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Shipping Survey Calls for Greater Efficiency, Tech Upgrade

With an estimated 90% of all world trade carried by ship, the challenges facing the maritime industry directly impact textile and apparel importers and exporters.

A new study by Business Performance Innovation Network, in partnership with technology specialists Navis and XVELA, notes that the shipping industry is going through a period of economic turmoil, as overly optimistic shipbuilding and slow growth in world trade since the Great Recession have led to a serious imbalance in supply and demand.

The industry also faces significant problems from inefficiency and waste due to aging technology infrastructure and business processes that are hamstrung by a lack of real-time information sharing and ineffective collaboration.

(Read more on ocean carrier problems: Shipping Issues and Uncertainty Upset Logistics Landscape)

The findings of the study, “Competitive Gain in the Ocean Supply Chain: Innovation That’s Driving Maritime Operational Transformation,” which surveyed more than 200 executives and professionals in the global ocean supply chain, details the critical need for improved collaboration and efficiency through the adoption of new technology-driven models and processes.

Greater Efficiency Needed

The study states that when it comes to efficiency in the ocean supply chain, there is massive room for improvement. It cites McKinsey & Company data that estimated there is about $17 billion of waste in port and carrier business processes.

Carrier-to-terminal collaboration is beset with significant inefficiencies caused by antiquated information systems that are too inflexible to enable improvements in stowage planning, port arrival coordination and other processes, said the study from BPI, a peer-driven, thought leadership and professional networking organization. It added, “But other challenges, such as coordination with inland transport carriers, cargo flow transparency for importers and exporters, and overall planning and decision-making, are also plagued by the lack of visibility and data integration in today’s ocean supply chain.”

Stakeholders across the supply chain see opportunities to improve efficiencies and customer service through better collaboration and data integration. Surveyed executives estimated the room for improvement in each area was as high as 66%.

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Some 57% of executives said poor coordination in the supply chain is one of the biggest challenges they face. Another 50% pointed to a lack of transparency and visibility as a top challenge.

Respondents pointed to a wide range of processes in the supply chain that need improvement—carrier-to-terminal coordination and planning, overall supply chain visibility, terminal operations, cargo flow visibility and predictability, and coordination across carrier alliances.

Some 90% said real-time access and information sharing between shipping partners is either “very important” or “important” to improving the efficiency and performance of the global shipping industry.

Rich Ceci, senior vice president of technology and projects for the Port of Virginia, noted that on-time arrival of ships on the East Coast is just 30 percent.

“As ships get larger and they continue to show that level of unreliability, it creates an enormous strain on the whole system,” Ceci said in the study. “If you can’t count on a ship arriving on time, you won’t have a place for it to dock or have enough room on land to unload it or appropriate space to hold the boxes…the net result is an inefficient operation.”

Ron Widdows, chairman of the World Shipping Council, said the challenge to improve industry synchronization cannot stop at the terminal.

“The biggest lift will come when you start providing information that improves planning and execution in terms of onward conveyance, including by truck or rail,” Widdows said.

Customer Service Please

When it comes to customer experience, there is widespread recognition that the industry is falling short. Survey respondents said by making process upgrades and leveraging new technologies, the industry could improve customer satisfaction by 64%.

Some 90% of shippers and consignees said there’s a need to improve visibility in the ocean supply chain. About 85% rated the industry as either “slow to change” or “far behind the curve” when it comes to innovation and next generation technology adoption.

Mark Wootton, chief innovation officer at of Yilport Holding, said, “What we see is that the end customer, the one who is actually exporting or importing the goods, is kind of left out of the loop. They don’t get the visibility they need of where the cargo is between point A and B and when it’s going to ship. What’s really needed is to find a way to bring them into the loop, actually give them better visibility, traceability and notifications, like you get with a FedEx or DHL-type service.”

Call for Tech Reset

Any discussion about improving collaboration in the ocean supply chain should start with the industry’s aging Electronic Data Interchange infrastructure, the report concluded, noting that systems are “notoriously inflexible, and incapable of sharing real-time information between partners, let alone across the entire supply chain.”

Only 16% of respondents said their companies are doing “extremely well” at digital transformation, with 43% admitting their technology efforts need improvement. When it comes to innovation and technology adoption, nearly 67% said the industry is either “slow to change, but improving” or “far behind the curve.”

Data protection and security, integration challenges and cost restraints were all identified as top reasons companies are not doing a better job of sharing data. Meanwhile, they see considerable risks and challenges in trying to adopt new technology architectures and models, chiefly internal change management, adopting new processes, cost management and integration with legacy systems.

Nevertheless, there is a commitment on the part of many companies to invest in new technologies, with 46% saying they are either making significant investments or significantly increasing IT spending.

Widdows said, “Any technology that can free this industry from its horrible reliance on EDI, with its armies of people scrubbing bad data and with its missing data and untimely data, will be useful. But what is more important will be a new mindset that leads to change.”

“A new mindset that can…move toward new platforms and models for sharing data is essential to meeting the needs of the entire ecosystem,” the BPI study concluded. “Fortunately, based on our survey research and conversations with industry executives, many of the ocean supply chain’s top companies are aggressively pursuing next generation technology strategies.”