There is a great deal of complexity in the carriage of goods by sea, and the maritime industry transports over 80% in volume and 70% in value of global merchandise. Its many moving parts need constant management and monitoring, due to the sheer amount of cargo, regional bottlenecks and the number of stakeholders. Already strained, the infrastructure has been further stressed by the recent pandemic, creating a delicate balancing act. It is no surprise, then, that this industry – the backbone of globalisation and long taken for granted, is now getting the attention it deserves.
During the pandemic, shipping and related logistics chains played a crucial role in keeping economies afloat and delivering essential supplies. The critical importance of the maritime industry was proven once again.
Yet this also revealed many weaknesses in the sector, and in order to ensure business continuity and improve the reliability of essential supply lines, it is now more important than ever to enhance its resilience. The key to accomplishing this is digitalisation.
Why go for Digital Transformation?
The maritime sector would benefit from fully harnessing the power of digital technology. This would help it to combat many of the critical challenges it faces today. Put simply, extending the use and coordinating the deployment of digital technology worldwide will lead to increased efficiency, a safer and more resilient supply chain and decreased emissions.
It is especially important to create an efficient digital ecosystem, to streamline operations and to facilitate data exchange between shippers, port operators, carriers and clearance agencies, as well as between, and also amid, transport networks. Also, in minimising human interaction, digital technology is advantageous in the context of COVID-19, helping to protect the sector from that, and from anything similar in future.
Digitalisation would have a significant impact far beyond the maritime industry. A strong, more sustainable recovery in low and middle income countries is particularly important, and (with the strategic role that the shipping industry plays) digitalisation could enhance that.
The Potential is not being Realised
While digitalisation has many advantages, progress has been uneven and inconsistent.
Surveys by the International Association of Ports and Harbors reveal that only one third of ports fully meet the requirements for electronic exchange of key maritime data, despite the fact that all IMO member countries are required to do that under the FAL Convention. It is interesting to note that, as major barriers to digitalisation, some ports have cited legal frameworks, human capital constraints and convincing the various stakeholders to collaborate.
In countries left behind in this, shortages of essential goods and higher prices are likely, in the short term, as illustrated at the beginning of the pandemic. If full digital transformation is not completed in the maritime supply chain in the medium to long term, we could see increased trade costs, diminished competitiveness, reduced economic growth and wider unemployment.
Globally, the situation could aggravate the isolation of the poorest countries and widen the gap between the developed and developing economies. A key aspect will be creating solutions tailored to smaller countries and small island states.
Talking about the Acceleration of Digitalisation
To help maritime countries and stakeholders along the route to digitalisation, we have outlined a practical roadmap, with a number of waypoints:
- With COVID-19 in mind, nations can use digital technology to provide protection for workers. This can be done by using digitalisation to track social distancing and sanitisation practices across the entire maritime supply chain. Assessing the mood of key stakeholders inside ports and better coordinating crisis management among the various agencies is equally vital.
- The immediate priority for many ports is to meet the requirements of all remaining COVID-19 measures and (certainly for the critical documents governing vessel access) to comply with the FAL Convention as regards electronic data exchange, preferably through a Maritime Single Window.
- A functioning Port Community System then needs to be established, based on single input of data in the logistics and transport chain, in order to optimise, manage and automate the various processes.
- In the next stage, each port authority should develop a Port Management System that allows control of all traffic via one single interface. This will also help in the management of port infrastructure, and with organisational matters like calls, dues, dangerous goods, planning, inspections, permits and security.
- Ports with advanced capacities should then consider a smart port model, using smart technologies – such as advanced analytics, the IoT, AI and 5G – to improve performance, economic competitiveness and environmental sustainability.
The global economy depends on maritime transport. About 11 billion tonnes of cargo are transported by this sector each year, accounting for more than 90% worldwide trade.
Advances in technology will undoubtedly result in an improved customer experience, and this in turn will affect manufacturing and consumer behaviour. New technology-enabled start-ups and developing e-commerce have made the logistics industry realise that continuous innovation is needed, and a major factor in worldwide transformation will be established companies – with their huge infrastructure and networks – moving towards an inclusive market based on standardisation.
The digitalisation of the maritime supply chain will go a long way towards enhancing the resilience of the maritime industry, at a time when the global economy depends on complying with a great many regulatory, environmental and safety standards.
Digitalisation in the maritime sector certainly includes an element of risk, but the positives greatly outweigh the negatives. However, a lot more than just investing in technology and digital infrastructure will be needed before all stakeholders in the maritime supply chain can complete each of the various stages of digitalisation.
To achieve a robust digital transition, political commitment must be sustained, appropriate regulation established and public and private sector collaboration enhanced, with all underpinned by a dedicated effort towards training and education.