May 3, 2017

Ocean carriers see "digitalization" as next frontier for improving costs and efficiency

Shipping lines are exploring further automation of trade and finance documentation and the Internet of Things.

By Toby Gooley

While membership in carrier alliances—partnerships in which shipping lines share vessels, equipment, terminals, and landside operations—are helping the struggling industry to reduce costs and improve efficiency, the next wave of improvement is likely to come from another direction altogether: "data digitalization," according to speakers on a panel at the Coalition of New England Companies for Trade (CONECT) Northeast Trade and Transportation Conference, held last month in Newport, R.I.

Ocean carriers have participated for years in cloud-based collaboration platforms such as GT Nexus and INTTRA, which automate certain transactions between supply chain partners. They and other collaborative programs continue to upgrade their products and add new capabilities, and their value is not in dispute. But some carriers are looking for additional ways to use technology to improve communications, information accuracy, and data acquisition and sharing.

Perhaps the hottest topic right now is the further automation of trade and finance documentation. A growing number of financial technology, or "fintech," solutions providers aim to make all domestic and international trade transactions, from one end of the supply chain to the other, fully digital and automated. Jay Buckley, executive vice president of Evergreen America, said his company has a relationship with one such firm, U.K.-based essDOCs, a software company that digitizes the creation, approval, and exchange of trade and finance documents.

Maersk Line is looking toward data digitalization to provide efficiencies and improve the customer experience, said David Zimmerman, vice president, North American sales. Maersk and IBM announced in early March that they were collaborating to develop a "blockchain" solution to digitize, manage, and track billions of transactions associated with millions of container shipments annually. Blockchain is an immutable and secure network that allows all parties in a supply chain to digitally exchange information, documents, and payments while viewing every step of a shipment's status in real time, depending on their level of permission. This includes not just trade and logistics activities but also sales, finance, and governmental transactions.

Marrying the flow of goods and the flow of finance in such a secure and transparent way, Zimmerman added, could potentially allow Maersk to do something like advance funds to a shipper and hold a container as collateral.

The solution is based on the Linux Foundation's open-source Hyperledger Fabric program, and Zimmerman said he expects that ultimately all digitized trade will be based on open-source technology.

Maersk is also betting heavily on the Internet of Things (IoT). It is outfitting all of its refrigerated containers with global positioning system (GPS)-based remote monitoring devices to track equipment. One unanticipated benefit of remote equipment monitoring, Zimmerman said, was that real-time information on the containers' locations allowed Maersk to determine whether the ships carrying those containers are speeding up or slowing down. Maersk shares that information with the ships' captains, who can then take action to optimize fuel efficiency, he said.

Maersk is now expanding the remote monitoring program to dry equipment, Zimmerman said.

About the Author

Toby Gooley
Contributing Editor
Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

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