CASE STUDY: A DIGITAL TRANSFORMATION JOURNEY IN THE SHIPPING INDUSTRY

Introduction

The industry in marine transport has been known for its lagging in the digitalization when compared to other industries. The shipping business is one of the oldest businesses in the world, which has a history of over 5,000 years of documented history. This could be a reason for being a digital laggard since the business involves many touchpoints along the supply chain when delivering goods from port to port. Nevertheless, this company is the largest shipping company in the world. It's determined that it's crucial to leap into the digital transformation and continuous to be the industry leader before the threat of new entrants becomes a reality.

Steps of Digital Transformation

1. Transformation Objectives.

The business in container shipping is cyclical, and it often has the issue of periodic overcapacity. When the business has overcapacity, prices go down. Consequently, the overall profitability is very sensitive in various factors, includes fuel cost, capacity, capital management, politics, port capacity, container terminals, inland connections. The company must have the ability to manage these challenges through carefully planning logistics network, making the best predictive decisions, and innovating the operational processes. The company must find ways to differentiate itself from others by taking advantage of digital strategy.

2. Set Goals

Need to reduce time on port stays to save cost
Need to improve fuel efficiency on shipping vessels to save cost
Need to streamline end-to-end supply chain processes include the handling of incompatible documents in these steps: exporters, freight forwarders, ports and terminals, authorities, transportation management, and importers.
Need to improve the visibility and tracking on container logistics and services to the customers
Need to have better ways of communications between the operations in all stages and the customers

3. How to implement

Create an end-to-end digital experience for customers by implementing one common platform that connects to all the transport and logistics businesses, and each shipping vessel has 30 TB of data (GPS, flow meters, control systems) transmitted over satellite link every month

Create several apps aim for bridging the operations in the supply-chain, includes Customs House Brokerage, supply-chain management, and customer delivery tracking system
Create an analytical system by leveraging all the data collected through the processes, and the company can create predictive models to enhance operational performance, carrier performance, equipment utilization, and supplier performance

4. Technology Tools

Using Microsoft Azure to create a digital platform, advanced analytics, and data capture and storage
Partners with IBM to create the TradeLens platform that uses blockchain technology for fast and secure access to end-to-end supply chain information from a single source. This is an open platform, which is intended to be used by all players in the global supply chain. [It's in the testing phase.]
Trade Finance is a secure digital platform that offers a simple trade financing solution, both pre-shipment and post-shipment finance.
Twill platform is a digital shipping platform that enables customers to book, manage and monitor shipments at the click of a button
Implement a connected Vessel project to improve performance and processes in bunker and port stay events.
Create the Remote Container Management (RCM) that enables customers to manage their cargo remotely, and in version 2, features a virtual assistant, Captain Peter, which will update reefer customers with end-to-end cargo information
Implement the global guidance system for reefer digitalization, called Sekstant®, which provides container operators transparency and data accuracy at any point in the reefer journey
Launched Customs Clearance online shipping management - Customs House Brokerage (CHB) helps your cargo can be released and transport to your destination

Notes:

A reefer container is a refrigerated shipping container.
Bunkering is the supplying of fuel for use by ships.

5. Process Review

The company also reports it has saved almost $90 million in three years since 2009 by devising Key Performance Indicators (KPIs) to measure the performance of individual ships. Each ship produces a scorecard of KPIs monthly and merged into an overall KPI score for each ship. The overall scorecard tracks energy, safety, daily running costs, and best practice sharing. In these three years, it was measured that 160,000 tons of fuel have been saved by optimizing the voyage speed.
Other essential metrics for exceptional results, such as booking turn time, documentation accuracy, documentation turn time, pre-arrival notification, invoicing accuracy, dispute resolution, phone accessibility, and service recovery (issue resolution), have helped to improve the supply chain journey.

Digital Strategy Analysis

In Maersk's digital transformation, the digital strategy is to create a common platform shared by all the transport and logistics businesses. By developing various apps in the marketplace, users can use apps to access data from the platform. The overall strategy helps visibility in supply chains and provides an end-to-end digital experience for the customers. In a way, the company simplifies the shipping journey by making the entire process reliable and efficient from port to port. By leverage the vast data collection and analytics, the company develops ways to predict and manage company-wide operations, such as optimizing cargo mix, better customer targeting, optimizing fuel consumption through vessels' voyage speed, and predictive maintenance. As a result, operational efficiency is improved. The cost is reduced. The profit is maximized when the company can make better decisions with predictive intelligence. At an accelerated pace of advancement, Maersk thrives from the success of its digital transformation.

Results

Maersk is the forefront of digital transformation in the shipping industry. The key to its success in digitalization, it's the execution of the right digital strategy to gain the performance it needed to excel by having the ability to anticipate and make timely decisions with the strong analytics information at its disposal. It could still navigate through the harsh reality of the shipping business, and overcome the unforeseen events.

Maersk’s Digital Transformation Mind Map

About the Company

AP Møller Maersk or known as Maersk, a Danish company, and it's also the largest shipping company in the world. It operates a container ship and supply vessel operator, and now it is structured into two business segments: transport & logistics and energy.

The company owns more than 773 vessels and operates in over 121 countries, transporting $675 billion worth of goods per year, carrying 12 million containers every year.

Founded in 1904 by captain Peter Mærsk Møller.