Standardisation and the importance of data collaboration between shipping lines

In serving the multitude of clients bringing goods from their point of origin to their point of destination, the supply chain industry may be conceived as a network of actors having different capabilities to fulfil the needs of the customer – and the networked economy of container shipping relies on collaboration, write Hanane Becha, TRAXENS & UN/CEFACT, Mikael Lind, RISE (Research institutes of Sweden), André Simha, MSC (Mediterranean Shipping Company), Francois Bottin, CMA CGM, and Steen Erik Larsen, A.P. Moller – Maersk.

In such a business network, business actors would be of different sizes and undertake different roles, where some of them are in direct interaction with the client while others may be serving the needs of the client’s client. In many industries this has brought companies to focus on core capabilities and pursue business in the so-called networked economy.

The supply chain ecosystem is quite complex, involving multiple actors that are continuously trying to enhance their processes, optimise their costs, and enter strategic alliances and collaboration with other partners to better serve their customers. In pursuing business in a networked society efficiently, participating actors must have agreed ways of communicating, to share information on both the key physical parameters, such as the identity and location of containers, and on other important organisational information, such as bills of lading, and timing of operations and movements.

As is becoming clear in container shipping, the collaboration between shipping lines is now evolving from operational collaboration focused on rationalising resources and offering more global coverage, to strategic collaboration focused on IoT (Internet of Things) communications and smart everything data exchange.

The container segment of shipping has a profound proven history of collaboration in which they various actors and elements back up each other. Some examples of such collaborative endeavours include: shipping line alliances, such as 2M and Ocean Alliance signing cooperative agreements; collaborative investment, with CMA CGM, MSC and Maersk investing in TRAXENS to deploy smart containers; the creation of the Digital Container Shipping Association (DCSA) to develop technology standards; and TradeLens, a collaboration between Maersk and IBM which has now engaged CMA CGM, MSC, Hapag-Lloyd and ONE. 

The purpose of this article is to elaborate on some of the possible collaboration opportunities seen in the light of what comes out of digitalisation empowering the network economy of container shipping. What may be seen now is that this collaboration is not just happening between different complementary service providers, downstream to the customer; the collaboration is now expanding horizontally between competitors facing the same technical and regulatory challenges.

Collaboration among shipping lines

Historically, the shipping lines were more focused on their vessels’ capacity, building bigger ships and trying to optimise their stowage plans and routes. The success of their alliances depends on the degree of compatibility of their service networks. Historically, shipping lines have also secured port capabilities by establishing such things as own terminal operator’s companies and having their own tugboats operating within the port.

However, bigger ships have not generated significant economies of scale and have yielded only marginal cost benefits for the shipping lines while creating significant costs elsewhere Hence, the race to build bigger ships has slowed or perhaps even stopped, and shipping lines need are now looking elsewhere to optimise costs.

The ongoing efforts in utilising digitalisation for supply chain integration have also put port developments in focus. Trade patterns, as well as short first and last mile distribution carried out by not utilising sea transports, points to the need to empower a large network of smaller ports to serve the needs of overall sustainability along the supply chain.

As an example of historical collaboration among shipping lines, when one carrier has had more bookings than it has capacity, competitor carriers that still have capacity have been approached, so as to satisfy the needs of the original client rather than refusing a booking outright. This buyer-seller collaboration ensures that the customer is served, and the cooperating competitors both receive revenue.

Nowadays, taking full advantage of digital technologies is clearly a high priority for shipping lines that wish to benefit from smart assets and big data to transform their processes. Further to this effort, ecosystem actors are collaborating to define enabling technologies, including specifications and requirements for Internet of things (IoT) communication and data exchange interfaces definitions, and competing in value-added services definitions.

Some of these efforts include, for example, the creation of standards for Smart Containers, agreement on time stamp data sharing for port call optimisation, and the Track and Trace standards for container shipping published by DSCA.

Standardisation – enabling the benefits of collaboration

With the ramp-up of new and emerging technologies, standards and horizontal collaboration between competitors are now more necessary than ever. A standard is an agreement among a business network constituted by actors that share the same common object of interest.

Adoption of global multimodal standards is a win-win situation, since these standards guarantee interoperability. Standards enable stakeholders in the logistics chain to reap the maximum benefits from smart container solutions, while enabling them to share data and associated costs. Standards-based solutions increase the ability to collaborate, which in turn increases efficiency. Additionally, data exchange standards reduce development and deployment costs and cut time to market for IoT solution providers.

There are several organisations that enable collaboration among different actors, such as the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), the IMO/FAL (International Maritime Organization Facilitation Committee), the International PortCDM Council (IPCDMC), the International Task Force Port Call Optimization (ITPCO), and the H2020 funded DataPorts project.

The latter efforts build upon the facts that shipping lines are collaborating with different actors while operating within the port. The standardised definition of data elements used in this process accelerates integration enhances operations. In addition, utilising different types of data, such as data from smart container data, port call operations, timing of ship movements, and track and trace enables open communications channels between supply chain actors.

Shipping lines will be limited in their ability to provide their customers with business intelligence coming out of the solutions above for their customers in the absence of a global standards. Standard data models and standard APIs are key to ensuring simplification and acceleration of the integration of digital services from various sources. Data sharing is particularly important in the logistics supply chain due to the large numbers of diverse players and because container movements are global.

Conclusion

As connected IoT devices become more ubiquitous, it will become increasingly possible to derive business intelligence from the combination of multiple sources for the better good for the industry. In doing so, it is important to distinguish between the sharing of business critical rather than business sensitive data, so as to promote the actors’ willingness to share data.

Digital data standards are now being introduced to encourage the generation of data streams and to facilitate their combination, especially in the logistics chain, as concrete examples of where collaboration is enabling this development.

It is important to note that communication technologies remain a current challenge for the shipping lines. Like telecoms companies, shipping lines must collaborate to define communication technologies as a commonality that transcends beyond competition to enable the networked economy of container shipping.

Other areas to consider, but not discussed in this article, are aspects associated with cyber security, a common approach to the identification of consignments, the handling of empty containers positioned in different parts of the world, solutions associated with the digitalisation of bills of lading, aligning common processes used in container shipping, and IoT standards for container shipping.

Collaborating between shipping lines is a win-win strategy to reduce transportation costs, empty miles and environmental impact, provided that logistics are willing to take advantage of the emergence of big data and increasingly interconnected communicating objects (IoT).

As in many other industries, some areas are more easily suited to collaboration while others might be more sensitive. The establishment of the DCSA is the proof that the leading shipping lines have come to an agreement to reinforce the utilisation of standards in the container industry.

Editor’s note: This article is an abridged version of a longer paper by the authors, which includes further details on the projects and use cases mentioned above, as well as a full list of references. The full paper can be downloaded here.