As we head into the era of big data, Internet of Things and data analytics, it will become more and more important to collect data from every link in the supply chain.

The Elephant in the room when discussing this data need is Ocean Freight. For hundreds of years the ocean freight business model has remained unchanged. Yet, over 90% of all goods in the world travel to their end destination by sea.

For the Beneficial Cargo Owner’s, the motto that reflects their relationships with the shipping lines over the last couple of centuries has been: “see nothing, hear nothing, do nothing until the cargo arrives”.

Today, the ocean shipping industry is facing some of the biggest challenges it has ever encountered and it is apparent to everyone that something has to change.

Looking back at road freight in the U.S.A for example, where modern roads started being built back in 1775, it has been innovation after innovation that has led to the sophisticated and technologically advanced systems that are over the road and in rail intermodal freight transport today.

 

What happened to Ocean Freight?

In the beginning, this highly lucrative industry was not for the faint of heart. The tenacity, courage and entrepreneurship, those very things that made ocean shipping one of the boldest commercial moves for mankind is also the same reason why there are still so many players in it today. Despite waves of consolidation, many ocean carriers still have the same “never say die attitude” that their predecessors did.

What seems to have gone the way side is the entrepreneurship and innovation. The entire industry has been commoditized and everyone is simply holding their ground while competing in a race to the “bottom” for freight rates as they squeeze each other out so things can hopefully return to normal.

It sounds almost crazy to think that within a couple hundred years on road freight we have gone from horse and carriage, to the complex Semi Tractor trailers we see today and increases in capacity, efficiency and visibility along with improvements in the actual road infrastructure and processes.

We have been transporting goods on the oceans for thousands of years and it took the invention of the shipping container in 1956 to bring about the biggest change the industry has ever seen. The arrival of the shipping container merely allowed for less staff on vessels loading and unloading loose cargo as it has been done for thousands of years.

We still have not mastered a system that is sustainable for generating revenue in ocean freight. So what does Ocean Freight need to do to bring itself into the 21st century and beyond?

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1. Embrace change

It is clear that what brought us this far no longer works so change must occur. Fundamental shifts in the thinking of Ocean Shipping lines with fresh new approaches to the business of moving cargo. In difficult markets the growth areas. have always been in value added services.

 

2. Continuous innovation

Bringing in new technologies to improve efficiencies across their entire operations. Data sharing with all stakeholders just like Road and Rail freight did before them.

 

3. Consolidation

The fewer the players the less pressure there will be on rates and price wars will subside. Although not great for the shippers, it is necessary for the survival of the shipping lines.

 

4. Visibility

This is the most impactful shift for ocean cargo ever. Real time on the water inventories, cargo condition monitoring, with accurate ETA’s on a global level. Unlocking the savings and efficiencies across the entire global supply chain.

 

There are tremendous opportunities for growth in ocean freight. The problem is that all of them are linked to advancements in technologies, business processes, data sharing and visibility.

If the shipping lines cannot change the way they look at their industry and find ways to generate revenue outside traditional norms the future of the industry looks bleak and the benefits of truly connected and visible global supply chains will continue not being realized.

Sobre o autor

Don Miller

Don Miller

Colaborador CargoBid, Empresário, Consultor e Cofundador em Greensee.ai

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