Digital Transformation in the Shipping Industry

Shipping organizations face intense pressure to operate more efficiently and profitably while catering to the increasingly sophisticated, digital demands of their customers.

Ongoing overcapacity, paired with a relatively soft global demand, is putting tremendous pressure on the rates and profit margins of shipping organizations.

Meanwhile, customers themselves are clamoring for faster, more streamlined services that afford integrated, end-to-end logistics capabilities versus port-to-port offerings. Even the most loyal customers are now turning to providers that offer solutions designed to deliver deeper value along the supply chain.

Shipping executives thus are forced to reevaluate many of the ways in which they’ve traditionally conducted business. Many of those tried-and-true methodologies simply no longer stand up to the complexities of today’s volatile business environment. New strategies that can more effectively optimize utilization and cost structures must be adopted.

Digital transformation offers a way to get there, and sophisticated shipping competitors know it. Innovative players are speedily bypassing traditional shippers with new and efficient digital business platforms that deliver more benefits to customers. Indeed, digital isn’t just a nice-to-have philosophy: it’s the very key to survival, and serves as the launch point for transformational turnaround.

Shipping’s Digital Solution

The blueprint for success draws upon three key digital actions: develop new business models and offerings, digitalize core operations, and build a robust internal digital foundation. For shipping organizations, the transformation model requires the following:

1. Develop New Business Models and Offerings

  • Easy online booking platform. "One-click" online booking has become a must to stay relevant. Besides, it allows shipping companies to strengthen the direct relationship with their customers and win new ones, attracted by the simplicity of booking online.
  • High-Margin Services. E-commerce platforms and advanced cargo management systems allow liners to expand their offerings into higher-margin areas of the supply chain, like intermodal and warehousing solutions.
  • Next-Generation Solutions. Real-time cargo tracking and on-board sensors that monitor cargo conditions cater to customer demands for greater visibility throughout the shipping journey.

2. Digitalize the Core Business

  • Revenue Management. Robust analytics unlock dynamic pricing and contract portfolio optimization with significant revenue-enhancement opportunities.
  • Advanced Analytics on System Costs. Advanced modeling allow optimization in network design, vessel deployment, cargo routing, and empty repositioning to minimize costs.
  • Blockchain Technology. Opportunity for the industry to streamline and secure the documentation process.
  • Digital Lead Management. Connected market intelligence and lead management allows liners to leverage the broad network of agencies and significantly increase customer bases.
  • Enterprise Resource Planning (ERP) Interfacing. Linking ERP functionality between liners and customers affords advanced capacity planning, and bolsters customer lock-in by providing an automated booking system directly from customers’ own ERP systems.
  • Control Tower Fleet Monitoring. Tracking fleet activity, by leveraging millions of data and on-board sensors, allows continuous routing and vessel performance optimization along with predictive maintenance.
  • Multi-Modal Collaboration Platform. Exchanging information between liners, terminals, and intermodal companies can improve efficiency of port call and connection with intermodal.

3. Build a Robust Internal Digital Foundation

  • Talent. Implementing—and publicizing—a strong digital foundation across the organization serves to attract the right digital talent in shipping to help keep the business growing and running more effectively.
  • Systems. Modernizing systems to take advantage of advanced data and predictive analytics enables growth-minded intelligence and decision-making capabilities.
  • Agility. Instilling a way of working throughout the shipping enterprise that enables shorter innovation cycles to more quickly develop solutions.
  • Digital Organization. When companies incubate new digital offerings, they can sometimes benefit from creating a new organization that is independent from the core.

Meet BCG’s Shipping Leaders

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