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5 lessons in digitalisation

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The future of shipping is being shaped rapidly, and one thing is sure: it’s digital.

“Digital is the only way forward”, Camille Egloff, Senior Partner & Managing Director at The Boston Consulting Group, told us earlier this year. “There is only going to be acceleration. I think that companies who have not yet embraced digital will come to it, and the ones who already started will accelerate and start to get the benefits.”

Indeed, 2018 is all about reaping the rewards of digital innovative changes. Although it is still too early to draw final conclusions, large players like Maersk and Torvald Klaveness reported positive experiences in their digitalisation programmes at Global Liner Shipping & Shipping2030 Asia this year.

“We can actually see tangible results based on early sea-trials”, Michael Rodey, Senior Innovation Manager at Maersk, commented on a currently on-going situation awareness AI project.

While Maersk is driven by “performance, booking, and safety”, Torvald Klaveness takes “pride in actually innovating”, Vice President of Commercial Operations in the Asia Pacific Jiten Mehra told audiences.

Based on the examples they have given us, the value and meaning of innovation is becoming clearer. As I stated before, final conclusions are too early to draw, but there are 5 things we can be certain of.

Digitalisation is not a choice

We’ve heard this before, and admittedly, it is not the most ground-breaking lesson to be learnt, but the significance of this is no laughing matter.

Shipping is part of the much larger transport industry, which according to Alexander Varvarenko, Owner & CEO of SHIPNEXT has already digitalised to a great extent.

“If you look at taxis, it is digitalised to its greatest extent”, Varvarenko explained. “You don’t have to look through yellow pages anymore to find a taxi, then wait an hour for it to arrive. Will it ever go back? No. Do taxi driver like it? No, they don’t. Do they have a choice? They don’t.”

“Digital disruption in shipping is unavoidable”, Sanjaya Mohottala, Partner & Managing Director in Singapore of The Boston Consulting Group, confirmed.

But as the first movers are charging ahead, the rest of the industry needs to catch up.

“We have these digital smart solutions starting with AI, IoT, and analytics for ship operations and AI and blockchain for ship management”, Maria Lambrou, Associate Professor of Digital Business from the University of the Aegean, commented. “These are the examples set by leading players in the industry. But more than that, there are very interesting nuances and disparity in the field. We don’t have just the leaders. We have another set of organisations operating there, and we have to think of them as well and leave some space for different – digital – strategies.”

Startups will be your competition

The maritime industry is not lacking in startups. As of August 2018, Leonardo Zangrando, Founder of the maritime start-up accelerator Startup Wharf, noted over 100 companies in various stages innovating various parts of the supply chain.

Leaving the digitalisation process late, Mohottala predicted that “you will end up competing with new startups which are looking to disrupt from outside whether it is booking platforms, chartering platforms, AI solutions, or someone who provides predictive maintenance”.

Although this notion might be inconsistent with the idea of a startup which usually needs collaboration with stakeholders in order to get funding, an interview with Wartsila’s Director of New Businesses Melvin Mathews suggests that those in the maritime industry are already looking to expand their horizons.

“We are constantly looking out for what we can acquire, who we can partner with, where it is that new technologies are evolving, how we can utilise new technologies, because our customers are not in the business of buying artificial intelligence or machine learning. They want tangible solutions that these technologies can enable and bring value to the business”, Mathews told us.

Platforms are important

During the panel discussion, both Mehra and Rodey gave us several examples of how they are digitalising their respective organisations. One thing that stood out was their use of platforms to collate and organise various data in order to improve their internal efficiency, drive fuel reduction, and provide a meaningful way for customers to engage with them.

Your people & customers come first

The use cases outlined by Mehra and Rodey have very clear purposes, and it is to help employees and customers make better decisions.

Klaveness’ internal platforms aim to provide employees with valuable data insights quickly, avoiding time-consuming search for data across several systems and spreadsheets.

Maersk’s Connected Vessel programme gives seafarers information about their performance, and intelligence to do their jobs better and safer.

CARGO, Klaveness’ customer platform, was created to meet customers’ needs and offers a place where customers can better manage their shipments themselves.

Writing for the World Economic Forum, BCG Senior Partner and managing Director Jorge Becerra noted: “as most digital transformation across industries and countries continues to unfold, the people dimension of these transformations has emerged as the key to unlocking value and ensuring the sustainability of the changes”.

The measurement of your digital success is up to you

ROI or ROX? When it comes to digital technologies, there are many approaches businesses can take to justify their development. But the IT industry’s priorities are different to shipping’s.

“Some are after disruption; some are after creating completely innovative solutions, and some are after changing the industry”, Varvarenko said. “If you ask Elon Musk, for example, is he actually after money? I would doubt he would say yes. I think he’s after creating a different world. And this is what the IT industry, when we talk about disruption, is after.”

Return on investment “is for the radical and incremental innovation”, Lambrou agreed.

But according to Rodey, there is a balance between return on investment and return on experience.

“As we move further down towards digitalisation, the issue that comes up is that we are moving further away from the customer”, Rodey said. “This actually creates a weird paradox, and one of our main focuses right now is getting closer to the customer. So, as we move towards this digital frontier, the middlemen start to go out. At the same time, you have these booking platforms that separate you from the people out there who are actually moving the goods, so how do you interact with your customer to create a bespoke solution?”

The competition in the shipping industry is only getting fiercer. But it seems that with the right digital tools, businesses could gain a competitive advantage.

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