25 years ago Shipping finally accepted communication via Email, however, Fax and Telex were used up and until the early 2000s.
There was a strong resentment to Email and internet, in fears, it will kill brokers. However ever since the mass shift to communication by email, international trade and the number of companies has drastically increased. The amount of cargo moved by sea has also doubled.
The growing importance of the supply chain and transportation in global trade has led to a growing demand for transparency and transformation. Digitalization and automation in labor-intensive sectors of the transportation industry have already gained pace with the introduction of automated warehouses, unmanned ships, and driverless vehicles.
The attention today is around efficiency and control on big-data Access to commercial information and the management of real-time data defines the future of any logistics and shipping company. And yet, with the growth of communications, the email still remains the main way of communication. 95% of communication is done by emails, 70-75% of whom use emails to manage and store documents. 20% of a manager’s time is spent searching for content.
With the growth of containerization, which makes up 23% of the cargo moved by sea, the challenge to manage data drastically increased. Shipping managers now have to compare various sectors of maritime trade - dry-bulk/break-bulk as well as containerized - to compare ocean-freight solutions alone. It may take up to 2-3 or more days to find the shipping solution. And with so much time spent, this may not even be the best one, as shipping and transportation still remain largely non-transparent and require long and mixed communication channels.
And yet information flow continues to increase. This leads to fraud, inefficiency, loss of opportunity, human errors and more.
Connectivity between the Shipping companies and Stakeholders
Companies such as TATA Group, BHP Billiton, Rio Tinto, MMK, Uralkali, Siemens, and others - have introduced their online tenders to collect freight offers. This increased transparency, efficiency, and helped reduce transportation cost. This increases the workload for shipping managers, as they have to process emails, as well as navigate between these online freight auctions. SHIPNEXT, therefore, offers connectivity between the Shipping companies and such individual freight auctions, providing instant Cargo-to-Ship matching.
Emails processing solutions - Baltic Spot, AXSDry, Compass - have introduced email processing, but their use of old and outdated technology - regular expression - does not allow the use of the processed data for calculation, and mainly helps improve manual search.
Some say digitalization will kill brokers. This is not exactly true. This is the most vulnerable group, which makes them resistant to change. As a result, SHIPNEXT, for example, started giving Shipbrokers a free access of its online Freight Trading Desk, and connectivity to the Marketplace, at least to that part of it which is public, in exchange for a signed Strategic Partnership agreement and a commitment to pay $100 per Contract (Charter party). This has led to an increase in the number of Shipbrokers using SHIPNEXT and those signing Strategic partnership agreement with the platform.
Like any other traders today, Shipbroker are professionals that require instant access to market data, as well as trading tools. In many other industries traders have successfully adopted digital means of trading, and so will the shipping community. Its just the matter of time when Shipbrokers, that exclusively represent Ship owners or Cargo owners will chose an online marketplace as their meeting point.
Individual shipbrokers, on the other hand, now have a chance to step outside the box by offering a much wider choice of solutions, while spending less time on searching. It was common for shipbrokers to be specialized in either dry-bulk or break-bulk shipping. Today, commodity shipments up to 20.000 mt of may migrate between dry-bulk and containerized transportation.
Digitalization of Freight Negotiations
5 years ago its was hard to imagine digitalization of freight negotiations and the use of online freight trading platforms. Since 3 years now the situation has significantly changed.
Companies like BHP, Rio Tinto and TATA Steel have been first to adopt the principal of reverse freight trading. The technology, however, did not allow to migrate data and provide a seamless integration with the email exchange.
Today the list of Exporters (primarily producers) involved in Reverse freight trading has drastically increased, adding:
Recently Clarksons have started a new era in digitalization of chartering
This service is offered to their top clients as one more service in an attempt to build a stronger and longer term relationship, where Clarksons would be preparing and holding reverse freight-auctions for and on behalf of their client on their digital platform - Sea.Live. This shows that not only do Shipbrokers adapt to the new reality but actually start to gain their advantages from being the first to adopt the digital technology.
This comes as a result of a need in greater need in security, reliability and efficiency of supply chain. Perhaps not everyone will adopt online freight auctions today. But this is certainly a growing trend, and in most industries this has been a reality for long.
Text: Alexander Varvarenko, Shipnext, www.shipnext.com