The Signal February 21, 2023

Container Shipping Gets Digital

Thomas Bagge, CEO of the Digital Container Shipping Association, and a 20-year Maersk veteran with digital transformation experience, has spent the last few years working closely with CIOs of the nine DCSA member companies to digitize global trade, starting with electronic bills of lading (eBL).

Logistics
Kevin O'Marah Avatar
Kevin O'Marah

The Digital Container Shipping Association, a Dutch non-profit comprising nine big carriers including Maersk, MSC, Hapag-Lloyd and Yang Ming, has gotten all members to agree to standardize on electronic bills of lading (eBL). The process wasn’t exactly easy, and the pace somewhat stately (the goal is 100% compliance by 2030), but the message for supply chain leaders trying to solve problems like Scope 3 carbon accounting with industry cooperation is clear: go for it. 

Turning a Battleship 

There is an old saying that turning a battleship around takes 25 miles. The image is apt for the container shipping industry and its even larger vessels. Thomas Bagge, CEO of DCSA, and a 20-year Maersk veteran with experience in digital transformation, has spent the last few years working closely with CIOs of the nine member companies to digitize global trade, starting with the eBL. 

Big picture, this mission promises to unlock $6.5 billion annually in savings and eliminate huge amounts of carbon emissions by reducing friction and improving visibility to containers in transit. Bills of lading are an important piece of the puzzle conferring title, confirmation of receipt, and terms & conditions for the cargo of a container ship. Unfortunately, only 1.2% of these documents were electronic in 2021. Inertia, tradition, and a lack of direct pressure from customers has slowed progress toward digitizing this essential document. 

But that’s finally changing. Bagge, who has led the process at DCSA, says of lessons learned while at Maersk, “I saw how slow we can be to transform, but after the 2017 cyberattack that cost us $300 million, I also saw how fast we can be”. Making progress toward industry-wide digitization “is a journey and requires grit…but the mission is huge both in terms of customer benefits and carbon”.  

Alignment among rival carriers is the key, and the first step is creating a future roadmap for digital standards. Cheng-Mount Cheng, CEO of Yang-Ming says “Digitalizing the bills of lading is an inevitable trend that will undoubtedly bring benefits to the supply chain. However, the transformation requires the support of all stakeholders and carriers”. 

Graph depicting global container shipping congestion. Source: Clarksons Shipping Intelligence Network, August 2022.

Standards to the Rescue 

Efficiency at scale generally requires standardization. This was true of railroadsthreaded machine boltselectrification, and the internet. Global shipping, which as a supply chain enabler predates all these other breakthroughs, has been slow to the standardization party. For example, Bagge says that among the nine member companies in the DCSA there are six different definitions of “vessel arrival”.  

The resulting confusion as shippers (a.k.a. customers like BMW, H&M or Levi Strauss) try to find out where their product is or when it will actually “arrive” is a major headache. Specialist tech vendors like Blume GlobalProject 44 and OpenTrack are investing in better software and analytics to solve the visibility problem, but everyone needs to work harder in the absence of standards. 

The power of standards and digitization is well known in supply chain thanks to the 50-year journey of GS1 which gave us the now ubiquitous barcode. Like the DCSA, GS1 was founded by a group of leading CPG and retail companies to streamline the checkout process for shoppers. The first move was agreeing on a standard for product identification, known ever after as the UPC or Universal Product Code. This deceptively simple step launched an explosion in consumer goods supply chain efficiencies that are still evolving today. 

Bagge sees three value streams for the container shipping industry that will follow from the eBL. The first is what he calls “digital trade”, which like the barcode, should eliminate friction and wasted time. The second is “asset efficiency”, which builds on innovative tech solutions to increase visibility and optionality between ships, containers, and ports all of which can be IoT-equipped and tracked. The third is “sustainability” as a natural extension of eliminating the ridiculous, but still common practice of “racing across the Pacific to wait outside of LA”. 

Go Farther Together 

The DCSA proves that competitors can work together to solve shared problems. Tackling a big problem like Scope 3 carbon depends on smart uses of digital technology, but no one can solve it alone. The unlock is cooperation and a shared vision.