The digitalisation of cargo flow in the breakbulk sector - Part 2
Upside of Slow Take-off
The pace of digitalisation in breakbulk shipping has been relatively slow compared to many other parts of global supply chains. Considering the complexity of it all - such as inventory, supply chain management, complex shipping contracts, ports, stowage planning, and so on - it’s perfectly understandable that it has been slow. This slowness can however also open up opportunities. There’s no legacy, no single vendor lock-ins, making it possible to approach the future of digitalisation in breakbulk shipping without too many path dependencies.
On a high level, cargo owners fall into two categories; the ones with their own fleet and the ones depending on COA or spot contracts for their maritime logistics. Regardless of the type of setup, the main digitalisation problems in bulk and breakbulk remain similar. The problems are naturally intensified the more organisational boundaries you need to cross, but there are three points of discontinuity where they really manifest:
- The first already appears in the cargo owner’s internal logistics planning processes:
How to get the transportation needs pulled out from an ERP system, parcelised and allocated onto COA contracts or passed onto the chartering desk and then finally communicated to the shipowner or operator. Some, albeit rare, cargo owners have built internal tools, but the vast majority of industrial charterers seem to rely on multiple spreadsheets and email routines.
- The second is between the emails arriving in the shipowners’ inbox and their transformation into voyages in the VMS. A couple of steps are essential for efficiency but lack proper planning, analysing, and communication tools. This refers to the scheduling dilemma and the selection of market cargo. The scheduling dilemma is about how to efficiently plan your fixed and COA cargoes onto your fleet. It’s incredibly hard to estimate the total cost and durations of a fleet schedule for a week. Making several versions of it and looking a few weeks ahead is a pipedream. Closely related to schedule planning, there is the question of how to identify the most profitable market cargoes that are optimal for your entire fleet’s efficiency. Simply looking for a profitable cargo for an open position might be suboptimal for the entire fleet’s TCE. With the current set of tools, there’s no way to truly discover, iterate and compare different schedule alternatives.
- The third discontinuity is upstream. How to deal with ETA updates and the vessel nomination process. There are many gates and gatekeepers for the ETAs, and each one hinders the flow of this information, which is extremely valuable in terms of efficiency.
The way this currently works falls short in a couple of respects. First of all, this is a one-way street where you can go back but you need to drive around half the city. For example, once the parcel size has been decided, and that spreadsheet has been sent and data forwarded a couple of times - it’s high friction to change it. Oftentimes you just wouldn’t do it, even if it opened up a saving opportunity. Secondly, there are many gates the data needs to pass through and almost all of them have a template where data loss and delay can occur. If the gate is manual, the data loss is significant.
We are undoubtedly entering a world where these problems need to be solved, and luckily we also have the skills and the will to do so.