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Container Shipping & Trade

Container Shipping & Trade

Digitalisation: port calls, box repositioning and blockchain

Fri 15 Feb 2019 by Rebecca Moore

Digitalisation: port calls, box repositioning and blockchain
Shipping lines can find partners on Container xChange that reposition their empty containers to places where they are needed

The latest digitalisation solutions encompass start-ups that can help container carriers with port and container repositioning, to Maersk’s and IBM’s blockchain platform

The latest digitalisation offerings help container carriers to save costs and boost port and container repositioning efficiencies.

Online marketplace Container xChange was launched in 2015 to allow empty containers to be repositioned and empty boxes interchanged using a digital platform.

It was set up to help deal with the challenges of repositioning containers. Container xChange founder and managing director Christian Roeloffs said “More than 200M containers are being moved every year with one-third being moved empty.” This costs the industry up to US$20Bn a year, and for a typical carrier, repositioning costs represent 5% to 8% of total operating costs.

He said the average saving is US$200 to US$400 per interchanged container for container shipping lines, by avoiding transportation and terminal costs. This corresponds to potential annual savings per carrier of approximately US$350M to US$700M.

The company is keen to emphasise that Container xChange is the world’s first online marketplace connecting users and suppliers of container equipment on a neutral platform. It connects shipping lines, forwarders, container traders and leasing companies. Shipping lines can find partners on Container xChange that reposition their empty containers to where they are needed.

Almost 300 members use Container xChange as their platform for container logistics on a daily basis. Mr Roeloffs said “Carriers especially value two things on Container xChange: they always find partners that use their containers if they have capacity and they always find containers in locations where their own liquidity is low or in cases where there is more demand than supply.”

He highlighted how the demand and increased interest in digital solutions had led to a growth in interest in the platform. “Yes, we definitely see a growing demand because companies realise the need for digital solutions. Of course, because it is new and people are interested and have a fear of missing out but also because sometimes processes are so time-consuming, long and expensive that the industry is open for new inspiration to increase their profit margins and flexibility.”

"It is still a challenge for some companies to share their data with third party service providers and we think that is okay because it is a tough decision to share your data with someone else"

But he warned “There are concerns we see ourselves confronted with, especially trust. It is still a challenge for some companies to share their data with third party service providers and we think that is okay because it is a tough decision to share your data with someone else. That’s why we created a vetting and onboarding process to make sure we only have verified companies on our platform. We use publicly available customer references and have a detailed company profile as well as credit checks.”

Mr Roeloffs said this is where being neutral was “the key to create trust… would you give away your data to one of your competitors? Without trust, we will not get updated information anymore and could close up shop.”

He added “Our biggest differentiator to past industry efforts is that the owner of the equipment keeps full ownership and control of the containers. There is no share equipment pool or neutral instance which decides about someone’s equipment.”

Another challenge is that shipping has traditionally been a relationship-based industry. “You want to know the person you work with, that makes sense. But as the shipping market is fragmented, we are not able to have offices everywhere in the world and need to rely on digital communications sometimes,” Mr Roeloffs said.

The company tried to combat these issues through a strong customer service team, regularly scheduled video calls and a 24/7 service.

Boosting slow steaming cost savings

CargoMate predicts the earliest time a ship can leave port, leading to large fuel savings

Port call efficiency is under the spotlight more than ever. According to research conducted by the EU-funded Sea Traffic Management Validation project, container ships incurred 71,202 hours of idle time at Europe’s major ocean-going ports in 2017. This represents an annual loss of €100M (US$113M) to the container sector alone. To tackle this issue, Intelligent Cargo Systems developed CargoMate, a port call optimisation system that predicts the earliest time a ship can sail, leading to large fuel savings.

The company was launched two years ago. The first version of CargoMate was a mobile device to help ship officers log cargo operations in port as they happened and to calculate how long they would take.

Intelligent Cargo Systems head of growth Nick Chubb said “The system collects all data while the ship is in port and makes predictions of the earliest time the ship can leave and displays this information to the fleet management department and the agent who co-ordinates the different departments. It was originally seen as a tool to help officers on board – which it does – but the added benefit is that if you save an hour in port, the ship can sail a little bit slower to the next port and save fuel. We want to be in the position where the smallest amount of time is spent in port so that vessels can sail as slow as possible between ports.”

Mr Chubb gave an example of fuel savings: an 8,000-TEU Panamax ship, sailing between Shanghai and Suez saving one hour in port translated to US$3,000 in bunkers saved and 21 tonnes of CO2 emissions saved.

The company is working with one of the top five liner operators and is trialling its solution with another carrier.

Intelligent Cargo Systems has just launched a free self-assessment  – the Port Call Calculator – to help container ship fleet management teams to better understand how much port idle time is affecting their bunker consumption. The tool calculates a port call efficiency rating, with those scoring below 80% likely to be able to make significant bunker savings through process improvements and better use of technology.

