There is no shortage of technology for carriers and other parties in the ocean industry, but in the wake of the Hanjin mess, the question is what carriers should invest in.
Three weeks into the Hanjin insolvency crisis, ocean freight technology providers have urged the industry to focus on what comes next.
“It’s really concretized how challenged the industry is,” said Adam Compain, chief executive officer and co-founder of ClearMetal, which provides visibility and analytics tools to the shipping industry (with a focus on supplying aid to liner carriers).
The founder of Haven, another startup providing solutions to the shipping industry, said Hanjin’s problems were clear.
“They failed to leverage technology as a competitive advantage and to maximize utilization,” said Matt Tillman, CEO and co-founder of Haven, an ocean freight logistics marketplace. “This put them in a position of constantly buying business to service their creditor’s volume demands.”
American Shipper recently profiled ClearMetal and Haven, both of which are among a crop of tech startups aiming to rethink the way various parties in the shipping industry conduct business. Among other companies in this wave of algorithmic ocean freight evolution are:
• Crux, a provider of container terminal visibility;
• TransVoyant, which tracks billions of data points to underlie its own analytics tools and also supply logistics software providers’ visibility platforms;
• CoLoadX, a marketplace broadening the reach of transactional relationships between freight forwarders and non-vessel-operating common carriers;
• Fleet and Simpliship, two ocean freight exchanges in which shippers that struggle to get traction with service providers can shop for rates;
• Xeneta, an ocean freight rate benchmarking platform;
• And Freightos, which launched its own ocean and airfreight marketplace in July.
The common thread among all these platforms is deep math and a structure based on current cloud-based technology infrastructure. As Joe Floyd, a venture capital investor with San Francisco-based Emergence Capital who has scrutinized the logistics landscape intensely, put it to American Shipper, some of the technology being developed today to address logistics inefficiencies wouldn’t have been as affordable for a startup 10 years ago.
These advancements have clearly come too late for the troubled liner carrier industry. With CSAV, APL and UASC all being acquired, Hanjin on the verge of the abyss, and rumors swirling of other lines being in trouble, this industry will look very different in 2017.
Compain, who to better understand the business did a two-month immersion program with the liner carrier OOCL (one of the few to be consistently profitable in the last decade), said carriers largely recognize what the next steps must include.
“Carriers do have systems,” he said. “They have digitized over the last decade. They know their inventories and container flows. They have ERPs and accounting tools. The problem is there was no pressure to adopt (the most modern forms of) technology because they haven’t had to. They’ve achieved efficiencies through operational means. They’ve squeezed efficiencies through economies of scale (i.e. bigger ships). But they didn’t need to do change management because they haven’t had to. But carriers now realize ‘we have nowhere to turn.’ They can’t cut costs, they can’t build bigger ships, they can’t create fewer alliances.”
Compain said that where carriers have looked at incorporating technology is in areas “that are familiar to them,” saying the industry is “still in the early days of digital transformation.”
He added, as well, that no one should be pointing fingers at the carriers for a lack of trying.
“Carriers have operated pretty well given the circumstances,” he said. “If you look at the options out there, it’s not like all these sophisticated technologies were out there until the last four or five years.”
Compain, who said ClearMetal’s analytics tools are relevant to terminal operators, forwarders and retailers, said those other groups are more “ready” for this technological wave than carriers.
“Those companies have already tried things themselves, and they realized how hard technology development is, so they’re more willing to engage outside companies,” he said.
The question remains, however: will carriers use this watershed moment to rethink their use of outside, leading edge technology, or will some use it as a means to push for further consolidation and market share?
If this means anything, most in the technology world believe the rate increases causes by the Hanjin ordeal will be temporary and not systemic.
Freightos on Thursday released statistics saying that ocean rates from China to the United States were 40 percent higher than before Hanjin filed for bankruptcy, but down from the peak of 56 percent a week ago.
Freightos CEO Zvi Schreiber said shippers shouldn’t expect those short term rate spikes to last, given there’s more than enough carrier overcapacity to offset anything lost due to Hanjin’s discontinued operations. What’s more, other carriers have already flooded into Hanjin’s void on the transpacific, where the South Korean carrier had its strongest position.
Tillman said much the same.
“This is likely a short lived increase as the industry works a bit like the stock market,” he said. “Big jump on news and falls back down once people stop reacting.”
Tech providers map out post-Hanjin phase
