Towards a Global Collaborative Platform for the Container Liner Industry
Technology will enable a global oceanic logistics ecosystem where partners can connect, collaborate and create opportunities unlimited.
The future of smart cooperation between container liners is very positive. Why? Because the values which are being shared between collaborative container liners are also of value to other players in the maritime logistics domain. In fact, the ongoing evolution of smart cooperation between container lines is likely the very seed of this vibrant global oceanic logistics marketplace of tomorrow.
A closer look at Container Liner collaborations today
Faced by the pressures of overcapacity, and the growing demand to lower costs and enhance service levels, alongside uncertainties in global trade politics, container liners are upsizing to gain efficiencies and a competitive edge. The chart below, gives an indication of the direction container liners have been going through the years.
Plotting the top 100 container liners in the chart based on average vessel size and fleet capacity, from 2006 until 2018, we notice prominent movements of liners either towards greater ‘economies of scale’, i.e. by increasing capacity of vessels, or greater ‘economies of scope’, i.e. through deployment of more vessels.
Rather than pursue both strategies concurrently, which usually does add up from a financial and marketing perspective, container liners tend to go with either ‘economies of scale’ or ‘economies of scope’. So, working together makes sense.
To meet the needs of a market that is demanding wider coverage and greater frequencies, always at lower costs, partner liners band together. Those who have economies of scale will offer lower slot costs while those who have economies of scope offer service flexibility.
These win-win collaborations between container liners have been working in many ways for decades as has been outlined by the Federal Maritime Commission Agreement Library. However, these various ways of working together have traditionally been fraught with challenges.
The rising need for a better way to collaborate
From slot swaps to strategic alliances, when container liners work together, an elaborate chain of processes is triggered — from discussion to consensus, agreement, contract, vessel & port operation, handling each liner’s legacy system, and ultimately, settlement. Every process is about sharing code, data or information, and communicating, be it directly or indirectly, with one or several parties in order to provide or acquire service.
Basically, all processes surrounding collaborative partnerships between container liners revolve around the same functions. However, as one-to-many communications is involved, there can be much duplicated effort especially with closed networks. Missing data, unmatched codes and outdated information are just some of the issues that can lead to underutilization of slots, unproductively long negotiations, and delays due to non-consensus during the settlement phase.
A unified IT platform would be able to harmonize cooperation in practical ways through IT technology. Essentially, it would enable the slot seller to offer the latest available slots on a vessel to a buyer who can then reliably complete the shipment order with real-time precision and visibility from booking to delivery.
From traditional to tactical collaborations
When we drill down on the chain of full processes when a slot seller (operating line) and buyer (booking line) connect, there are a lot of steps involved such as sending, receiving, understanding, confirming, recording and validating data. In traditional modes of communication such as email and phone calls, multiple partners have to replicate the same data, information or process, often many times over throughout the course of the collaboration. This gives much room for mistake, inaccuracies and lost opportunities.
The fact is, 84% of booking line working processes rely on the action of the operating line and 73% of operating line working processes are for booking line. Therein lies the source of great inefficiencies and inflexibility of the traditional system.
Why not streamline the processes and remove duplicates and inefficiencies? Many advanced IT technologies and proven methodologies today already connect players on a single system in many other industries such as retail and manufacturing.
Easy communication regardless of code or information and channel, open trade based on smart contracts and settlements, real-time sharing information by intuitive data, standardised process, policies and regulations are no longer a complicated matter with today’s technologies.
All key data can be aggregated and integrated on one single multi-tenanted platform where collaborative container liners can connect to and work with each other securely and effectively for individual and collective good.
The various cooperation contracts can be standardized and used as smart contracts which can open up the possibilities of forming slot market for trading services in real-time. Instead of working based on different processes, policies and regulation, connected parties can work more efficiently using unified and standardized processes, policies, and regulation creating greater order under one common rule.
The future of container liner cooperation
As Doug Braun, CEO of Kewill puts it, “The key to a global trade network is connecting all these supply chain partners through technology that is easily and instantly accessible to everyone.”
Connected on one unified platform, container liners will not be the only ones to benefit. Eventually players within the supply chain, forwarders, suppliers and even customers, along with partners outside the supply chain, will be able to leverage one open and collaborative IT platform which will power a universal ecosystem that optimizes opportunities for all.