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HOW DIGITAL STANDARDS WILL IMPACT THE SHIPPING INDUSTRY OVER THE NEXT DECADE

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The shipping industry is no stranger to change, constantly adapting to new regulations and technologies. But digitalisation – particularly the adoption of digital standards – could be a game-changer for the industry. Traditionally, the lack of standardization in the shipping process has led to inefficiencies and difficulties in tracking goods. Also, the industry has relied heavily on paper documents, leading to slow and error-prone processes. 

However, organizations such as GS1 and e-freight are pushing for the adoption of digital standards that would streamline processes and improve supply chain visibility. GS1 is the global leader in supply chain standards, promoting the use of Universal Product Codes (UPCs) and Electronic Product Codes (EPCs) used for tracking products throughout the supply chain. 

E-freight, on the other hand, is a joint industry and government initiative aimed at creating digital standards for air freight such as the adoption of electronic documentation (i.e., bills of lading and customs declarations). Adopting these digital standards not only improves supply chain visibility but also helps reduce errors and improve overall efficiency. It allows for more accurate and timely tracking of goods, as well as streamlined communication between all parties involved and the management data in the shipping process. Importantly, it can result in cost savings and improved customer satisfaction. 

In fact, a recent study by McKinsey found that maritime digitalisation (such as digital documentation and bill of lading) could reduce direct costs by $6.5 billion, opening the door to $40 billion more in global trade by 2030. And with new technologies such as blockchain being integrated into the adoption of digital standards, we can expect even greater improvements in supply chain management. As noted by DSCA’s Chief Executive Officer on the need for maritime digitisation “…the container shipping industry needs digital standards – to drive communication, interoperability and reduce trade friction.” What this goes to show is that the adoption of digital standards in the shipping industry is not just a trend, but rather a necessary step towards improving overall supply chain management and efficiency. 

Furthermore, digital standards, such as Electronic Data Interchange (EDI) and Radio Frequency Identification (RFID), have the potential to revolutionize how goods are shipped and tracked. RFID (Radio Frequency Identification) tags on cargo also allow for improved tracking and visibility throughout the supply chain. This technology can even be used to monitor temperature, ensuring that perishable goods are kept in proper conditions during transportation. There are indications that the industry is starting to adopt these standards, but there is still much progress to be made in the coming decade. 

Currently, many shipping companies are using Electronic Data Interchange (EDI) for exchanging documents such as purchase orders and invoices. This adoption of digital standards eliminates manual data entry and streamlines communication between parties. This has equally enhanced supply chain visibility, allowing for better tracking of shipments and reducing the potential for delays. In fact, the Convention on Facilitation of International Maritime Traffic – under the auspices of the International Maritime Organisation – has made it mandatory for ships and ports to electronically exchange FAL data with the introduction of EDI.

Another area of impact is digital documentation and recordkeeping – electronic bills of lading, transport documents, and other records will streamline processes and reduce paperwork. The adoption of digital standards allows for an efficient and seamless transfer of information, reducing the need for physical documents. This can result in cost savings and improved accuracy in recordkeeping. For instance, Maersk, the world’s largest container shipping company, successfully completed a pilot project for electronic bills of lading in collaboration with technology giant IBM. This should become mainstream in the coming years as more shipping companies recognise the benefits of digital documentation. 

The adoption of digital standards also opens up possibilities for new technologies such as blockchain, which has the potential to revolutionize supply chain management. By creating a secure digital ledger of transactions, blockchain allows for faster, more efficient tracking of goods, reducing the potential for errors and fraud. In fact, Maersk and IBM have partnered to create a blockchain-based platform for global trade. In the coming decade, this technology has the potential to transform international trade.

Of course, there may be challenges in implementing these digital standards – such as ensuring compatibility with different technologies and getting buy-in from all parties in the supply chain. Additionally, concerns about data security and privacy may also present hurdles. But as digitalisation continues to take hold, it’s likely that more and more companies will recognise the advantages of adopting these standards. While these advancements bring countless benefits, they also require companies to invest in training and updating their systems to keep up with the rapidly evolving digital standards in the shipping industry. 

In the next decade, we can expect to see a significant shift towards using digital standards in the shipping industry, particularly in the areas of communication, documentation, transportation, and supply chain management. This change may bring with it some growing disruptions, but overall, it has the potential to greatly improve efficiency and visibility in the supply chain. It’s an exciting time for the industry, and we can’t wait to see how digitalisation will shape the future of shipping.

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