Why the future of global trade is digital
Henk Jan Gerzee, chief product officer at the Digital Container Shipping Association, explores how a common data language and process framework can bring about seamless information exchange and speed up commercial container shipping processes.
Data sits at the heart of global trade. How it is generated, held, used, and exchanged has an enormous impact on the productivity and sustainability of container shipping processes, the experience of shipping customers, and the industry’s ability to innovate and improve.
Digitalising data and enabling its seamless exchange between all stakeholders is key to mitigating the impacts of current and future supply chain disruption and ensuring a future in which shipping customers have a choice of seamless, easy-to-use services that provide the flexibility to meet their business and sustainability goals.
The need to work smarter for future growth
According to a paper published by the UK Government, global trade will double in real terms and quadruple in dollar terms by 2050. It is unlikely that the infrastructure supporting container trade will grow in a similar way, so supply chain participants will need to work smarter to enable and support sustainable growth.
Visibility into shipping processes and events is central to ensuring this happens. Without it, the efficient and unhindered flow of cargo is jeopardised. Visibility requires data that is able to move freely through interoperable systems across the supply chain.
Currently, the container shipping industry is too dependent on manual and paper-based processes and non-interoperable technology platforms to allow end-to-end visibility.
For example, it is currently difficult to track and trace shipments, because containers are lost from view until they reach certain points in their journeys. Further, event information is often exchanged inconsistently through emails, online portals, faxes, text messages, and so forth.
These messages must be aggregated and analysed by users to get, for example, an accurate ETA. This makes day-to-day management labour intensive and time consuming, which slows down exception handling and prevents smooth operational transitions.
Standards enable interoperability
Central to enabling interoperability is the widespread adoption of standards. Digital standards provide a foundation for shipping data to be seamlessly exchanged between supply chain stakeholders regardless of technology platform.
With a trade ecosystem that is entirely interoperable, supply chain participants can more simply and quickly establish communication pathways, access data and process that data faster, enabling better-informed decision making.
What’s more, application programming interface (API)-based standards allow data to be communicated in real time.
With APIs, shippers won’t have to wait for carriers to notify them of events, they can dynamically query the carrier’s system or subscribe to automatically receive status updates to learn about delays or other exceptions as they happen and work to resolve them immediately.
This will not only give shippers and beneficial cargo owners the visibility they need to make more timely decisions, it will streamline and increase the efficiency of virtually every operational process in shipping. This will enable the industry to become more agile, resilient to change, and responsive to customer demand and market forces.
Interoperability minimises impact
Companies that adopt digital standards will also be leaders in the sustainability movement, which, in the coming decades will become a major focus for governments and the logistics industry. By adopting early, companies will be able to lessen their impact on the environment and deflect potential legislation that may mandate ambitious environmental targets.
Interoperability minimises environmental impact by enabling transparency and seamless data exchange to enable things like just-in-time port calls and at-capacity onboard cargoes. But delays, inefficiency, and waste are also caused by the industry’s continued reliance on paper documentation.
The documents needed to complete an international trade transaction are often not standardised or digitally available, such as the bill of lading (B/L). This can require physical hand-off between participants – which is inefficient, expensive, and error prone. At the beginning of Covid-19, cargo would get stuck at port waiting for B/Ls to be delivered by flights that were delayed.
The documents needed to complete an international trade transaction are often not standardised or digitally available.
The Digital Container Shipping Association (DCSA) estimated that a minimum of 16 million original paper B/Ls are issued by ocean carriers per year, costing the industry around $11bn.
Paper B/Ls are also expensive for the environment. Research from the Economic and Social Commission for Asia and the Pacific suggests that fully digitalising regulatory procedures around trade could save between 32kg-86kg of CO2 equivalents per end-to-end transaction.
At the same time, the Commonwealth nations estimate that widespread acceptance of digital trade documents could generate an additional $1.2tn in trade for Commonwealth countries by 2026.
Despite this, at the end of 2021 only 1.2% of B/Ls was electronic.
Future-proofing international trade
For these reasons and more, the future of global trade is digital, enabled by the widespread adoption of open-source digital standards. The DCSA works in collaboration with a wide array of stakeholders to develop digital standards that increase visibility by enabling the seamless exchange of real-time data between all supply chain participants.
In the short term, widespread adoption of DCSA standards will increase the efficiency, reliability, and sustainability of container shipping while fostering innovation and a better customer experience.
In the long term, complete digital transformation of container shipping requires collaboration on a global scale. When each stakeholder group within the supply chain is committed to implementing digital standards, transformation will occur through consistent vocabulary, aligned processes and better leveraging of technology and data.
Only then will the shipping industry be well placed to meet the ever-growing demands of a fully industrialised world.
Main image: Henk Jan Gerzee, chief product officer, DCSA