The inevitability of a digital approach to container shipping and supply chain logistics

The inevitability of a digital approach to container shipping and supply chain logistics

Maritime transport is the mainstay of global trade and supply chain. Over four-fifths of global trade by volume is transported by sea. For long distance mass transportation, maritime is the most dependable and cost-effective mode. From 1970 to 2018, the volume of global trade has increased by an average 3% each year. This reached a landmark 11 billion tons in 2018, according to data released by the United Nations Conference on Trade and Development (UNCTAD, 2019).

Such exponential growth in global trade by sea draws attention to the rising need of the maritime sector to come up with newer innovations to keep stride with the rapidly advancing business landscape shaped by digitalization. It’s the right time for the industry to employ novel ways to work that should prove smarter and result-oriented – methods that could not be envisioned even a few years back.

The International Maritime Organization (IMO) constantly highlights the need to reduce pointless administrative hurdles in the maritime sector. In 1967, the Convention on Facilitation of International Maritime Traffic (FAL) came into force. It is ratified by 124 member countries and updated constantly through the FAL Committee that meets every year. The convention strives to stop delays in maritime traffic, assist co-operation between governments and secure maximum standardization in work procedures. The convention stipulates practices for ports to simplify processes, documentary requirements and procedures on the arrival, stay and departure of vessels, recommending all stakeholders to use the standardized FAL forms. Since April 2019, the FAL Convention has made it obligatory for vessels and port authorities to exchange FAL data electronically, allowing maximum 12 months to complete the transition, and encouraging the use of a single point of contact for all agencies and authorities.

The susceptibilities in the supply chain logistics came to the forefront in the aftermath of the COVID-19 calamity that led to disruptions in food supplies and medicines affecting the health, safety and livelihood of people world over. In today’s globalized economy, maritime trade accounts for 90% of the world trade. So it is of essence to realize that an exemplary leadership team must come together to put in place a robust, dependable infrastructure powered by the continually evolving digital advances taking place.

The application of Blockchain technology and smart contracts are some of the recent digitalization trends observed in the maritime sector, benefitting smooth customs clearance and streamlining of documentation through lesser dependence on paper work and approvals.

The container shipping industry been confronting a series of setbacks since the economic recession of 2008. The transition to mega-size container vessels has produced economies of scale, but with that came unique operational challenges. Alliances or code share agreements between shipping lines have also resulted in increased complexity in cargo handling. Digitalization is the principal solution to overcome these new challenges.

Technology is the mainstay of digital platforms. At the same time, a high degree of political obligation, healthy institutional framework and quality human resources are equally vital to a successful transition to digital environment.

Artificial intelligence allows carriers to predict customer demand in advance. AI helps to optimize container movements, so there’s reduced strain on capital resources. Better control of empty container repositioning with useful demand predictions, decreased container repair expenditures and lesser dependence on manual labor are the ensuing benefits from the implementation of AI tools. For decision makers to appreciate where the containers should actually be going to and repositioned can help free up the massive accumulation of containers at ports where they are not required.

For the shipping and logistics industry to embark on a fruitful journey with confidence, it is imperative that the leadership taps into digitally sourced data and takes decisions based on the insights such information provides.

Continual engagement with the shipping industry, domain knowledge and technology expertise make iInterchange Systems the ideal software solution provider to container depots and ocean carriers.