladings, and submit the BOLs for a letter of credit. Then of course there’s the informational flow, with regulatory and environmental compliances that has only been growing over the past few years.”
She continued, “Traditionally, each of these areas have been automated separately. Either within the same carrier or across carrier communities. Integration of operational, financial, and informational flows into one system would allow you to audit invoices automatically or provide a letter of credit and really integrate delivery and tracing of the data and invoicing. However, because cargo touches so many hands and so many companies across the network this is a difficult proposition. As the saying goes, a chain is only as strong as its weakest link. Even if most of logistics providers touching the cargo are fully automated, just one provider using manual processes can break the chain; there’s only so much you can do to streamline informational flow. This fragmentation and legacy behind it has been causing the industry to struggle.”
As the digital divide grows ever larger between those in the industry, we’re at a tipping point now. There’s of course still value and a need for humans in the mix, as most customers will want the ability to talk to someone they know and trust. However, the direction towards the type of automation that streamlines the industry and makes it possible to make a profit in these increasingly tough times is what the industry should strive for.
INTTRA’s role in the push for digitization can be seen with the numerous programs and partnerships with vendors they have developed. Together, they are building the type of platforms that look to bring about change to the industry. One of the most recent and successful initiatives for INTTRA was their e-VGM platform that was adopted by many for the SOLAS regulations that went into effect last year for container weighing.
“Last year INTTRA launched an e-VGM initiative with top carriers and shippers as a call to the industry to do things digitally and stay with a preference for digital. A year later and almost 90% of VGMs are submitted digitally. Some shippers use INTTRA’s service, carrier direct websites, or smaller port solutions. However, most VGMs are now being provided digitally. It took 15 years to digitize 50% of the shipping process, and yet we’ve proven the industry can adapt quickly with our e-VGM project leading to almost full digital adoption in only one year. I think this reflects the accelerating speed of adoption of technology we’re seeing in the industry as a whole,” said Ms. Kuznetsova.
We’ve seen in the past big IT projects that have failed publicly for the ocean industry that soured some to new IT advancements. That’s why INTTRA’s successful e-VGM initiative should be applauded and used as a blueprint for future digitization efforts. These smaller focused IT solutions allow a problem to be tackled and solved more efficiently. It’s a bit unrealistic to think one solution would be able to cover the industry at large. Smaller applications bring real value to the industry without the traditional big vendors, with big overhead that accompany these expensive projects.
“With all the struggles the industry seems to have, digitization seems to be the clearest answer in sight to solving many of the problems.”
Ms. Kuznetsova concluded, “The current trend will favor very focused solutions that solve issues like dwell time management, empties management, integration between inland and ocean movements, and tracking for containers door-to-door. This trend favors logistics startups and will favor INTTRA who combines logistics and IT expertise and brings small solutions to the market that allows shipping companies to tackle one problem, show a return, and solve each issue one-by-one. We’re starting to see both large carriers and shippers opening their funds and their minds to experimenting with some of these projects. With all the struggles the industry seems to have, digitization seems to be the clearest answer in sight to solving many of the problems.”