Sunday 21st Jan, 2018

SPECIAL REPORT: Information Technology

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SIXTY years ago an American trucker called Malcolm McLean saw a way of revolutionising how cargo was transported. He invented the container, cutting handling costs from $5.86 per ton to just 16 cents.

A decade later, a consortium of British shipping companies revolutionised cargo transport between Australia and Britain by commissioning six fast ships that would each carry 1130 containers and, within two years, carry 85% of the two nations’ trade across the seas in a series of 10-day voyages.

It was not just the speed of the ships making the difference. Most of the time saved would come from port operations. A consortium spokesman told The New York Times at the time: “By means of highly mechanised operations at the terminals, the turnaround of ships will be measured in hours rather than days.”

Yet in the wake of that watershed moment fifty years ago, little has changed in the way freight prices are set and distributed.

But a digital revolution is underway. Data is gold. We at Mizzen are looking to combine digital expertise with shipping line experience to benefit both shipping lines and freight operators.

At the moment, as Lloyds List found, “there may be some 200 interactions involving documentation along the supply chain that could be digitised. Typically, the shipper and consignee may have to deal with 28 different entities, such as customs, terminals, forwarders and carriers, creating a stack of paper required to arrange a shipment”.

Mizzen is focused purely on the rate procurement part, it’s clear from our experience, and that of our clients, that jumping through these old hoops is no longer necessary. Using our digital application, we seek to quickly let freight operators and shipping lines match a cargo need to a shipping solution.

For example, more than 80% of one shipping line’s rate requests managed by Mizzen are in real time and automated without impacting their sales team, allowing them to chase new opportunities. One of our forwarder customers used to spend around an hour spread over three days per inquiry just to obtain pricing. “Now, via Mizzen, this process takes 12 minutes per inquiry,” they told us. “We calculate that as a 73% cost saving, without taking into account the speed and probability at which we can convert an inquiry into a booking.”

We are not alone in this digital advance. Last year, venture capitalists backed 245 startups in shipping and supply-chain management worth around $4bn, according to business intelligence company CB Insights. The new hunger to modernise operations is endorsed by a recent McKinsey report, How Container Shipping Could Reinvent Itself In The Digital Age, which forecasts digital technologies will play a key part in seeing the container industry grow between two to five times by 2067.

While digital infrastructure is cheap, digital expertise is harder to find in shipping. We offer a smart partnership with shipping lines, freight operators and the wider supply chain community, providing the digital means to give instant pricing to customers, freeing up sales and support resources to use our spot market and customer analytics to target new opportunities.

Through us, freight operators can quickly find out which lines service a port they need and access rates for shipping lines they may not have used or have a relationship with.

The nature of the spot market results in a low quote-to-booking conversion rate, yet has a fully resourced sales force. By digitising the process, carriers can match resources to product, driving more opportunities to sell direct online and better service higher value customers. Pricing no longer needs to be time bound and independent of a ship’s utilisation but dynamic and linked to a voyage and the slots available.

Digital channels present new products with a range of values which can give shipping lines and their customers greater certainty. It’s an approach we and US startup NYSHEX are taking.

While freight buyers have access today to new benchmarking platforms like Xeneta, Mizzen is the shipping line-focused alternative, providing clear performance data to help improve operations.

This digital momentum is rapidly gathering pace, with major players such as Maersk, OOCL and the CMA CGM group developing their own strategies and new companies, like ours, steering a new course for the future. It’s time to get on board.

* Jonathan Charles is the managing director of www.mizzenit.com, a Digital Shipping Solution start-up based in Australia’s leading deep tech incubator Cicada Innovations, Jon is contactable at jcharles@mizzenit.com

From the print edition December 14, 2017

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