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Digitalisation of bulk shipping - Part 1

Digitalisation of bulk shipping - Part 1

Digitalisation is a hot discussion topic of today, and what’s on everyone’s lips, is how will it impact shipping? Digital developments will provide opportunities and benefits but the industry-wide digital transition will take time.

We got an opportunity to talk to ex-Master Mariner Melvin Mathews who is passionate about the environment and emerging technologies. Melvin is here to talk to us about digitalisation and how owners and operators are seeing its benefits as they push for greater operational efficiencies and competitive advantage.

Hi Melvin, thanks for seeing us today. We are looking forward to getting your input on these burning industry questions. Let’s start with the current situation: In your opinion what are the biggest challenges in the bulk segment in general currently?

Melvin Mathews (MM): The bulk segment was navigating its way out of the doldrums towards the end of 2018 with positive cash flows. The recovery was triggered by a healthy growth in demand. However, the situation has dramatically changed since. Throughout 2019 the impact of trade wars was being felt with diminished trade flows between the United States and China, leading to a slowdown in global GDP growth. The uncertainty has impacted investments, manufacturing and shipping.

The final blow was received by the outbreak of Corona virus, the impact of which was felt from early 2020. Several manufacturers in China were instructed to shut down their processes to minimize the virus spread. Ocean-going vessels to and from China have been reduced to minimise the spread of the virus while China remains the pillar of the global entwined supply chain.

Natural disease manifestations at a global scale of course cannot be predicted in advance and neither can trade wars be foretold early enough. However, there is a more fundamental challenge and inherent problem within the bulk cargo segment, which involves the lack of visibility across the bulk supply-chain and the almost nonexistence of capability for accurate forecasting, not just in routine trade operations but also when such untoward and unexpected events occur.

What kind of solutions do you see solving this problem?

MM: The lack of visibility and the ability to forecast mining or production of bulk raw materials, manufacturing, trade and transportation can be solved to a great degree by digitalisation. A range of point solutions have blossomed to solve specific pain points or generally increase efficiency in targeted areas.

What the industry urgently needs is that the point solutions rather than act as watertight compartmentalised entities addressing specific issues, they proactively communicate and interact with each other across the bulk supply chain. This will also inevitably eliminate the plethora of entities that act as unnecessary gatekeepers of information, that thrive on the lack of transparency, without adding significantly to the value chain of bulk transportation.

Hence technology solutions should be open to receiving and sharing information that will improve the bulk supply-chain as a whole.

Completely agree with that. Well, how do you see digitalisation changing the industry?

MM: Digitalisation continues to change the industry in many ways. It began with equipping vessels with sensors, devices and equipment that produced digital data. Ashore it meant almost all activity of a repetitive nature is automated and computerised. This ensures that everything that is in physical format is converted into a digital one. Digitalisation allows leveraging this process improvement into business competitiveness and enables exploring new business models in the industry.

Data, computing power and analytics allow digital solutions and data platforms, that create new ways of solving problems and improving efficiency. When relevant data is shared, it improves visibility and transparency in the industry, not just breaking down departmental silos that exist within companies, but also across customers, suppliers and regulators within the industry.

It brings with it standardisation, speed and improved performance. While business leaderships have better visibility of wastage and bottom line, digitalisation provides them data driven insight and decision support tools to take timely action when the need arises.

How do you see the transition in shipping from legacy systems to digitalisation being done? What could be the steps?

MM: It is no surprise that most companies still use excel sheets and calculations for itinerary planning, cargo fixtures, voyage estimations, demurrage calculations, etc. In many companies this is an onerous task undertaken by a dedicated team of people and of course is therefore prone to human error.

However, digitalisation is changing the old ways of doing things. Several tech companies have come onto the scene providing digital alternatives and solutions, considerably growing revenue increasing accuracy, enhancing decision-making and improving working speed.

Spot on, and Seaber is here to help. So you think that cooperation is needed with tech companies and between ship owners and charterers to achieve benefits?

MM: Tech companies are working closely with ship owners and charterers to build solutions unique to their business and that suits their specific operational needs. Some of these solutions and platforms, where relevant, also facilitate the involvement of other entities participating in the commercial engagement such as brokers, agents, insurance providers, cargo finance, ports, and terminals. This makes it a one stop shop for all chartering, commercial or technical requirements.

Chartering and operations teams now have the entire work process captured by tech solutions. Every step, from cargo planning, vessel assignment, voyage estimation, fixtures, sensitivity analysis, charter contract, operator allotment, agency appointment, bunker nomination, demurrage and dispatch calculation, staggered payment to various parties, freight invoicing, right up to claims management is provided on software platforms.

Close collaboration between tech companies, ship owners and charterers allow them to generate a galaxy of reports that are tailor made for individual businesses and teams within those business based on their specific requirements. We now have the capability to create real-time dashboard for CEOs and CFOs that show not just the operational status of the company, but also their cashflow status and claims status.

Exactly true. We can proudly say that Seaber is in the forefront of driving digitalisation of the bulk industry. Our unique software will help stakeholders of bulk shipments with more efficient planning and communications improving their business. This is an especially exciting time to witness the evolution of digital transformation in the bulk market!

Thank you Melvin for your time today. We will continue discussing this subject in our next blog post, where we will touch upon topics such as risks and benefits of digitalisation. Stay tuned!