Technology applications in shipbroking and commercial shipping
February 17, 2022
Shipping is frequently compared in its evolution to an old dinosaur having a hard time accepting that all of its peers are long extinct. Change might not be taking place as rapidly as for other business microcosms, yet the shipping sector has been undergoing constant progress. Only in the last couple of decades, a different generation of industry leaders have contributed to nothing short than revolutions in how the ship is constructed and operated. Engines, fuel types, hull design, safety on board, and navigational aid instruments have been undergoing significant improvements and contributed to smoother voyages, increased performance and overall better results. Even today, we can observe this eco-system being infused with conversations around robotic maintenance equipment, smart/autonomous shipping, virtual twinning, dual-fuel technology and the like. Shipping is abating all resistance to progress and propels itself from the stone to the space age.
What I’m personally fascinated by, given also my commercial background, are the changes in communication patterns within shipping. The employment stage of a vessel is a key phase amongst its wider operations, and three central players have traditionally carried it out: owner, charterer and broker, this last being the intermediary who creates a marketplace for cargoes and ships. In sync with technological advancements over the decades, what has taken place was a steady transformation of the way commercial information was obtained, registered, analysed and shared.
The shipping world has evolved from communicating via telex, to fax, to phone, to computers, to mobiles, to soon-to-be virtual reality (VR)- in an ever-evolving and increasingly dynamic social and economical context. Speed and depth of information flow are key to this industry’s “sales” sphere and there are many tools that are only just beginning to being developed and applied to it, such as Artificial Intelligence (AI), Machine Learning and algorithm technologies. For example, AI can be employed to improve shipping routes or determine the optimal speed and lowest fuel consumption of a voyage, while algorithms can improve predictive capabilities and for instance provide more accurate ETA data or cargo flow activity depending on seasonality and weather.
I am excited of being part of a project whose mission embraces the next phase of shipping’s future. With my company, we are working on building new software for brokers, based on all the above mentioned technologies. The main goal for brokers is, immersed in a communication-intensive activity, to drastically cut the time and costs needed for daily manual data input and management. Nowadays the speed and high level of competition present in the shipbroking environment mean that brokers need to find ways to create time rather than waste it.
Brokers have always looked at digital advancement with suspicion, worried of attempts to cut the middleman from the playing field. In an extensively digital world, the delayed adoption of digital solutions for increased communication effectiveness has hurt the end clients, preventing benefits such as improved transparency, efficiency and compliance. As a general mission, our company wants to keep the broker alive and thriving, against many trends that are in fact diminishing their relevance. Thus, our ambition is to empower this profession to create more value by performing tasks that are key to producing revenue, as developing deeper relationships with the most essential constituent in their business: clients.
Another way to do this is to help brokers keep up with the pace at which sustainable practices in energy consumption and pollution are taking over. Carbon emissions need to be reduced to a minimum and/or offset from all players in the industry, and brokers can be a vital part of the way this is done. On our platform, we are implementing a carbon emission calculator to determine which vessels will be more or less competitive for any given voyage by a new metric: carbon emission produced. This introduction on a commercial level will be relevant for two reasons: first, it will validate the broader efforts from maritime authorities to push owners to cover for part of the cost of the energy transition by adopting more eco friendly fuels or engine designs. Second, there will be a clear metric according to which owners will feel incentivised to invest, and ultimately able to request a premium in rising markets or simply get better access to cargoes and clients. What will make the difference for industry players will be the ability to obtain this metric effortlessly within the first stages of the commercial transaction, in a standardised, accurate format, clearly visible and certified, not some hypothetical value subject to interpretation. Oil majors from across the world are also lining up substantial budgets to make sure their chartering arms will follow up on this same policy. Just like owners, they will have interest to quantify the levels of emissions produced by their transactions and to offset them in the easiest way possible.
Most importantly in order to maintain their relevance, brokers will need to be able to advise both owners and charterers on this new benchmark and ideally also help them to directly offset their carbon emissions. Thanks to yet another industry transformation, they will be leading actors in this next generation of shipping and trading, and once again pivotal characters to completing transactions.
To conclude, in my brief yet profound professional experience I have been able to observe the difficulty with which brokers keep their heads above water in a sector that has been impacted by new technology and increased speed of communication. Hundreds of shipbroking firms compete for the same business, those that succeed are the ones able to add value to a deal. As a concrete solution to this concern, I believe it will be necessary for brokers to first and foremost employ modern digital solutions to take care of their data management inefficiencies. The hard hours put into the most routine and mundane tasks and the effort in keeping pace with the information flow are disproportionate to the results they generate. The highly transparent trading markets of today leave no additional benefit to information exchange, if not for the highly sectorial ones that are ultimately based more on close relationships than on the ability to sift through piles of emails and messages. Once the broker has reached efficiency and gained time for value creation, I see this role reaching the productivity stage and moving towards being a multi-dimensional service provider.
Freedom from data overflow will allow them to have more time to be involved in modern areas of shipping, whether it being managing carbon credits, providing advanced analytics, giving rise to a sustainability consultancy service or any other door to opportunity they can open. The bottom line is for this profession to be moving at the same – if not faster – pace of their clients, to always be the one providing not only transactional assistance, but also all the other much needed solutions of our time.
Federica Maiorano, VP Strategy & Parternships at Spot Ship
WISTA Technology and Futures committee member