In the 1950’s, global trade changed for good. The invention of the standardized container suddenly meant that transporting goods across the world became affordable—and with that, pathed the way for globalization and global wealth. In effect, the simplicity of the container lifted billions of people out of poverty, but contrary to the container itself, most surrounding processes are still frustratingly complex, manual and error prone.
Today, while consumers are used to managing half their life online, companies still rely on manual processes to perform mundane, repetitive tasks which could easily be automated through technology.
As such, a recent conversation with a leading feeder carrier yielded a startling inefficiency: One of their employees is tasked solely with manually handling booking enquiries and requests for quotations, which amount to a staggering 50-70 emails per day. What’s worse, out of these less than 1% convert to a booking! Moreover, within many logistics companies, employees maintain their own "master sheets," meticulously recording rates, billing information, booking references, and network provider details.
To contextualize this level of inefficiency, our recently published report titled ‘Benefits of Digitalizing Container Operations’ exposes quantifiable inefficiencies. It found that 93% of logistics professionals are spending nearly half of their working day addressing operational problems, 4 hours a week to source one new partner when needed, and 3-4 hours per week discussing terms and conditions with new partners. Remarkably, all these labour-intensive tasks are conducted without the support of standardized systems.
Even in light of these evident inefficiencies, which lead to squandered time, finances, and resources, the 2022 Global Trade Report by Thomson Reuters highlights that a significant portion of businesses acknowledges being either behind the curve or in the early stages of adopting trade and logistics technology.
Navigating the Digital Waters with Three Key Strategies
Before delving further into the factors that have hindered businesses from fully embracing interconnected and streamlined trade practices, let's pause for a moment to reflect on the three key advantages that digitalization brings to businesses: enhanced people efficiency, streamlined process standardization, and elevated customer experiences. Together this yield either an uplift in revenues or a decrease in operational costs—making the business more competitive.
By efficiency of people, we mean that every person in or outside the organisation, involved in the movement of cargo, can deliver more value through the adoption of technology in the day-to-day operations. .
Second, digital tools and technology can simplify and standardise procedures and processes—resulting in fewer errors and omissions.
And third, customer experience gets amplified as customers benefit from data driven decision making, improved collaboration, optimized resource allocation and a more sustainable use of limited resources.
These advantages merely skim the surface of what lies ahead for companies that set their course toward full integration of digital technology.
Given the apparent and compelling benefits of digital technology, a pressing question arises: If digital technology is so obviously beneficial, then why are supply chain businesses so slow in adoption?
Anchored in Tradition: Resistance to Digital Technology
Firstly, the container logistics industry is extremely competitive. Many companies are reluctant to share their confidential data and bring their personal networks online because they fear compromising competitive advantages. This reluctance even stems from a belief that individual negotiations might lead to better outcomes than embracing standardized "bookable prices."
Second key barrier is the high risk, low trust nature of shippingand the perceived comfort of having a human to manage a crisis.
Shipping Supply is a people’s business and because the industry is high-risk, businesses prefer to talk to a human on the other side of the table.
There are innumerable unforeseen events like delays, container damages, thefts and pilferage, revenue losses due to incorrect documentation, cargo loss or misplacements, container overload, customs and regulatory issues, communication breakdowns, inadequate insurance coverage, payment disputes, lack of container price visibility, insufficient trading networks, and many more.
Supply chain professionals face numerous challenges every day, and dealing with this always requires the people to exchange a lot of communication, often ending up as a one-on-one format.
The third key barrier is the thin margins, and high investment required for digitalising container operations.
Particularly for small and medium businesses operating on tight financial constraints, the prospect of heavy investments in digitalization can seem daunting. This reluctance is often rooted in the uncertainty of immediate or visible returns.
In such an environment, allocating resources to digital initiatives might appear financially risky, especially when the outcomes are not assured. These businesses might be skeptical about the potential benefits outweighing the considerable upfront costs.
Furthermore, the lack of a clear roadmap or assurance of success can exacerbate the reluctance to invest in digitalization. The shipping industry's inherently complex nature can make it challenging to project how and when these investments will translate into tangible operational improvements.
Embracing the Digital Mindset: A Fundamental Shift
To overcome these barriers, it is imperative for businesses to understand that digital tools are not merely operational enhancements but vital drivers of competitiveness and trust-building. This realization rests on two fundamental pillars. Firstly, technology-driven advancements, when strategically incorporated, significantly heighten a company's competitive edge. They empower personnel, streamline processes, and enhance customer experiences, culminating in improved operational efficiency. Secondly, these digital transformations dispel the notion that automation erodes trust. On the contrary, real-time tracking, predictive analytics, and transparent communication build a foundation of reliability and accountability, strengthening relationships with partners and clients alike.
To truly capitalize on these opportunities, it's not just about adopting technology, but also about fostering a mindset shift within management. Company leaders need to embrace and champion digital adoption, understanding that it's an investment in sustained growth, resilience, and industry leadership. Here are some immediate actions that will help companies build truly remarkable tech-enabled supply chain businesses of the future.
The Digital Shift Starts with People
The success of digitalisation lies in the commitment from top down. Prepare and equip your leadership team to embrace the digital shift by providing them with the necessary training and insights. Engage them in shaping the digital strategy and instil a sense of priority for technology adoption.
To start, identify what's causing you the most trouble right now, and prioritize these issues. Once you know where the pain points are, find simple solutions that can be put into action quickly—in technology companies we call those “MVPs” (Minimum Viable Products). Don't worry about big, complex changes right away. Instead, focus on getting some small wins under your belt. Implement these solutions swiftly, then learn from what you've done. It's all about trying things out, iteratively seeing what works, and what doesn't.
Remember, you don't have to do everything at once. Take it one step at a time, and you'll be surprised at how much technology can improve your operations. And for many of those pain points that you will have identified, there are also already off-the-shelf solutions available. The key is to have a clear plan – figure out what problems you want to solve, choose the right tools for the job, and make sure each step moves you closer to your goals. This way, technology works for you, not the other way around
About the Author: Christian Roeloffs is the Co-Founder and CEO of Container xChange,an online container logistics operating platform.
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