While marine transport enables the lion’s share of global trading in bulk commodities today, the business-to-business (B2B) information integration across the value chain of a voyage has yet to evolve. As both the shipping industry and commodity merchants face tighter profitability, they need to look at a holistic approach to improve efficiency and data quality through information integration. In this article, Thomas Pappas, Jay Rajagopal and Rashed Haq discuss a way to harness emerging information services and technology platforms.
Imagine air travel today without online booking and check-in, flight tracker applications and other web-enabled conveniences. This technology traces back to 1953 when C.R. Smith, president of American Airlines, and R. Blair Smith, an IBM sales representative, developed the idea for a data processing system that could create and manage airline seat reservations and make that data instantly available electronically to agents at any location. Named the Semi-automated Business Research Environment (SABRE), this revolutionary system enabled American Airlines to replace the handwritten passenger reservations system for the future. Today, Sabre solutions, such as Travelocity and a host of others, make it easy for travelers to navigate through virtually all airline schedules and pricing information to book flights to anywhere in the world, then manage their travel from online check-in to flight tracking.
Bulk oil, gas and commodity shipping has evolved in many ways over the years and today a number of voyaging software solutions are in use by ship owners and charterers. These solutions provide much of the functionality for chartering, operations, fuel management and settlement of marine contracts. But there is little sign of industry-wide data exchange and integration between all the partners in a voyage. The result is added costs related to manual data handling and, more importantly, lost opportunities to utilize readily available, accurate and actionable data to improve business results.
How Much Data and How Does it Move Around Today?
A charterer with 3,000 voyages each year would receive about 60,000 voyage data reports, primarily originating from ships and port agents, with a number of them containing duplicate information. These include estimated time of arrivals (ETAs), position reports, notice of readiness statements and port turn-around details. Globally, there are millions of these data reports each year in the bulk oil and gas trades alone, each containing numerous information elements.
These reports are largely sent by email between the ship and owner, charterer, port agents, brokers and cargo surveyors and are circulated internally by the charterers to their supply and trading departments. At the same time, vessel operators frequently have to convert position reports and other inputs into unique formats required by their various stakeholders. This amounts to a lot of manual data handling.
According to people in the voyage chain, two things are apparent. First, little has changed over the years in terms of how voyage information is gathered and shared. Second, when people need to know when their ship is arriving, or how much cargo is onboard, they either go to the latest email or make a phone call to get the information. And even when an email is available, or a position report is provided and available, people still make the phone call because they either don’t trust the information or they want the latest information. The result: more phone calls and emails to verify or update the last report.
Past Integration Attempts
Many of the voyaging software vendors, agents and others have attempted to automate information flows but most of these integration attempts have not been adopted by end users. One agent developed a website for client use in tracking their ships and getting any information they might need. Today, this system serves its purpose internally to the company, but clients are not using it because the website doesn’t easily integrate into their internal business processes.
Vendors have built data interchange functionality into their voyaging packages, including very simplified Excel-based reporting tools for ships to send data by email attachment, which could be uploaded into the client’s data tables. This approach has not gained ground for a few reasons, including ship owners’ reluctance to increase the paperwork burden on their ships. And although these tools can also be used by other service providers downstream from the ships, such as shipbrokers, few have taken on the task of transforming emailed data into a more usable form.
In cases where charterers have a controlled fleet, they have had more success in getting electronic data directly from the ships, but spot voyage charters often make up the larger share of the voyages for many companies, leaving a lot of data handled manually.
As the above examples show, because there are multiple participants for each voyage, it is very difficult for any single participant or service provider to make a difference in the automation process. Therefore, it will take a concerted effort by the majority of participants before any meaningful change can occur.
Opportunity
The immediate benefit from developing voyage-lifecycle B2B integration will be that organizations become more efficient as they are relieved of the burden of manual data handling and can give more attention to value-added activities. The additional benefit over time will be the availability of higher quality information for the marine transportation industry. For example, owners and charterers can fine-tune and improve their fuel-saving measures with better data; ship managers can improve planning and scheduling of crew changes, spare parts deliveries, repairs and other services that are highly dependent on reliable ship schedules; and cargo suppliers and receivers can improve berth scheduling at their cargo terminals.
Additionally, the customers of marine transportation services—trading and supply organizations—will also benefit. The trading community has largely moved to straight-through processing (STP) through the entire commodity transaction lifecycle and is looking for improved efficiency and service levels elsewhere, such as in the voyage lifecycle. These organizations are becoming more sophisticated and their need for faster and better data delivered electronically into their trading systems is a strong driver for improved shipping data flows. As improvements occur, the broad data sets already in use by traders and other participants will become more robust and complete, leading to improved trading and supply decision quality.
