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Maritime industry’s need for digital transformation surfaces

COVID-19 has brought attention to information flowing through every step of supply chain

MSC is a member of the Digital Container Shipping Association with eight other container carriers. (Photo: MSC)

The coronavirus pandemic has brought the need for seamless information flows among global maritime industry stakeholders to the surface.

“This COVID crisis has at least made one thing very clear,” said Jaco Voorspuij. During the rush to deliver personal protective equipment and toilet paper, “people make distinctions between essential and nonessential goods, meaning you need to know quite a lot of detail about the cargo. The maritime mode has struggled a lot to provide the information to those that need it to clear the goods through Customs and make them available at the right place at the right time.” 

Voorspuij, the senior manager of transport and logistics for GS1 Global, was a panelist Thursday during a MarineTraffic-hosted webinar, “Maritime Digitalization: Unlocking Opportunities for the Shipping Industry,” along with Jonathan Lewis, the innovation manager for the U.K. Hydrographic Office; Stellios Stratidakis, the head of data for MarineTraffic in Athens, Greece; Simon George, the technical director for Metro Shipping in the U.K.; and Bob den Ouden, manager of special projects for MSC in the Netherlands.

Voorspuij said the need to follow essential goods through the supply chain has shown that the air and rail industries have made far more progress adopting electronic bills of lading than maritime.

“For instance, in air cargo, penetration is about 60% or better for consignments being moved under an electronic airway bill,” he said. “Similar levels of electronic paperwork are still far away in the maritime industry.”

The Digital Container Shipping Association (DCSA), of which MSC is a member, last month did launch a collaborative effort to push for e-bill of lading standardization and implementation.

“It’s highlighted as one of the hugest potentials within our industry,” den Ouden said. “Without an electronic bill of lading, blockchain will never work.” 

Digital transformations

George said the coronavirus pandemic has forced the freight forwarder Metro Shipping to accelerate its digital transformation.

“We’ve engaged with major stakeholders — and that’s the BCOs — and it’s pretty obvious the kind of thing that they want. They want real-time data. They want KPIs that will bring benefit and value,” George said. 

Voorspuij said GS1 essentially has been on a digitalization path for 45 years as the inventor of point-of-sale bar codes.

“GS1 has about 2 million user companies using our standards,” he said. “Every single day in the world about 10 billion times, the GS1 identification key is scanned or used in a digitalized process. … We are on a journey, and I think on an accelerated journey, toward digitalizing the way we work and the way we provide services to our user base.”

But the pandemic has littered the road with potholes, according to Stratidakis.

“There’s an obvious delay in decision-making as everyone is trying to understand how this will play out. There was a very interesting spike in requests from financial institutions, governmental bodies and associated organizations who were also trying to understand how this will play out. There was a major shift toward analytics,” he said. 

Stratidakis said Automatic Identification System (AIS) analytics provides “a way to utilize the past to get information about the present and be in the position to use AIS as a living indicator for what is about to come. This trend is here to stay. … Through collaboration we’re moving toward a more connected shipping industry so in this situation the whole disruption easily turns into an opportunity.”

Voorspuij said GS1 is involved in several maritime standardization initiatives, including the United Nations Center for Trade Facilitation and Electronic Business project on smart containers and cross-industry track and trace; the International Port Community Systems Association and Alibaba joint logistics visibility task force; the International Task Force Port Call Optimization development of business process definitions and standardization of information exchanges to make port calls more efficient; and the DCSA’s work.

Den Ouden noted that DCSA represents 70% of the container fleet. In addition to MSC, the other container shipping lines that are members are CMA CGM, Evergreen Marine, Hapag-Lloyd, HMM, Maersk, ONE, Yang Ming and ZIM.

“What we are trying to do is find common use cases — business cases — that we all recognize, that we … can leverage” for digitalization standards within the industry, den Ouden said. “We think as a container carrier association that our business processes and information flows are quite similar between the members. … We think that we can make or at least start making a difference on different initiatives that the DCSA started,” including e-bills of lading and Internet of Things connectivity interface standards for shipping containers.

Stratidakis said, “Standardization has a vital role to play. Think of simple information that has to be relayed and communicated. … It is important that everyone involved in this process … has the same understanding of this information. This is where things get interesting, which leads to the need for collaborative systems and the importance of having timely data to further optimize the whole industry.”  

Bracing for valued-added tax changes

Voorspuij said the entire industry has to be prepared for a European Union regulation that will take effect next year.

“Every single e-commerce item as of July 1, 2021, has to be declared and VAT has to be paid for these items,” he said. “The result of this new legislation, where you now have to declare and pay, means that the economic operators involved in moving e-commerce items across EU borders and also the member state authorities will have to deal with at least a 15-fold increase and in some countries a 30-fold increase in the number of declarations they will need to handle. 

“Just as an example, in France they currently do 10 million per annum declarations. That will go to an estimated 300 million to 350 million declarations per annum,” Voorspuij said.

“The declarations will now have to be done on an individual sales order transaction level so everything that we buy online … will have to be declared. In a nutshell, if we have a container crossing the border into the European Union containing e-commerce items, there may be 1,000 or 1,500 of these sales transactions in a single container. Whereas you could get away with a single declaration in the past, these will now be 1,000 or 1,500 separate declarations through Customs,” he explained. “Anybody who moves e-commerce items will be affected by this.

“This is probably one of the most impactful changes that is coming down the line for the maritime industry,” Voorspuij said. “I think we will find with this new legislation we will no longer escape the tidal wave of change that e-commerce has had on supply chains everywhere else.” 

And here comes Brexit 

George said England’s break from the EU “now is firmly set in stone” for Dec. 31.

“There are some rather scary numbers being circulated out there — an additional half a million declarations per week are going to be incurred due to Brexit,” he said. “It goes without saying really that collaboration and data exchange are absolutely required for a sustainable solution.

“Automation and workflows are the only way I can see this working. Master data is going to be required, transactional data is going to be needed and that data needs to be mapped in a standardized way. The digitization of documents is going to be key,” George said.

He said the coronavirus crisis has shown the time for industry digitalization is now. “COVID-19 has drawn that line in the sand.” 

Den Ouden said stakeholders within the maritime industry historically haven’t been very good at sharing information, but the DCSA’s initiatives as well as others are kickstarting collaborative efforts.

“There is huge potential for standardizing processes and information flows in our marine industry,” den Ouden said. “I think this situation with COVID only accelerates these initiatives.” 

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Click for more FreightWaves/American Shipper articles by Kim Link-Wills.

Kim Link Wills

Senior Editor Kim Link-Wills has written about everything from agriculture as a reporter for Illinois Agri-News to zoology as editor of the Georgia Tech Alumni Magazine. Her work has garnered awards from the Council for the Advancement and Support of Education, the Georgia Institute of Technology and the Magazine Association of the Southeast. Prior to serving as managing editor of American Shipper, Kim spent more than four years with XPO Logistics.