Tech is not solving maritime big problems

Published on September 24, 2018

Starting with this one, I shall write in a series of articles to discuss this issue from the experience I gained over the last few years as investor, adviser of startups and simply as someone who is keen in finding wholesome solutions to maritime commerce many problems.

To begin, more often than not, Tech and Maritime don’t see the same problems:

Generally, maritime people grapple with these:

“Dis-aligned” Supply – I made up the word ‘dis-aligned’ to differentiate it from ‘mis-aligned’ which would imply one could do something to align. But, due to ship and space supply in-elasticity, more often than not, supply is ‘dis-aligned’ (difficult if not impossible to adjust) to demand, and unfortunately, it’s usually more over-supply than under-supply.

Low Freight – while this is the very strength of maritime shipping that keeps it thriving vis-a-vis land and air shipping, this creates a hyper-competitive maritime commerce in the 4 markets (New Build, 2nd-hand, Freight, and Demolition). Often, ship-owners and ship-operators run their business below cost, so they have to keep driving cost down.

Timing Good & Bad times – such a competitive nature focuses participants’ energies in timing the limited periods of ‘recovery’ and ‘good times’ in a shipping cycle that faces regular boom and bust.

Opex Control – while ship-operators want to keep their operating cost down, unfortunately, two biggest costs of ship fuel and port expense are mostly out of their control.

Regulatory Changes – furthermore, ship-owners and ship-operators have to deal with regular regulatory changes eg. BWMS, Sulphur2020. These increase their cost of operation and add to many uncertainties they already deal with.

On the other hand, these are what Tech people see:

Lack of data & usage – Tech wants to help, and usually first things first, and that is about digitalising and collecting data. But to their surprise, there are few systematic capture, collection and collation of data, and naturally a very low usage of valuable data.

Inefficiency – Tech finds out that many processes along a very long chain of maritime services are highly inefficient and should be cut to save cost.

Human-Reliant Cost – of these processes, many if not most are carried out still using pens, pencils, fax, phone, etc. (like phone or verbal booking) and manually which are subject to errors, omissions and frauds.

Long Document Chain – lots of paper documents, many copies are required and passed through various nodes and processes, creating problems that maritime service providers are now parts of them.

Maritime and Tech people tend to look pass each other. Sometimes they might even look at the same thing, but see it differently, focusing on their own perspective. In the next article, I will discuss a little more of this mismatch.

This is my small bit in demystifying maritime commerce and innovation, please share this article if you find it helpful. Thank you!

Author’s LinkedIn Profile:

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I invest, mentor and grow a group of startups which specialize and focus on creative maritime commerce innovations and solutions via digitalization, data-science applications, work tools, etc.

I believe for now, ShipsFocus’ maritime venture studio model is an appropriate one to most efficiently and effectively overcome the BIG innovation conundrum.

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What is really unique about Chemical Shipping (vis-à-vis other segments of shipping)?

James: 1) other bulk cargoes like oil, ore, or even container liners move in one direction, chemical cargo has more myriad ways of flows to/fro multiple ports and berths. 2) chemical cargo is not generic: there are hundreds of different types of cargoes and grades by multiple producers, users and traders involved. that leads us to: 3) the hardware: chemical ships have multiple segregations. voyage options and decisions for which cargoes to combine to where and how are much more varied, furthermore 4) while there may be some standardisations, many ships are built for specific needs. with this multiplicity of factors, optimal loadable quantity and performance of a ship can be a BIG VARIANCE. ironically, this also makes for an attraction and a low entry barrier into chemical ship operating as each operator believes in his one-upmanship within that big variance.

How is that uniqueness important in what you and ShipsFocus are doing?

James: maritime shipping faces various issues, like in 1) HR: people with great skills and experience are aging and leaving the industry, while new ones are not catching up fast enough; 2) PR: constraints to improving its image as an industry that has a wide spectrum of jobs ranging from off-shore to land-based; 3) TALENTS: shipping lull in the last decade did not help in attracting talents; 4) 24/7 nature it’s hard to sell ‘work-life balance’; 5) SYSTEMS: experience, know-how and network within a knowledgeable person are not captured systematically over time.

Our role is to fill gaps, bridging 3 major gaps: (1) between the ‘Old’ and ‘New’, (2) more and better use of data (3) optimising the ‘variance’ and efficiency. there are not many people in this unique space, and on such pursuits. to make it work, we have to cater to this uniqueness, using our unique knowhow, experience and network.

Which part of your background is most helpful to what you are doing now?

James: I believe it’s my background as a ship-owner and operator. I was with Hanjin first in VLCC and then Aframax, then to Chemical Tankers. that gave me tremendous opportunities adjusting from one to another. there were so many varieties and details in high frequency I had to know and adjust to. i became sensitive to the uniqueness in Chemical shipping. coincidentally, Hanjin was undertaking a PROCESS INNOVATIONS initiative, and I was required to provide inputs for a chartering and operations system, including on how it should work. unfortunately, users had to work for the system when it was developed, not exactly a system i dreamed of.

What is the biggest challenge in marrying tech and shipping, and what is your specific strength in this respect?

James: mainly it’s people’s fixed mind-set that’s the biggest obstacle. people say they are busy, while tech can help, they are reluctant to adopt such change. it’s a chicken and egg issue. our strength is the ability to cater to the specific and minute details that make chemical shipping unique, and the network we’ve gained trust from previous roles we played as shipbrokers. we get better chances than the tech people to hear the pain points and thus introduce the right solutions.

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