Logistics Technology

The slow journey towards the digitization of container transportation

The supply chain is at varying degrees of digital maturity. In container shipping, while some companies have begun to adopt digital solutions, there are still persistent barriers, such as interoperability between platforms that prevent more widespread adoption. The Digital Container Shipping Association, DCSA, publishes a report where it assesses the main advances and barriers. Let's take a look at it.

Posted on 12.13.2024

PierNext

There is still a long way to go to digitize container traffic. And without the demanded interoperability, everyone seems to be fighting their own battle (FP).

Global supply chains are constantly experiencing an avalanche of disruptions for which, although there are no simple or immediate solutions, there may be shortcuts.

The Digital Container Shipping Association, DCSA, in the preface to its report 'The State of the Industry 2024 - Insights on Digital Evolution in Container Shipping', prescribes that communication, in these scenarios, must be “fast, reliable, consistent and effective”. And, above all, digital.

These disruptions, he continues, influence the ability and willingness of stakeholders to adopt new technologies and processes, such as replacing electronic data interchange (EDI) with application programming interfaces (APIs) and switching from paper to digital documentation.

Currently, the supply chain is at varying degrees of digital maturity. While some companies have begun to implement digital solutions, barriers to more widespread adoption persist.

“The value of digitization is extremely important, but putting it into practice is complex, as there are different barriers, especially that of achieving industry consensus to adopt it through a single, global and universal solution,” explains Javier Gallardo, director of Portic and president of IPCSA (International Port Community Systems Association).

Portrait of container transport digitization

This report surveyed 400 shippers and other supply chain companies in the U.S., U.K., Germany, France and Singapore, resulting in the following findings on the benefits and barriers of digitization:

Digitalization brings benefits such as improved operational efficiency, greater customer satisfaction and cost reduction, among others. It is noteworthy that 41% of shippers prioritize supply chain visibility and real-time information over cost reduction.
Readiness for digitization: 90% of cargo owners say they are ready for digitization. But at the same time, more than half feel they need external support, indicating a lack of in-house expertise or resources.
Barriers to digitalization: challenges such as integration issues, policies, investment and cooperation between partners need to be addressed. More than half of cargo owners see shipping lines and carriers as a barrier to digitization. Improving collaboration along the supply chain is essential to overcome these barriers.
Standardization: it is necessary to establish digital standards for the transport of containerized goods, as it is a global business. Most shippers agree on the importance of standardization as the basic tool for improving chain efficiency.
Sustainability: improving energy efficiency is the main sustainability goal for most shippers. Other priorities include reducing waste or optimizing transportation routes.

If we divide these perceptions according to the different logistics agents surveyed, the benefits and barriers to achieving digitalization vary slightly.

Cargo owners point out that digitization enables them to improve operational efficiency and provides better tracking and visibility. Conversely, they point to lack of supply chain visibility and technology limitations as barriers to adoption.
For freight forwarders, improved communication and operational efficiency thanks to the ability to obtain real-time data is the main advantage, while they point to integration with legacy systems and underinvestment as barriers.
In ports and terminals, the digitization and integration of data eliminates manual data processing and facilitates scalability. On the other hand, it raises concerns about job security and is not supported by the unions.

For Portic's director, this apparent disparity is due to the fact that each company has its own problems and needs:

“Some want to automate their internal processes and others want to have more contact with the external layer of customers. To achieve their objectives, everyone can choose different strategies. What is true is that the technological infrastructure is becoming more and more important because any change costs a lot financially and in terms of systems integration,” says Gallardo.

Another barrier is resistance to change.

“Clearly change for change's sake is not attractive. In the case of consignment notes, it begs the question of why change if it's really working unless it's an imposition or a compulsion,” he reflects.

Precisely, the report welcomes the fact that the implementation of waybills has increased to almost 5% in the first quarter of 2024, almost double the same time last year.

The two major handicaps: interoperability and legislation

Javier Gallardo offers an analysis of the two elements that are most hindering the expansion of digitization: interoperability and the lack of a common legal framework.

On interoperability, digital solution providers often operate in digital silos, which means that stakeholders use a number of systems and platforms that do not always interoperate.

Digital standards create a common framework that allows data to flow seamlessly throughout the supply chain, facilitating communication and collaboration.

“There must be a mechanism that allows communication between platforms, otherwise it will be very complex. The DCSA is, in some way, looking for mechanisms to achieve that interoperability,” he shares.

There have been attempts by shipping companies to create alliances to harmonize this communication and collaboration. However, the most notable and mediatic one, TradeLens, failed.

The DCSA's own report acknowledges that international trade depends on the smooth and timely exchange of information. This is hampered by digital platforms that do not interoperate and an increased reliance on paper documents.

Regarding regulation, Gallardo explains that it is necessary to create legal frameworks that support this solution. For example, the eFTI regulation in Europe, “which at least obliges administrations to accept electronic documentation,” he points out.

Why is interoperability so complex?

Lack of interoperability leads to fragmentation of data, processes and technology. This lack of alignment hinders collaboration and reduces the efficiency of nearly all container transport processes, decreases reliability, increases operational costs and generates unnecessary paper and carbon waste.

Regulations such as the European Maritime Single Window, EMSWe, try to work towards this harmonization, but in this case, we are talking about Europe only. “How do you approach the problem, country by country, shipping line by shipping line? In the end you have to create clusters in order to standardize the different platforms,” Gallardo argues.

The Digital Container Shipping Association has published, precisely, a set of standards to facilitate interoperable digital trade and cargo visibility that are open source and free to use.

“The problem often comes from onboarding, i.e., how do I get another company to connect to this same platform and start working? And what is the process that actually certifies that the recipient is really who they say they are?” asks Gallardo.

“The big workhorse is usually digital identification, which is the first step, and then, obviously, that each platform or each system has its working rules,” concludes the IPCSA president.

Be that as it may, the DCSA report tries to be positive about the (slow) progress made this year in the digitization of container shipping.

However, the main conclusion is that there is still a long way to go and that, without the demanded interoperability, everyone will continue to fight their own battle.