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Dry bulk shipping: Will we finally see widescale digitisation in 2018?

Exploring the major 2018 trends & steps to start your digital journey

Taking a look back

The use of technology in the dry bulk shipping industry has evolved a lot over the years, but it all started back in the 1930s with the introduction of the Telex machine.

If you’re too young to remember the Telex machine, imagine a typewriter keyboard and a printer connected to the telephone network – or more accurately the old telegraph system. That was all you needed to send and receive text-based messages over the wires. With the recent advancements in digital technology and mobile communications, it’s hard to believe that many of the practices we use today actually date back to this time. For example; starting every message with the recipient/ sender (i.e. client name/ broker name) made perfect sense when the post room boy was responsible for printing it out and delivering it to the right person. Many of the acronyms we use today can also be traced back to the Telex machine where the number of characters in a message was limited.

Following on from the popularity of the fax machine in the 1980s, new digital tools have gained widespread adoption with the most prominent ones falling into four main categories.

AIS data
Ship tracking information provides useful visibility of the global fleet but is something of a commodity these days with many re-sellers simply offering a ‘cleaned’ version of the raw data.

Broker ERP systems
Every brokerage house needs a system of record – where key fixtures and ship data are stored – and the adoption of these tools played a key role in helping to improve how data was organised across the business.

Chat programmes
Modern instant messaging applications – like WhatsApp, WeChat and Skype – provide ease of use and privacy as well as a more personal touch.

Commerical voyage management systems
These internal databases are used extensively to enhance communications and help organise documentation post-fixture.

As for where the industry will go next, there are differing views. However, much of the debate revolves around the actual need for shipbrokers in the future – with shipowners being more pessimistic on this point than the brokers themselves.

“The middleman role played by brokers faces a threat from the emergence of technology that would allow owners to cut brokers out by logging directly on to a database to find cargo. In fact, some companies are already developing systems tailor-made for the shipping industry.”
(Source TradeWinds)

More interestingly though, it appears that the debate on the impact of new technology for shipbrokers hasn’t changed for decades – this quote was actually expressed back in 1996. At Shipamax, we have a less partisan take on the future of shipping and will explain here why we remain optimistic.

Why digitisation will not be so disruptive

Despite all the talk of digital technology changing business models and entire industry sectors, we believe that digitisation will be more transformative for chartering and shipbroking operations than disruptive. Technological innovation will not create new markets but will have the potential to revolutionise the way different parties communicate with each other – and that can only be a good thing.

The promise of brokerless shipbroking will seem very appealing to a lot of people but if you consider the fundamental role that the shipbrokers play, it’s clear this will never happen. Purely online shipbroking solutions fail to take into account the value of the relationships that shipbrokers build and maintain and the power of the market gossip and intelligence they uncover. In reality, it’s the sharing and careful distribution of this private information that brings both sides together and provides the liquidity. Of course, computer systems can help with some elements of the process, but to replicate this entire ‘human’ process digitally – and at scale – is just not feasible.

The future of shipping

So, how can technology help – where are the opportunities for such a people-centred business? For us, the future of shipping and technology lies in the efficient processing and management of information. Here are the key developments we are seeing in this area.

Trend 1: Masters of data processing
Given the sheer volume of communication and the range of different stakeholders, streamlining the processing of information can free up time for brokers to add more value to their clients. Of course, reading multiple emails and reports can be a good training exercise for a junior broker, but inputting positions into an internal position list isn’t going to be a good use of time for more senior team members. Fortunately, this is the kind of thing that can now be done just as well by a computer.

From our studies, the average time spent manually translating an email position into a list is 2-5 minutes – depending on the number of positions. At Shipamax, we can process this in less than 1 second. On top of this, the data is automatically cleaned to remove any misspellings and converted into structured data that is more usable and shareable – something that would take a very long time for a human to do. And all that time saved by junior team members could be spent digging into the data to provide real insights for the senior brokers – complementing the intelligence they uncover from their relationships.

In summary, the first key area of transformation we expect to see is the implementation of advanced data processing and aggregation solutions that allow brokers to spend more time on value-added tasks.

Trend 2: Taking control of your data
We see a future of technology being based around application programming interface (APIs). APIs allow data to be imported and exported freely across different systems which means that a more modular digital strategy can be created – a best-of-breed technology approach where you choose the best building blocks for your own solution. There are, of course, a few systems that want to control the entire software ecosystem – removing your choice and flexibility. This closed platform or ‘walled garden’ approach can make accessing your own data both difficult and expensive. When all your systems can talk to each other, you not only save time but have the opportunity to unlock huge amounts of data for your analysts and traders to build upon.

Trend 3: Communications – an intelligent layer
As we discussed in our recent article Real-time team collaboration in dry bulk shipping, there are a number of different channels used to manage day-to-day communications and a number of additional tools – such as MS Excel – needed to plug the gaps between them. Therefore, we expect ‘intelligent layers’ connecting existing software solutions to be a big trend in the future – fuelled by the need to bring information together in one place for human minds to perform analysis, extract intelligence and create value. We would expect a true intelligent layer to become a communication platform in its own right – integrating the key channels whilst removing the need for ad-hoc tools.

In essence, we expect digitisation to transform the way people communicate with each other. In this new intelligent world, the shipping community will spend less time on mundane administrative tasks and more time understanding the data they have – either providing advice to add value to clients or helping to make the most optimal trades.

How to plan your digital journey

Whilst every company is different, the steps needed to plan and implement a journey towards digitisation are the same – regardless of how long and complex that journey is. Here are the key steps that we would recommend taking.

1. Leadership
The first thing you need to do is determine who is going to own and lead the project. You’ll also need to establish who is going to take responsibility for making strategic recommendations and authorising tactical changes to your current processes; who is going to sign off on final decisions and who will help implement the changes across the organisation. Without true leadership and ownership, the project has a good chance of failing.

2. Discovery
With the right team in place, the work can begin. The next step is to fully analyse and document the current state – mapping out the all the processes in detail. The project owner should be given free rein to investigate and understand the various workflows across your organisation – process by process and step by step. Whether it is limited to one business unit or an enterprise-wide initiative, the key here is to identify where time is being spent, which tools are being used and what processes work well – and, more importantly, not so well.

3. Solution
Whilst it may be tempting to start formulating a solution as soon as the discovery stage is complete, it is important to determine your requirements for success before you do – to understand what success looks like and how you will measure it. These KPIs will give you direction as you plan your solution – they will be your north star as the project progresses into implementation. Prioritisation is going to be crucial too, so identify the biggest areas for improvement first. When you know the areas you want to focus on, reach out to relevant vendors in the market who may have just the technology and expertise you need.

We’re here to help

We believe that real-time team collaboration, automatic information processing and intelligent application interfaces are the future of dry bulk shipping software. Tediously piecing information together should be put firmly in the past. If your company is looking to make this digital transformation, please get in touch.