Shipping 2.0: This time it’s different

Shipping 2.0: This time it’s different

Sometime in the not so distant past, a bit less than 20 years ago in fact, I had the enviable task of reporting shipping’s first dotcom boom.

As a youngish and eager journalist (together with a colleague who these days has a proper job in the industry) I observed legions of start-ups spending a great deal of other people’s money on what was then quaintly known as e-business.

The value destroyed and money wasted was impressive, at least equivalent to the number of lunches we were bought by execs swinging through from The Valley and elsewhere, intent on revolutionising shipping.

One of the most illuminating aspects was how keen some established industry names were to get involved, lending their backing to projects that in some cases would barely render more than a few lines of code.

The era of digitalisation in which we now live – shipping 2.0 or industry 4.0 depending on your perspective – has all the makings of a second dotcom boom (with one exception, of which more later).

The tell-tale signs are all there: hot money pushing novel concepts from the retail and B2C markets, the return of disintermediation, this time as disruption, venerable shipping names getting all misty-eyed about concepts that sound great even if they don’t appear to have a business model.

It’s easy to see where the exuberance comes from. The era of hyper-connectivity in which most of the developed world now exists, has created a sense that this time, it will be different. The constraints are off the bandwidth, Moore’s Law is either dead or dying, cloud computing is available on demand and the connectivity of everything means that anything is possible and nothing is certain.

Except that, if you use any one of the many digital platforms to look for videos of seafarers doing their jobs, or ships actually carrying cargoes, its quickly clear that this is only partially true at best.

Despite years of having to tolerate endless name-checking of Uber, AirBnB, HyperLoop and the rest in presentations, shipping remains a nuts-and-bolts business which exists because of the investments made by people with the money and physical relationships that start-ups can only dream of.

The bits of shipping that can be improved with apps and connectivity are many and varied, but for the most part they are also marginal.

The fact that many of the problems that existed in 2001 still exist in 2018 tends to suggest that either people are happy with the status quo, or that the improvements that might result are too small to be worth the investment.

They are at last receiving some attention – fleet management, bills of lading, better information and data analysis, the parlous state of shipboard cyber security – to name but a few.

If we look at the rather bigger picture, the case can easily be made that shipping needs a makeover but the challenges here are a bit more physical.

The biggest of all – decarbonising the industry sufficiently to bring down greenhouse gas emissions to 2008 levels by 2050 – will rely on fuels which mostly don’t exist or aren’t yet widely used in shipping.

No smartphone app is going to solve that, and yet an industry which until recently has appeared to be surprised that it will have to comply with sulphur regulations in 2020 seems untroubled by the fact that it will need to be 70% more efficient in barely more than one 25-year vessel lifespan.

There’s no question that – unlike 2001 – we are living in an era of actual digital transformation, but as we have discovered in our private digital lives, the changes it brings are not always what we expect or even what its progenitors would have us believe.

The vexed questions of data privacy and access, standards, competition and co-operation need to be answered – and let’s not forget they have existed as long as the industry itself.

Making information available faster does not resolve problems, in many ways it multiplies them. Just ask the manager of a data-enabled fleet as they wade through terabytes of performance data to find the needed piece. It’s also why there are still shipbrokers, 17 years after LevelSeas rather foolishly predicted it would replace them.

And the major point of different between this dotcom boom and the first time around? Well this time, there will be no China-powered super-cycle to save the markets and distract everyone from the cataclysmic waste of time and money that enveloped shipping for a few brief, exciting years. I suggest we enjoy it while it lasts.

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7 Comments

  1. Alan Knight
    August 29, 2018 at 7:45 pm

    Thank you for this wise article, Neville. As a 50-year veteran of the marine industry, I am very much aware that the e-industry is cursed with a rose-tinted belief in their own abilities which is very rarely born out in the cold realities of the marine industry. The thriving medieval trade in “Pieces of the true Cross” bears remarkable similarities to the present-day computer industry; “Buy this piece of the true Cross and untold benefits shall be yours!” How many of these benefits are measurable?
    Two years ago, my employer, a Flag State/Port State Administration, moved us to a new “paperless” office. So why is it that I sit here in my “paperless office”, surrounded by ring-back files labelled “ISPS”, “ISM”, “Timber Deck Cargo stuff” and the dust-covered file on a long-abandoned ex-Navy vessel which some delusional clown figured that he could convert into a floating restaurant, 18 years ago!

  2. Tony Fordyce
    August 29, 2018 at 8:01 pm

    Excellent article. I remember all too well the dotcom frenzy, albeit not quite as extreme in shipping as elsewhere, but, as you say, with some very big names involved; for example in broking platforms which were going to eliminate the middle man. None of them seem to have come to anything.

    I also remember a conversation with the owner of an extremely well-known and successful shipping company (no names, no pack drill) telling me that within a few short years all broking activity – with the possible exception of Sale & Purchase – would be handled online. Of course it never happened, yet now there are several companies (run by people who almost certainly weren’t in the industry the first time around) trying to do the same again, of course with more up-to-date technology. I believe they will be doomed to the same fate. I can only see this working in markets (dry cargo anyway) with a very few players – possibly Capesize, although there may be too many vested interests. If you are the owner of a Supramax free in South East Asia (where there could be hundreds of potential charterers), are you going to assign the fixing of your ship to a platform which only 50% of the charterers subscribe to (or even 90% of the charterers), thus running the risk of not finding the one perfect cargo being offered by one of the other 50 (or 10)%?

  3. Shesh
    August 31, 2018 at 8:29 am

    Great article, sir! A much needed dash of cold water to cool down the simmer of what appears to have all the signs of an over-heated bubble!

    Technology will disrupt, contribute and impact, but in specific aspects and to finite extents.

  4. Neal Anderson
    August 31, 2018 at 6:34 pm

    I just had some SetFair deja vu. Thanks Neville 😉

  5. Barry Parker
    September 3, 2018 at 3:40 am

    Neville,
    Excellent and to the point article. I recall that we met 18 years ago at a dotcom conference in London (which took place a week after a big gathering of the clans that had occurred in Plymouth). As I recall, I was a speaker, or possibly a moderator, since I got to introduce Mr. Hext from LevelSeas.

    As I will post for anyone who does not instantly hit the delete key, CARGO IS KING. So any digital-anything that will actually make a lasting effect on shipping will need to come from the cargo side (or BCO side as the cool folks call it). This goes beyond supply chains- into things like Corp Social Responsibility where a big charterer runs the risk of being called out for sloppy behavior. As CSR expands, it could infuse beyond the engine room into the crew quarters. Yes, this about much more than vessel automation, which is fun distraction from much bigger issues.

  6. Barry Parker again
    September 3, 2018 at 3:41 am

    I guess my ref to DEL key was taken very literally by the SPLASH computer-editor

    1. Grant Rowles
      Grant Rowles
      September 3, 2018 at 3:50 am

      Fixed it for you Barry, never seen that before!