The Way Forward
Today, there are a number of software packages offering various functions and infrastructure platforms that connect industry participants. These provide the opportunity for partners in a voyage, together with the software platforms and vendors, to collaboratively develop straight-through information and data processing for the voyage lifecycle.
The voyaging system acts as the focal point for all functions, stores associated data and makes that data available as needed by users. Just as the charterer and ship owner use voyaging applications, the other participants would have in-house software systems as appropriate for their organizations, making use of the data to serve their business needs.
Integration and STP across organizations are the logical next steps to take full advantage of voyaging applications, with the need for connectivity applying to both internal and external data flows. By adding an exchange platform, voyaging applications can become much more useful. An exchange also enables linking to other hosted software or exchanges, such as pipeline or rail data exchanges that are integral to a supply and trading organization’s activity. Automated integration across transportation modes also creates additional possibilities for organizations looking for new ways to drive efficiencies.
A number of industry exchange services exist in shipping, such as the Oil Companies International Marine Forum’s (OCIMF’s) well-known Ship Inspection Report Exchange (SIRE) system. Consider how an exchange might work for voyaging information. At the start of a voyage, the owner or charterer invites the various parties to participate in a voyage work group, with each receiving the necessary transaction code and authorization details. All standard documents and data are shared within the designated “voyage space” and participants can download whatever they choose to capture into their internal voyaging systems.
Individualized settings might allow participants to use data in whichever way they choose. Depending on each participant’s role, they may have access to more or less information. For those owners and charterers who do not have voyaging systems, the exchange could provide some degree of functionality and graphic interface for enhancing their experience. Value-added functionality, like RSS feeds, alerts and document on-forwarding, could also be provided. This approach would be extremely efficient for all the participants and could provide significantly earlier access to important actionable information.
Any solution will require leadership and collaboration between the transport suppliers and consumers, the intermediary participants and the software platforms and vendors. Alignment on the vision and agreement on relevant standards and protocols of the B2B Exchange will be necessary to collaborate across groups.
B2B Exchanges exist primarily in three flavors:
1. Public/Independent—These platforms are provided by an independent third party to multiple companies, as long as the companies adhere to the standards established by that third party. In the past and especially after the dot-com era, many public exchanges failed to gain ground due to such factors as lack of clout to influence buyers and suppliers, funding issues or a poor understanding of their marketplace.
2. Consortia—As public exchanges started dwindling, a small group of companies came together to form platforms to collaborate with their business partners (e.g., GM, Ford and DaimlerChrysler came together to form Covisint to interact with their suppliers, although Covisint has since transformed into an independent exchange).
3. Private—This is a platform hosted by a single, usually large, company to facilitate business with its partners (e.g., Walmart’s Retail Link®). Several private exchanges have thrived after the dot-com era because they successfully addressed governance and security concerns and were internally funded rather than relying on external sources. This gave companies the flexibility and power needed to establish the roadmap of their own exchange as they deemed fit.
Since the formation of a consortium-based exchange enabling voyage partner integration would entail significant work by a group of companies, the two more immediately viable approaches involve individual companies taking up ownership for integration.
1. Building a private exchange—Larger companies with significant chartering and voyage management activities would benefit from setting up their own private exchange and connecting it to other software providers for specific shipping functions both within their organization and, more importantly, to interact with external companies as part of voyage management activities. This assumes the companies have enough leverage to ensure their business partners use the exchange, rather than ignore it and continue to do business as usual.
2. Building a public exchange—OCIMF’s SIRE program brought together various shipping parties (charterers, inspectors, ship owners) for a specific function using standardized data interchange formats and eliminated such issues as privacy concerns related to visibility of competitor data. The funding for SIRE is based on member subscription fees. Along similar lines, an independent voluntary body or a private third party (such as a software vendor) could set up a public exchange to facilitate collaboration among the various parties. Such a platform could also connect to other platforms to ensure that the entire voyage lifecycle is covered.
Whatever the approach, it is imperative for participating individual organizations to ensure that a few key prerequisites are addressed:
1. Redesigning business processes to eliminate manual work and paper trails
2. Architecting and deploying technology solutions that are able to “talk” with each other and with outside applications over the Internet
3. Identifying and providing value-added services that maximize the benefits of STP, thus differentiating one firm’s customer service from its competitors
Conclusion
It is widely recognized and agreed that seagoing officers are increasingly burdened by paperwork and administrative workload; the same problem applies to shore organizations. These impair the ability to accomplish important value-added functions. As the benefits of B2B integration and STP become more widely recognized in shipping, voyaging software vendors and other stakeholders can continue to work together to develop common standards and protocols for integration, with the potential to deliver benefits across the industry. Ship owners and other commercial operators that see this opportunity and translate it into a strategy have the best chance of reaping the benefits of data integration and STP ahead of their competitors.
