Digitalization in the Shipping Industry

Digitalization in the Shipping Industry: Navigating the Digital Transformation

Digitalization in the shipping industry refers to introducing and integrating various technologies to improve the operational efficiency of supply chain activities. Before the evolution of the shipping industry, all trade activities were carried out manually, which led to various setbacks. Technologies such as RFID, IoT, GPS, artificial intelligence, machine learning, blockchain, automation, digital twins, and big data analytics benefit many importers, exporters, logistics service providers, and shipping carriers. Let us learn more about the history of digitalization in the shipping industry. 

History of shipping 

Shipping is the process of transporting goods from one place to another. In earlier times, shipping primarily depended on waterways where boats were used to load and transport goods along sea routes to far-off places. It was the cheapest and fastest means of international transportation in earlier centuries. Due to a lack of technology and resources, goods were not containerized and were put inside wooden crates or barrels loaded manually onto boats. The goods used to stay in scattered condition and were manually unloaded one by one upon reaching their destination. With time, ships that sailed using the wind as their energy source were built.  

In the later centuries, the shipping industry came in more demand, with merchants wanting to trade. During this time, steamships and motorboats were built. This led to the construction of ports and shipping docks. In 1956, Malcolm McLean invented the first standard shipping container in the USA. By this time, the invention and advancements in railways gave access to railroad transportation of goods. Digitalization in the shipping industry has made it feasible for merchants to carry out commercial trade worldwide in recent decades. The extensive network of highways, railroads, and sea routes has improved the fate of international shipping. 

What is digitalization in the shipping industry? 

With increased demand for international shipping and technological advancements, organizations and companies began adopting digitalization and integrating new technologies to enhance operational efficiency. Hassle-free worldwide shipping can occur through various modes of transport, including trucks, trains, ships, and planes. By adopting a combination of various technologies in shipping, the supply chain agility and operational efficiency have improved. 

Need for digitalization in the shipping industry 

The reasons for adopting technology in shipping are as follows- 

  1. Time taking– Manual handling, loading and unloading of goods from the mode of transportation was a time-consuming process and required lots of labour. Due to a lack of resources, manual billing, invoices, documentation and clearance also took significant time, making shipping tedious and time-consuming.   
  2. Human errors—Since many shipping tasks depend on human labour, the risks of human errors have increased. These risks include injuries and fatalities during container handling, cargo damage due to tripping or slipping, and errors in digits when calculating shipping rates.  
  3. Communication—In previous decades, shippers had no access to tracking shipments and had to work with the ETA allotted. Lack of communication between shipping parties led to revenue loss and shipment arrival delays. Since shippers could not track the movement of goods, cargo tampering and cargo thefts were also potential risks. 
  4. Illegal shipping transactions– Scams started to grow as there was no standard legal method for shipping transactions, and shippers often fell for such scams. 
  5. Enhancing safety– Transportation of goods was exposed to risks, including pirates, collisions, lack of emergency planning, and other accidents. Guarding the safety of workers in the logistics and transportation industry became a priority. 
  6. Lack of knowledge of routes—Ships, trucks, trains, and planes used to travel on designated routes, but any changes in traffic or faults in the routes led to traffic and delays in the arrival of shipments.  

What technology is used in shipping? 

Digitalization in the shipping industry has transformed and revolutionized the supply chain activities. Technology in shipping has facilitated importers, exporters, shipping carriers, and 3PL or 4PL service providers in multiple ways. Let us learn more about the various technologies used in shipping. 

  1. Artificial intelligence—Artificial intelligence has revolutionized shipping. Various organizations and companies use AI to improve operational efficiency, perform data analytics, and optimize shipping processes. By pairing up with machine learning, AI helps minimize human intervention in shipping activities. 
  2. Blockchain technology– The challenge of making standardized and legal transactions has been addressed. The benefits of blockchain in shipping help make legal and safe shipping transactions as it is an immutable digital ledger that records assets and allows international transactions. Blockchain helps reduce the risks of fraud and data manipulation by barring unauthorized access. 
  3. Container tracking technology– To increase supply chain visibility and offer transparency to shippers, container tracking technology such as RFID (radio frequency identification) and IoT (Internet of things) in shipping are in use. With the help of RFID, shippers can track the movement of goods in transit. IoT allows organizations to track their inventory level and monitor the condition of goods during transportation. 
  4. GPS– The global positioning system (GPS) in shipping has made it easier for logistics and transportation companies to identify and optimise routes for shipping. It allows vessels, trucks, trains and planes to operate on minimum fuel, thereby reducing carbon emissions in shipping. GPS offers real-time routing access, enabling drivers, pilots, and seafarers to avoid traffic-laden or wrong routes. This increases the supply chain agility, allowing shipments to arrive on time. 
  5. Digital twin– An amalgamation of artificial intelligence and machine learning, digital twin in shipping benefits shippers, manufacturers, and shipping companies to improve supply chain efficiency. It builds a digital replica of any physical object or idea and conducts testing to filter anomalies. Powered by AI and ML, digital twins can suggest potential changes in any blueprint for manufacturing, strategizing, or planning. It helps avoid supply chain disruptions caused by faulty executions. 
  6. Automation– Digitalization in the shipping industry is continuously moving towards lowering the manual input and exploring the use of technology in shipping. Automated guided vehicles (AGV) are leading to the evolution of smart ports in shipping. Autonomous ships are driverless ships entirely driven by technology that eliminates the need for many seafarers and maximizes space for shipping containers. Automated trucks also improve operational efficiency. Engineers are deployed remotely to keep track of these vehicles driven by technology and take manual charge if needed. 
  7. Electronic data interchange– The shipping process involves documentation and billing, such as invoices, receipts and bills of lading. The offline process involves printing and sending these documents to respective shipping parties. EDI in shipping aims at paperless documentation by digitizing the documentation process. Shippers and shipping companies can now exchange all documents digitally. This helps save time, cut documentation costs, and improve supply chain efficiency. 
  8. Drones– Container inspection is an essential logistics operation in ports and transportation hubs that is time-consuming when done manually. It was difficult for workers to inspect containers in a stack, which increased risks in maritime shipping. Drones in shipping are used to perform container inspections as they help conduct thermal screening through sensors. It helps improve maritime and shipping safety through other transport modes. 
  9. Big data analytics– Shipping activities accumulate vast chunks of data stored for big data analytics in shipping. Various organizations use these large and diverse sets of historical data to analyze fluctuations in market trends, make predictive analyses, optimize operational efficiency, and strategize inventory management. 
  10. AR/VR– Augmented and virtual reality are used in the maritime industry to provide high-class training to seafarers based on the SOLAS convention. By getting hands-on experience with AR/VR, workers can learn better how to operate ships, equipment, vehicles and what to do in emergencies. These technological simulations help prepare workers to work in smart ports and ensure maritime safety. 

Digitalization in the shipping industry is immensely helping shippers, shipping companies, and logistics service providers improve operational efficiency, supply chain agility, sustainability, and profitability.

LOTUS Containers is a global marketer of shipping container solutions in Germany that sells and leases different types of shipping containers in various sizes. You can buy used shipping containers from us that cater to your shipping needs.

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