Shipping industry moves into digital age with automated booking
With human error costing the shipping industry US$684 million a year, digital platforms are now being adopted to automate the order process
Bloomberg in New York
The shipping industry, which carries 90 per cent of world trade, is finally going digital.
Until recently, if you wanted to send a couple of pallets of televisions from Hong Kong to New York, you had to place your order over the phone with a human on the other end. Those humans make mistakes about 20 per cent of the time, costing US$684 million a year, according to Ocean Audit, which examines invoices for retailers.
To cut this waste, customers and ship operators can now use digital platforms offered by Freightos, Amber Road and Inttra or by carriers including AP Moeller-Maersk that make booking international freight as easy as reserving a hotel room or buying a jumper online.
"As an industry, I wouldn't pride ourselves on being at the forefront of technology," said Carsten Olsen, a senior director responsible for Maersk Line's commercial business processes in Copenhagen. "To the extent that we can automate processes, we can speed up the processing time and make more accurate booking confirmations and invoices."
Solutions range from shippers developing their own software to independent companies trying to make booking freight more like buying a plane ticket.
About 160 million containers filled with goods crossed oceans last year, 13 per cent of them bound for North America and 21 per cent for Europe, according to London-based Clarkson, the world's largest shipbroker.
The ocean shipping industry has not fully made the changeover to digital platforms because a single transaction usually involves multiple companies and jurisdictions with their own rules and procedures. Shippers prefer to keep privately negotiated rates secret, unlike airlines that publish fares.
But Maersk now takes about 87 per cent of its orders electronically, up from about 80 per cent for the past four years, Olsen said. About 40 per cent of bookings on Maersk's website were confirmed in five to 19 minutes, and 90 per cent were finished within two hours, a "significant improvement" from a year or two ago, he said.
In most cases, shipping a box load of goods around the world remains a time-consuming and labour-intensive process. Orient Overseas International acknowledged online inquiries within 24 hours and employees then continued the booking process, said Stephen Ng, the Hong Kong-based company's director of trades.
Existing customers usually contacted their account managers directly, Ng said, adding that because companies develop their own approaches, it might be difficult to establish a uniform system.
Steve Ferreira, founder and president of Miami-based Ocean Audit, said the current system was too prone to error.
"We need to be concerned about this because it's a huge drain on our economy," he said.
Ocean Audit reviewed invoices to find mistakes in customers' favour, taking 50 per cent of the savings, Ferreira said. Other start-ups seek to stop the discrepancies before they happen.
The biggest is Inttra, whose network now processes 22 per cent of all containers shipped globally, according to Sandra Moran, its chief marketing officer. The company began 13 years ago as a collaboration among the largest shipping companies, she said.
While Inttra shows quotes from multiple carriers, Amber Road's service plugs in the terms of a company's negotiated contract, said Ty Bordner, its vice-president of solutions consulting.
That allowed users such as Honeywell International and GlaxoSmithKline to enter the cargo, origin and destination, push a button, and see all the available rates and schedules according to their contract, he said. They can also book directly through the software.