The Importance of Innovation and Digitalization in Shipping

Thoughts from our Singapore Office

Tim Polson, APAC Business Development Manager in Klaveness Digital’s Singapore office, shares his thoughts on the importance of innovation and cooperation to solve the problems the shipping sector is experiencing.

This article was originally published in the NBAS Talks article series by the Norwegian Business Association Singapore*

Winners experiment most - fastest and cheapest

”We at Klaveness are pioneers and have challenged the status quo in shipping from our inception” states Polson.  Early innovations at Klaveness include being the first to carry cement in bulk in 1961 and pioneering shipping pools back in 1963.

Polson says a drive for innovation is a key part of the company’s DNA. Most recently, Klaveness established its youngest explore amongst the group, ZeroLab by Klaveness, an initiative dedicated to making low and zero emissions options available to its customers.

The creation of “K-Lab” in 2015 marked the first step of the Klaveness’ digital journey. From this grew Klaveness Digital, now a standalone company offering software as a service solutions such as CargoValue. CargoValue is an intelligent logistics platform designed for industrial companies sourcing and shipping raw materials by sea. It helps them reduce the costs, risks and CO2 emissions related to shipping and logistics through real-time, actionable data.

Polson addresses two common questions from maritime professionals: “Do we spend a fortune on digitalizing for the sake of digitalizing?” and “what are the benefits?”

Both questions are very good, especially considering alternative uses for the time and financial outlay required to digitalize. We believe that digitalization is dynamic; there is no “big bang”, rather a series of many small “bangs”.

Identify the quick wins

Polson explains that Klaveness’ digital journey began with mapping processes in the aluminium industry, identifying low hanging fruit (problems that can be solved with existing solutions) and gaining small, but regular wins.

“Valuable lessons were learned from initiatives that did not result in a win. Sharing these lessons and other industry knowledge has been key to a successful digital evolution. Klaveness’ technological initiatives all stem from team members recognizing something internal or external to the organization that could be improved, and the organization working together to find a solution” says Polson.

An example of this is the recent collaboration with DNV GL and Arundo Analytics on implementing the Veracity data platform on board Klaveness vessels. This platform provides a crucial link between data generated by sensors on board vessels and shore-based teams who are charged with managing these vessels efficiently and effectively. Operations teams ashore can use these insights to make more effective decisions on items such as when to dry dock vessels, when to order mechanical parts and which suppliers’ materials are performing best. Shipboard team members can also use these insights to operate vessels more effectively and communicate requirements more clearly with shore-based functions. An example could be the ship’s crew justifying the need to dry-dock earlier than planned, based on data-driven insights showing hull growth being higher than expected due to unforeseen time anchored in tropical waters.

Tim Polson is emphasizing that digital optimization initiatives save considerable costs both for Klaveness and their customers. However, this is just the beginning of the digital transformation journey.

“The most significant benefit of digitalization is increased capabilities to serve our customers’ needs. This strategy is not a new concept in shipping: the master of a 17th century East Indiaman galleon had little opportunity to make his vessel perform mechanically better than the hundreds of other similar vessels, but he could study weather and tide, learn from others’ mistakes, set his rig according to wind indicators and navigate his course better than his competitors,” muses Polson. “The reward for the best sailor was reaping the highest price for delivering the freshest produce of the season first.”

Klaveness aims to identify challenges, democratize data related to those challenges so that the data tells a story, then go about solving it and thereby challenging the status quo.

Understanding pain-points

Polson visits Jurong Port to discuss optimization potential through digitalization

Looking ahead, Klaveness Digital’s philosophy is sharing knowledge with the wider industry. Klaveness studied bulk material producers’ and receivers’ supply chains over several years to develop its solution CargoValue. A key finding was that many of these companies use spreadsheets, antiquated enterprise resource planning (ERP) systems and manual processes to co-ordinate high-value, time-sensitive shipments. Most rely on email and phone calls to transmit shipment-critical information, meaning staff and management are overloaded with transactional tasks and potentially hundreds of different versions or variations of a single piece of information.

For instance a simple estimated time of arrival (ETA) update: A port agent provides an ETA update to a bulk receiving company’s port operations team (eight people) who forwards it to the chartering team (four people), local transport co-ordination (six people), local sales team (seven people) and local accounts payable team (three people). That is one piece of information multiplied 28 times, which is a benign piece of data that will be out of date as soon as a new ETA update comes, maybe a few hours later.

The bullwhip or ripple effect from a 24-hour delay not being quickly and accurately transmitted can cost tens of thousands of dollars, and this may happen several times a month.

“It is hardly surprising that when changes occur, for example a normal 24-hour delay due to weather, the organization struggles to respond quickly enough to avoid unnecessary costs’” says Polson.

Debunking myths

Klaveness’ research has also debunked a common misconception that intermediaries are a source of waste in bulk commodity supply chains. Quite the opposite, given the right digital tools an intermediary is more valuable than ever to solve the problems in a maritime supply chain.

Klaveness’ mantra is mapping a scenario, identifying problem areas, and developing digital solutions to address those problems.

“There is no sense in building a whole new berth to avoid demurrage when the real problem is lack of information transparency, solved for a fraction of the cost. To maritime enterprises yet to begin their digital transformation journey, we encourage them to do so with haste, starting with small, but regular improvements.

To those whose journey is already underway, we implore digital initiatives to be prioritized higher on the agenda. Performance gains from democratizing and manipulating data are real and measurable. When employees are armed with improved visibility into their company’s operations, they can identify more areas for improvement and opportunities to adapt, and so the benefits from digital transformation snowball” ends Polson.