Better data for better border protectionBy Inna Kuznetsova, President and COO, INTTRA
Ocean shipping has a history of slow adoption of information technology (IT), which means it is also an industry that can benefit significantly from technology-driven innovation. That is one reason INTTRA was formed in 2001 to bring digitization to the container booking process. More than 15 years on, INTTRA is now the largest neutral digital transaction network and software platform in the ocean shipping industry, empowering customers to trade with multiple parties and leverage information to improve their businesses. We are bringing technology to the shipping industry; helping organizations to reduce costs through innovation and to generate higher revenues.
It is working. More than 700,000 container orders are initiated over our platform weekly through more than 50 carriers. We manage over one quarter of global container volume, with additional visibility into nearly 40% of global container trade. INTTRA processes a large amounts of data, including tracing containers from the first terminal entry to delivery, Harmonized System (HS) codes and bills of lading. So, we recognize the value that data-driven insights present both for operational optimization and border protection.
We’re at a tipping point
The shipping industry today is experiencing a visible acceleration of IT adoption. A long period of overcapacity and volatile prices led to reviews of business models for many of the maritime trade participants. Many of them resulted in a higher focus on digitization as the means to reduce costs and improve service. Digital booking and tracking of containers quickly become a competitive necessity rather than optional service, bringing the shipping industry to the tipping point when IT becomes an important driver in long-term profitability.
Here is a good illustration. It took the industry 15 years to digitize half of all container bookings: according to a recent study by American Shipper, 51% of shippers are still processing orders manually. Yet, for a new process – the Safety of Life at Sea Convention (SOLAS) compliance – it went digital. The Convention required that from 1 July 2016 a shipper must verify the full weight of a packed container – the Verified Gross Mass (VGM) – with a certified signature as a condition for loading onto a ship for export.
At the end of 2015, INTTRA announced the eVGM initiative – a non-commercial collaboration with leading carriers and freight forwarders to state their preferences for electronic submissions of VGMs and to develop common business standards for the process. This year, as a direct result of that collaboration, the vast majority of VGMs are transmitted electronically.
INTTRA sees several trends that will shape ocean shipping moving forward. While the strength of the players is often defined by the size of their physical networks, it means more one-on-one connections to digitize, which is a very expensive approach. Thus, in the supply chain industry, digitization elevates platforms and marketplaces connecting ‘many-to-many’ while bearing the costs of multiple electronic data interchange (EDI) links.
Having all data on a single cloud will lead to better integration of operational, financial and informational workstreams within shipping that traditionally uses different systems and, therefore, misses the opportunity for more complex analysis and optimization. We expect to see further convergence in tracking and optimization of ocean and land container movement for these same reasons. New technologies will be used to accelerate the process.
Blockchain, for example, will simplify transaction processes and reduce costs, providing secure transactions with information only going to the parties that need to be involved. This has the potential to break down silos, allowing for the integration of operational, financial and informational workstreams, and helping customers by taking an enormous amount of cost out of the industry while increasing overall efficiency.
The real-time tracking and status of containers supported by the ‘Internet of Things’ (IoT) will be a significant driver in improving security. Shipments monitored with tracking devices will increase the timeliness and quality of data, with an immutable record of container or cargo events. This will drive greater efficiencies. The real-time collection of data about temperature, humidity and tilting is already being used in a limited fashion on selected temperature-controlled and monitored containers. As the ocean shipping industry moves across the digital divide, we anticipate an expansion of real-time tracking as the technology becomes more robust and related costs decrease.
Predictive analytics, ‘big data’ and artificial intelligence (AI) will allow companies to transition to more accessible business analytics that will automate business processes and operations. Some of the pilots in the industry today include such projects as the Korean blockchain consortium for trade compliance and the European Commission’s Taxation and Customs Union Directorate-General (DG TAXUD) – for effective information sharing between Customs, ports and law enforcement.
Looking forward, there are many opportunities and uses of data analytics related to border security. They include commodity risk profiling for Customs screening; data analytics for security risk assessment and systematic operational planning, and data addressing unsystematic risk with disaster relief, such as alternative security and screening protocols. Customs and government agencies may access the data the same way as INTTRA’s shipping partners, through a secure network conduit and portal providing customized data feeds based on the requirements and authorizations for each party.
Taking a deeper look, with commodity risk profiling, data can greatly improve screening and tracking processes. For example, the shipping of high-security threats, such as fertilizer and household chemicals, can be tracked through a combination of a container’s history and global HS codes. More granular and comprehensive tracking information promises to increase security by showing who touched and handled containers along their many stops in transit. Mapping that data against other information will improve risk profiling on future shipments.
Theft is another area of concern throughout the ocean shipping industry and all areas of logistics. The tracking and monitoring of high-value commodities, such as consumer electronics, in an effort to prevent and reduce theft, is a focus area. Multiple sources of security data help to identify ports and container yards with higher security by, for example, using data from firms such as CargoNet and Sensitech. At the same time, INTTRA has good insights into ports with longer dwell times (how long containers wait at ports before moving to their next destinations), which increases opportunities for theft. Mapping these two sources offers great promise in reducing pilferage.
Data analytics can also be used effectively to address unsystematic risk, an uncertainty that exists within every business and industry, and certainly within shipping and logistics. The right data will allow shippers to measure the impact of port events, such as strikes, to prepare for security risks, resource utilization and capacity predictions, while also managing the flow of containers and prioritizing screening processes during these events.
Preparing for the future
We are entering a new and important phase in ocean shipping, empowered more by networks and increasing interconnectivity. Those who fully embrace technology and select strong partners to drive innovation will occupy the winning side of the digital divide.
Indeed, INTTRA believes that over the next 15 years IT will further transform ocean shipping, changing industry processes, driving down costs, and improving security. INTTRA will be a part of that, helping our customers through advancements in digitization that will enable new business models.
We are looking forward to partnering with the Customs community, providing data and analytical insights to enhance security at the borders. Today, our current data analytics combined with historical shipment data helps customers make cost- and time-saving decisions for future shipments. Thus, we offer insight on how many times the estimated time of arrival (ETA) has changed since the first booking and what ports experience the highest dwell times to avoid cost and future delays.
INTTRA can offer similar data services based on the needs of customs and government agencies with the goal of enhancing border security.