Jan Wilhelmsson from Eniram says shipping has failed to realise the importance of connectivity and digitalization thus far.
As a keen private sailor and having spent the first 10 years of my career at sea, I simply can’t help myself from stopping and admiring old sailing vessels if I happen to walk past one. I think there is something vastly satisfying in sailing a sailing vessel of proper size and displacement. I can’t really explain why, it just is. Perhaps the romantic in me is painting an over-glorified picture compared to what it really was like to sail these majestic vessels for a living. Having spent the latter part of my seagoing career navigating from comfortable leather chairs on the 13th deck, warm and dry behind 2x5m large widows, with six computer screens feeding me all the relevant information, the logic part of my brain will reluctantly have to admit that modern technology has brought vast improvements to shipping in all areas including cost, reliability, safety, security and crew comfort.
A few weeks ago I mentioned (without too much forethought) to a friend: “Would it not have been great to be alive during the industrial revolution and experience all the changes?” He looked at me like I was crazy and responded – “What are you talking about? We are currently going through the fastest technical evolution in human history. Internet and mobile communications have changed almost every aspect of our lives in only 20 years, not even motorisation and electrification moved that fast”. “Good point…” was my only response, feeling a tad corrected.
I do still meet executives in the industry who have their secretary print out their emails on paper for them to read. The vast majority though (even in our quite conservative and traditional industry) have adopted new means of communication and reap the benefits of faster communication. In the commercial side of the shipping industry, apart from email speeding up our daily business execution, it is however mostly the non-core business processes where we see the major developments. It is often the technical departments, with a natural interest in technology that tend to be early adopters. Many consulting firms will however argue that when technical operational data and information technology are brought into the commercial decision-making processes, much larger economic benefits will arise, compared to only using it for technical management. For the vast majority of the industry, there is a large upside opportunity still to be made.
If I were to ask – “Who goes to the bank these days to pay bills? Who goes to a travel agency to book a flight? Who resorts to the encyclopaedia in the bookshelf when we need to know something? Who sends daily correspondence via snail mail? Who rents a movie at a store? Who buys a music CD?”. All these things have been made available through connectivity, a.k.a. being online.
If you look at the world fleet of cargo vessels today, it is actually only a small portion that are fully connected, beyond simple email and dialup capability. This is the main reason why digitalisation until now has had a very little impact on core shipping processes. Despite everything that has happened, most vessels are still being commercially operated on charter agreements that have in principle changed very little in the past century. The ship to shore link is still in most cases relying on manual reporting. In almost all comparable industries paradigm shifts have occurred as connectivity has made alternatives possible. Take for example the impact Uber has had on the taxi industry across the world. Satellite communication costs are now dropping at a rate where every vessel will be online within a few years. What is going to be our industry’s comparable business disruptive application?
I often meet shipping executives these days who believe that digitalisation is something that simply can be handed over to an IT and technical department to sort out, and that it won’t really affect the core business. I believe there is a risk that if one has this view today, one might not be prepared for the unexpected changes connectivity will create.
As much as we love our traditions and want to keep on doing things like we always have, we can’t ignore the future. Connectivity and digitalisation will most likely be as disruptive for the commercial shipping processes as shifting from sail to power and breakbulk to containers. If one does not believe that to be true, one just needs to look at what has happened in the financial markets to realise that a similar development in shipping is inevitable.