Chartering 2.0

Chartering 2.0

Will 2020 be the year Big Data changes the day-to-day business of chartering? The industry is not 100% convinced. Jason Jiang reports.

When canvassing the industry for maritime tech trends last month, the comments from William Fairclough, the newly installed boss at Hong Kong shipping line Wah Kwong Maritime Transport Holdings, stood out as worthy of further investigation.

Fairclough, an ex-broker, said 2020 will be the year where Big Data changes the business of shipping with a host of competing platforms coming online promising to deliver unprecedented insight into the movement of cargoes around the world.

“I think 2020 is the year when Big Data will start to be seriously offered to shipping companies by a number of different companies,” Fairclough said.

“There may be some differences between the offerings but there will be many overlaps too,” Fairclough said, adding: “They are all looking to change the way we process information relating to things like voyage data, charter parties, operational messages, market data, pooling and chartering. There are basically multiple platforms all claiming to do various parts of this all coming to market at the same time.”

The many offerings promising to change the way ships are chartered include AXSMarine’s Trade Flows, Sea by Clarksons, Ocean Freight Exchange, Signal, ShipNext, MSI Horizon, Nautilus Labs and VesselsValue’s new Trade tool.

“Some will thrive, others probably won’t. It will be their ability to adapt and remain cheap – and relevant – that will separate the winners from the losers,” said the Wah Kwong boss.

Many people contacted by Splash agree with Fairclough’s predictions, but not all.

Tabitha Logan, chartering manager at Hong Kong shipping line Asia Maritime Pacific, agrees with Fairclough’s comments, observing: “Compared to a few years back, the quantity and sophistication of platforms available has greatly increased.”

Logan says she is interested in platforms that integrate across all sectors of the shipping business.

“Shipping companies can be notoriously siloed and I see true benefits in sharing data and increasing transparency between chartering teams, operating teams and technical departments.  This can optimise the performance of the business as a whole and the ROI can often be seen quickly,” she tells Splash.

“We think 2020 is going to be a year setting a direction towards a more digital way of doing business in tramp shipping. Several software products are emerging,” says Peter Schroder, chief digital officer at Maersk Tankers, a company that last month spun off its own digital creation, SimBunker, into a separate company.

“Data has been available for years – it is a matter of combing the right data sources and turning the outcome of the data analysis into real actions, which will deliver tangible business benefits,” Schroder says.

“We will look back at 2020 as an important milestone when shipping companies started to utilise cloud data platforms in scale and that an Open Edge infrastructure became an enabler for this transformation,” predicts Inge Sandvik, chief digital officer at Wilhelmsen Group.

Shanker Pillai, lead of innovation and change at tanker operator Hafnia, reckons that although digital tools can have a major impact on how to use data and other measures to make wiser decisions, the digital platforms alone are not sufficient to bring about wide scale transformation for the shipping industry.

“We feel a lot has to be done in addressing the cultural aspects of digital transformation in organisations to enable our people to make the most out of digital tools and platforms and this is especially true in an industry such as ours,” Pillai says.

A slowness to embrace technoligical change is something also picked up by Dr Roar Adland, shipping professor at the Norwegian School of Economics.

“The transformation of shipping is a much slower process than we all like to think, and 2020 will be no different,” Adland says. “The winners will likely be those that can rid us of the menial tasks such as reading emails and entering duplicate information in Excel spreadsheets. There is nothing particularly revolutionary about that, but it makes employment in shipping a lot more interesting.”

The first few weeks of 2020 have been filled, ironically, with announcements of shipping email tech developments.

Lasse Kristoffersen, one of the most high profile digital preachers within the shipowning community, believes the slew of competing digital platforms will not change the actual business of shipping on a wide scale this year. The CEO of Norwegian owner Tovald Klaveness, and former DNV GL executive, tells Splash: “We will see more and more of them, but still I think most will have quite limited penetration and market share in 2020.”

Ian Staples, managing director of UK-based Sinndar Commodity Research, maintains that simplifying the processes in shipping has to be a goal for all of us.

“I’m not sure that email aggregators and suchlike are exactly new or game-changing, but it would be great if one platform was to win and we all could get on it. Running an industry like a secret service when every other industry appears to be developing as many ways to share information as possible seems very retrograde,” he says.

The sheer volume of data is still a barrier, Staples believes, for the industry to make informed decisions.

“The prospect of trying to understand whether what is being analysed is meaningful data, and more to the point, can I consistently recognise what I am being told and what to do about it makes me think that my failure to grasp what is truly meaningful may be the weak link for all of this Big Data,” he says, adding: “If these systems could redact the Big Data down to a single number – say 42 – then I’d be the first to use it, but I do get the impression, sometimes, that I am being given more questions than answers and I don’t need more things to get wrong.”

Also sceptical on the speed with which Big Data will change chartering daily operations is Panos Patsadas, chartering manager at Hamburg’s SIBUR International.