“As 2020 approaches, the need to make marginal efficiency gains across every area of vessel operations is increasing,” said Mr Chubb. “A staggering amount of fuel is currently being wasted across the world through poor port call efficiency. This tool gives ship operators a quick and easy way to understand the scale of the problem and some insight into what savings can be made through using port call optimisation technology”.

He highlighted the importance of incorporating time in ports into route optimisation. “You can optimise routes but if the vessel is stuck in port all that optimisation is lost – you need to have the full holistic performance to optimise routes.”

Mr Chubb said port optimisation is a huge growth area and indeed, Intelligent Cargo Systems is part of the Port Call Optimization Taskforce, which represents shipping, ports, suppliers of navigation, terminal operating and blockchain systems (see pages 19-21).

Blockchain enters box shipping

Elsewhere, Maersk and TradeLens have launched a new platform underpinned by blockchain technology. When the digital transformation is discussed, there are certain concepts that always come up. One of these is blockchain, the distributed ledger touted as a solution to many industrial and commercial challenges, with the maritime sector no exception.

Massachusetts-based consultancy Boston Consulting Group (BCG) published a report on the potential impact of blockchain on the transport and logistics industry on 29 January that illustrates that while many executives believe blockchain will cause major changes to the sector, there is reticence to explore how these changes can be leveraged.

88% of executives surveyed by BCG said they thought blockchain would disrupt the industry, with 59% believing this will happen in the next two to five years. However, just 16% of respondents felt they had a clear understanding of blockchain and its implementations, and only 20% said their company ranks blockchain in its top 10 strategic priorities. 60% of the executives said a lack of co-ordination and the absence of an ecosystem were the main barriers to adoption.

BCG partner and co-author of the report Andrew Schmahl said “By increasing transparency, blockchain can mitigate the mistrust that often exists within the [transport and logistics] industry’s multiparty transactions.

“Yet this same mistrust makes it hard to bring together the industry’s diverse participants into a common blockchain ecosystem.”

“To promote industry-wide adoption, each player needs to see how blockchain can create value by relieving the points of friction in its own operations,” said BCG partner and the report’s co-author, Camille Egloff.

“Then, by working with suppliers, customers, and even competitors, a company can understand and implement solutions that address its specific business needs,” she added.

An example of what this might look like is Maersk and IBM’s blockchain-based supply chain tool TradeLens, which hit the market on 11 December 2018, just four months after it was officially announced in August 2018.

TradeLens is designed to be a neutral, open platform underpinned by blockchain technology that facilitates the efficient, secure exchange of information. It comprises three layers. First is the business network, comprising parties such as shippers, freight forwarders, ports and terminals, carriers, government authorities and customs brokers, that have permission to connect to the platform and provide data. Next is the platform layer, which enables users to take advantage of the data, for example by tracking shipment-related events or sharing documents with partners. Then comes the applications and services layer: TradeLens incorporates a set of documented, open APIs to enable seamless access, for example through supply-chain management software, control towers, transportation management systems, enterprise resource planning systems and terminal operating systems.

At present, more than 100 organisations are involved with TradeLens, including more than 60 network members comprising ocean carriers, inland carriers, 40 ports and terminals and eight customs authorities.

Saudi Customs and IT partner Tabadul has integrated TradeLens with Fasah, Saudi Arabia’s national platform that connects parties involved in cross-border trade, in a blockchain pilot programme.

The governmental authority responsible for the import and export of trade goods and associated services, Saudi Customs is heavily involved with achieving Saudi Arabia’s Vision 2030 goals to diversify the kingdom’s economy and attract investment.

Saudi Customs’ governor Ahmed Alhakbani said “The pilot comes in line with our strategy that aims to facilitate trade and enhance security levels, while working to establish the kingdom as one of the world’s premier logistics hubs.

“The recent pilot to link Fasah to the TradeLens platform clearly illustrates we are on the right track.”

In Canada, both the Port of Montreal and Canada Border and Services Agency have signed up to TradeLens.

Port of Montreal sees TradeLens as a means of enhancing its business intelligence to better plan and allocate resources based in inbound traffic and upstream visibility.

The port is collaborating with Montreal Gateway Terminals, whose terminals receive Maersk vessels, on the project. Montreal Gateway Terminals will provide data on the movements of Maersk’s vessels and containers, which will be integrated into TradeLens to generate intelligence to increase visibility of cargo movements in the port’s logistics chain.

Maersk Canada president Jack Mahoney said “With TradeLens, the Port of Montreal will be better able to control delivery and operation schedules, provide easier access to clearance and billing documents and bring greater fluidity, efficiency and transparency to international shipping.”

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