Container carriers must start digitalizing their business as soon as possible if they do not want to be overtaken by new players in the shipping industry.
If carriers fail to go digital now, they risk being reduced to shipowners without contact to customers, warns one of the world's largest consultant agencies, Boston Consulting Group.
In a new report, the agency notes that only a few container carries have really delved into digitalization. On the other hand, several new and innovative companies have made their foray into the shipping industry where they are trying to designate new, smarter solutions to well-known problems.
They have taken on areas such as online booking, pricing, empty containers and autonomous shipping. For this reason, it is crucial that the carriers act fast with resolution.
Although there is still time to get started, we expect the window of opportunity to close soon.
"To emerge as a winner in the digital era, a carrier must be willing to invest significant time and resources. Most carriers lack an overall vision and compelling plan for digital adoption. They also face major organizational hurdles and are slowed down by the scarcity of workers with digital capabilities and skills," writes Boston Consulting in the report.
However, the carriers can overcome the challenges if they make an ambitious and structured digital strategy. But they cannot afford to wait much longer, warns the firm.
"Although there is still time to get started, we expect the window of opportunity to close soon. Now is the moment for carriers to embark on the voyage to digital leadership," reads the report The Digital Imperative in Container Shipping.
Money flows to start-ups
Boston Consulting points to several key areas where carriers could benefit from going digital. These include optimizing networks, empty containers, service planning, market estimates, pricing and IT security.
"Most carriers still handle them in the traditional way, without systematically leveraging the power of advanced analytics and artificial intelligence (AI). For example, some carriers have collected impressive volumes of data but lack the skills or agile processes to generate insight and improvements," writes the group.
While the carriers hesitate to fully adopt digitalization, a series of new firms have arrived in shipping. According to the consultant agency, the threat comes from start-ups as well as established companies which have been quicker to understand the opportunities in the new technology. This applies to firms such as internet retailer Amazon, but also newer names such as Flexport, Yimida, Ninja Van, Geek+ and Sea Machine Robotics.
In the past six years, USD 6 billion have been invested in digital start-ups focused on the shipping industry. Flexport, which is a digital forwarder that lets the customer track its cargo throughout the journey, has raised USD 200 million in capital.
"If these companies' business models succeed, carriers run the risk of losing direct contact with some of their most profitable customers – primarily small and midsize freight forwarders and beneficial cargo owners (known as BCOs). In this scenario, the carrier's role could be reduced to providing commoditized ocean freight services," writes the firm.
How to do it
But while digitalization is becoming more urgent, the carriers themselves will ultimately decide their own fate, according to Boston Consulting.
The consultant agency also notes five points that a carrier must have under control in order to successfully digitalize business. If it is to be done right, then large steps can be taken in just 18 months, writes the firm.
- Develop a digital vision: There must be a long-term and targeted plan for the digitalization and its possibilities.
- Commit to rapid adoption: It is important to be brave and take on new technology quickly, so that the rest of the world can see the results.
- Lay the foundation: Hire digital talents with the right skills and create framework conditions to make fast decisions.
- Incubate outside the main organization: It is a good idea to set up a digital task force outside of the regular organization which can work fast and independently.
- Test and then scale fast: When a solution has been tested and works, it must be spread to the entire company as quickly as possible.
English Edit: Gretchen Deverell Pedersen