“Big Data is something that has been put in front of shipping over the last year, and something shipping is in the phase of trying to digest. The transition from gut feeling decision making to data-based decision making will not happen in one year, but I would expect that it will take at least five to seven years before it starts altering traditional shipping structures,” Patsadas predicts.

Platforms aimed at processing Big Data with the purpose of spotting patterns and creating a base for decision making will be the hardest to find a home in shipping as they try to substitute experience with facts, Patsadas argues.

“Most ambassadors of such platforms will argue that they are designed to complement decision making,” the charting veteran claims, “but they inherently project their creator’s own inability to understand the dynamics of shipping, and are a mere attempt to standardise something they are not part of.”

Stridently, the Greek national tells Splash: “I cannot accept that a tech company’s two-year efforts can become an adequate substitute or complement for a 20-year track record across different markets, cultures, roles.”

It will indeed take time, agrees Mark Williams, head of consultancy Shipping Strategy, who quipped in an interview with sister title, Splash Extra, last month: “By the middle of the 21st century, the freight market casino will be replaced by artificial intelligence.”

Frank Coles, CEO of shipmanagement major Wallem Group, reckons the actual business of shipping will be way ahead of the operational side of shipping in terms of the adoption of technology, digitalisation and generally in modernisation, while the use of data in making chartering decisions is already widespread and it is simply a question of levels of complexity and levels of utilisation.

Coles points out that companies like Maersk Tankers and CargoMetrics have stolen a march in truly understanding what can be done with data in trading and booking cargoes while there are several others that play on the periphery mainly because they are just digitising current processes and not truly innovating the decision making process.

“Like many parts of shipping, the wide variety of offerings is only helping to confuse the value that the systems offer. Especially as many are only a part of the puzzle and decision making process,” Coles says, adding that he doesn’t see much in terms of progress in maritime operations to use digital platforms to create an ecosystem for proper standardised operational efficiency, with the use of data to help understand and support the day-to-day decision making process.

“It remains fragmented and closed silos of big engine companies and multiple start ups.  This is only the start, and this barrier needs to be broken first,” Coles says.

Coles disagrees with Fairclough’s opinion that the technology needs to remain cheap.

“William saying it needs to remain cheap is to point at shipping’s continuous problem, technology brings value, cheap implies commodity mindset and a lack of understanding of the true value of proper data analytics and manipulation.  His comment on relevant is true but again we need to understand that proper digitalisation will change the way things are considered not simply repeat or mirrors the broker or ships, engineers, human and or manual approach,” says Coles.

“Proper use of technology, analytics and AI will go beyond the old way of doing business,” Coles concludes.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.

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3 Comments

  1. Avatar
    Tony Fordyce
    February 6, 2020 at 5:55 pm

    If we only concentrate on chartering, I’ve seen several platforms proposed, but it seems to me that the only way these have a chance of being successful will be in market with a comparatively small number of players (such as Capesize). I was once told that if an owner had a Supramax open in S.E.Asia, there could be over 200 potential charterers (of course not all necessarily having cargoes to suit at any one time). Unless the platform covering that market had access to ALL the charterers and cargoes, it would not be successful, because it might not cover the one cargo which would be ideal for the owner (whereas in the current broker-led market, that cargo would almost certainly be proposed to the owner).

    And the same would work vice versa. The platform would also have to cover all the owners, probably considerably more than 200.

    Or am I missing something?

  2. Avatar
    Christian Buckow
    February 7, 2020 at 12:56 am

    What many lack already exist!
    To provide consistent data, any database must be independent and must not be active in the charter business. There is such a platform, so far for the European short sea business only, but it can easily be extended to worldwide trade:

    fixbo.eu

    Since 2015, members have been submitting anonymous fixture reports (called FIXBOS) there. In the meantime, the data volume has exceeded 100 million tons of dry cargo (500-20,000 t). In the last 30 days alone, 553 and in the previous seven days, 155 Fixbos have been put online.

    Subscribers can set filters online and compile and analyze routes from up to 50 areas within Europe according to their own wishes. Since 2016 there is an own Fixbo index.

    fixbo.eu is an excellent help for decision making and is available to every participant in the European short sea business, charterers, ship owners, operators, and shipbrokers alike. fixbo.eu is independent and neutral and is supported by the shipbrokers’ associations and the SPC.

    For further information, please visit: fixbo.eu

  3. Avatar
    Handy Trader
    February 8, 2020 at 7:58 am

    Agree with Tony,

    It also doesn’t factor the secrecy required by commodity traders and a reluctance to want to use a transparent network for pricing and executing cargos. Whilst I’m sure there are ways to adjust the systems so certain orders only go to select owners etc it takes away from the personal feel and relationship aspect of discussing a sensitive deal, what’s wrong with picking up the phone or skype?

    I only see relevance for these platforms in major bulks for uncompetitive off take volume deals, I.e BHP, VALE etc. handy size and supra max markets won’t adopt this tech anytime soon as it can affect competitive advantage.