Air cargo carriers: this is your moment – enjoy your profits, but play nicely
The numbers currently being bandied about are big ones: some $25,000 for an hour’s 747 ...
Former Maersk executive Thomas Bagge has been chief executive and statutory director of Digital Container Shipping Association (DCSA) for nearly 18 months, in an attempt to pull the shipping industry into the 21st century. It is, he says, not an easy quest, but the first fruits of his labour are starting to show.
“The container shipping industry is currently not a digitally advanced industry. We are, however, seeing a shift as many companies are thinking about how to change their supply chain to be more efficient and reliable through digitalisation.
“There is a clear and increasing demand for more digitalisation in the industry,” he explained.
DCSA membership comprises nine of the largest container shipping lines, which aim to create a “digitally interconnected” industry, which will give customers “seamless, easy-to-use services”.
Non-profit and independent, the association’s aim is to drive and develop technology standards and frameworks – a crucial step forward.
“Taking a standardised approach to digitalisation is crucial to enabling interoperability, as this industry depends on collaboration from all industry stakeholders to maximise the benefits of digitalisation,” explained Mr Bagge.
“Since the launch of DCSA in April 2019, we are encouraged by the support we’ve received from many industry stakeholders for digital standards. We look forward to collaborating more with shippers as well and all supply chain participants.”
One of its major efforts has been introducing an e-bill of lading (eB/L), which, it believes, could save the industry up to $4bn a year, even if only half the B/Ls were digital.
The DCSA worked with IATA on the data, which has spent a decade trying to introduce e-freight and e-air waybills, and which currently have about 68% market penetration.
“If we start on standardising eB/L now, we have reason to believe a 50% adoption rate is feasible by 2030,” said Mr Bagge.
But he admitted: “As part of the overall digitalisation of documentation effort, it is a major undertaking for the container shipping industry. Carriers cannot do it alone. It requires key stakeholders such as regulators, banks and insurance companies to accept eB/L as the equivalent of paper bills of lading to drive widespread adoption. Not every government has provisions for an electronic form.”
Covid, as has been found in many other areas of business, has accelerated digitisation, and Mr Bagge said progress was now being made.
“A number of DCSA members have reported a sharp increase in eB/L adoption in an effort to keep trade moving. By developing an industry-standard language and definitions for eB/L, DCSA aims to make it easier for government authorities and other stakeholders to accept an electronic replacement.”
While Covid had accelerated some trends, such as a move towards more digital documents and use of technology, it had slowed other aspects, explained Mr Bagge.
“The Covid-19 pandemic has caused many companies to shift their priorities to deal with operational issues. However, while the impact of the pandemic may slow some projects down, the focus of our standardisation work and the commitment from our member carriers to drive standards adoption remain unchanged. For eB/L, adoption has even accelerated as the industry acted quickly to find solutions for not being able to pass paper BLs from location to location.”
It is not just the $4bn in savings that will shipping line customers could enjoy; digitisation boosts efficiency.
“There are significant time benefits to digitisation in addition to cost benefits, and eB/L is a good example. When the cargo is loaded onto a ship, eB/L will enable the destination port to have visibility of the cargo and expedite processing upon its arrival. Regulators can reduce clearing time; shippers, ports and other stakeholders will all benefit from the time saving. As Covid-19 continues to cause disruptions around the world, digitalisation enables people to work from home and minimise or even eliminate potential delays.”
‘Digitisation’ covers a multitude of facets, and to bring the industry into line, the DCSA had to prioritise; it decided on track and trace and operational vessel schedules (OVS) as its first moves.
“We set the DCSA priorities jointly with our carrier members and they bring insights from their customer base. For shippers and freight forwarders, having visibility of where the cargo is has been an issue for more than a decade. This is why we published the track & trace standards in January 2020, simplifying shipment visibility across multiple carriers to enable better planning and shipment handling for shippers.
“OVS is another area that’s in urgent need of improvement,” he added. “Today carriers lack a standard and digital way of sharing vessel schedule data between themselves, their vessel sharing agreement (VSA) partners and operational service providers. OVS standards will enable automatic sharing of vessel schedule data among different parties and build a higher degree of effectiveness and efficiency into the fabric of container shipping processes.”
Port call optimisation technology is also on its way, to drive both efficiencies and environmental gains.
“Today ships often speed across the ocean, burning more fuel than necessary, only to find themselves waiting outside of a congested port, burning more fuel in the process.
“DCSA port call optimisation (PCO) standards will aim to enable the just-in-time port call by aligning operational processes and data communication between carriers, ports, terminals and other stakeholders. PCO standards will create a more efficient and harmonious ecosystem that will drive increased trust and visibility among stakeholders, reduced ship waste and emissions, and improved schedule reliability,” he said.
He urged forwarders and other stakeholders to get involved with the association.
“At DCSA, we actively invite all stakeholders to engage with us in order to develop standards that are useful for the industry and drive rapid adoption of standards. We have been working with the freight forwarder community and welcome more feedback.
“DCSA standards are open source, free for everyone to use. It is our strong belief that by adopting digital standards, supply chain participants can improve efficiencies and unlock opportunity to innovate.”
This article was first published in Voice of the Independent’s August issue.