An estimated 90% of world trade is carried by container shipping, yet manual, paper-based processes continue to dominate key transactions. This makes for slow information exchange and a lack of visibility into real-time data. There’s a pressing need for shipping data to be digital and standardized.
According to a U.K. government outlook, global trade will double in real terms and quadruple in dollar terms by 2050. To support sustainable growth, container shipping must adopt digital standards to enable seamless, end-to-end data exchange across the supply chain.
A modern-day package of shipping documents can contain 50 sheets of paper, in some cases to be exchanged among 30 different stakeholders. They provide details on cargo, financing, licensing and more, and include bills of lading, carrier and authority certificates, import/export licenses and vessel-sharing agreements.
For bills of lading alone, the Digital Container Shipping Association (DCSA) estimates that a minimum of 16 million original documents are issued per year, costing the industry around $11 billion. Yet despite this, at the end of 2021, only 1.2% were electronic.
Exchanging paper-based documents is slow, inefficient, and unreliable. If original bills of lading, title documents or other essential paperwork get stuck somewhere in the system, cargo can end up stranded in ports, unable to progress.
Without a technology foundation that supports interoperability, data can’t flow seamlessly across all links in the chain. Proprietary platforms that draw on unstandardized data can only support segments of a complex and interconnected global supply chain.
Supply chain disruption happens for many reasons, including extreme weather events and industrial action. In recent times, the blockage of the Suez Canal by the Ever Given and the truck driver shortage resulted in shipping fleets out of position, and major backlogs at ports. The pandemic also created a range of issues, from panic buying of goods to worker absences, which had ripple effects across the supply chain. Shippers, carriers, ports and other links in the supply chain have had to deal with the logistical fallout.
The problem with paper-based processes and digital tools that can’t communicate across the end-to-end supply chain is a lack of data visibility. Without accurate, up-to-date information that can be easily accessed and analyzed by any stakeholder, it’s virtually impossible to optimize container shipping processes and improve performance. Data is the oxygen for artificial intelligence and other systems that enable more effective decision-making across an increasingly complex supply chain.
The difference that standards-based digitization can make is vast. The Commonwealth’s recent analysis found that widespread acceptance of digital trade documents could generate an additional $1.2 trillion in trade by Commonwealth countries by 2026.
There are moves to bring about a shift toward standards-based digitization to improve supply chain resilience. In the U.S., the Freight Logistics Optimization Works (FLOW) initiative is developing a proof-of-concept digital information exchange; and through its Maritime Data Initiative, the Federal Maritime Commission will assess and provide recommendations for standards governing the U.S. import and export trades.
In the UK, the Electronic Trade Documents Bill is currently making its way through Parliament with the aim of allowing digital trade documentation to be recognized as legally equivalent to paper by mid-2023. The bill paves the way for widespread adoption of electronic bills of lading for all sectors and industries that use English law as a basis for international contracts, which includes 80% of bills of lading, much of world trade and several leading ocean carriers.
To achieve these aims, supply chains must adopt open-source digital standards. They provide a common language that enables data to be readily exchanged by all technology platforms that work to the standards. This establishes a foundation for an interoperable global trade ecosystem.
Application programming interface (API)-based standards enable shippers to dynamically query carriers’ systems or subscribe to automatic status updates. That way, they can learn about delays or other issues straightaway and act accordingly.
Container-shipping processes that rely on the exchange of paper and isolated technology platforms hinder supply chain resilience and the efficient operation of global trade. The future lies in effective, up-to-date data exchange, enabled through digital standards that support interoperability and scalability.
DCSA collaborates with a broad spectrum of stakeholders in international container shipping to develop digital standards that will enable a consistent vocabulary, common process flows, and API-based interfaces. In this way, digital standards will pave the way for effective communication among container shipping stakeholders, ensuring a more agile and resilient global supply chain.
Source: Henk Jan Gerzee is chief product officer with the Digital Container Shipping Association.