High time for Singapore shipping sector to get more techieBy Won-Joon Lee
The global shipping and ocean freight industry is set to face a fourth year of challenging business conditions as weak demand for goods and services continue to afflict the world’s economy.
Being well integrated into the global shipping ecosystem, Singapore’s shippers face the same situation.
A major transhipment hub standing at the nexus of major shipping lanes, Singapore connects 200 shipping lines to 600 ports in more than 120 countries with daily voyages to every major port of call around the globe. 85 per cent of all containers coming to the island state are transhipped to another port. The country’s total trade is about three times its GDP, underlining the importance of trade and the extent of its open economy.
The recent resolution of the fiscal cliff in the US and the recovery of European sovereign bond yields have seen some confidence restored to global markets, but the return of the world’s economies to a level of stable and sustainable growth is not assured.
In the shipping industry, high bunker fuel prices coupled with a continuing overcapacity in supply has driven the world’s leading shippers into the red. Just in the container shipment category alone, more than 290 new ships are expected to come online in 2013, expanding the global fleet by about 11 per cent, while global container trade is only expected to grow about 6.5 per cent.
Measures such as slow-steaming have become a common tactic to save fuel, contributing to scheduling reliability, while capacity cuts through scrapping and idling ships attempt to address excess capacity in a bid to raise freight rates from the doldrums.
According to Singapore’s Business Times, the outlook remains subdued, with industry players expecting a real sustained recovery in shipping only in 2014. Nonetheless, Accenture believes shipping organisations should prepare themselves for that time by adopting measures to become high performance businesses.
High performance software solutions for high performance businesses
Advanced business analytics and process management software tools built on a modern technology base such as service-oriented architecture, J2EE and Oracle databases can serve up lower costs, increased revenue and optimised capacity to shippers.
Freight rate management software provides centralised accountability, traceability and consistent rate offers for quotation and bid requests, yielding greater control over decentralised and centralised pricing decisions and reducing revenue leakage because of limited accuracy in pricing and capacity.
Booking and cargo execution modules can bring sophisticated booking and inventory management capabilities with cost transparency and additional services offered at the point of quotation, improving customer satisfaction and reducing the cost-to-serve.
Dynamic route generation provides real-time cargo routing optimisation, simultaneously accounting for complex constraints imposed by carrier business rules and government regulations, boosting asset efficiency and enhancing the company’s agility and responsiveness.
Revenue management and optimisation software modules can dynamically evaluate the economic value of shipments at the time of booking across an entire shipper’s network, enabling short-term pricing and medium-term capacity allocation to maximise the value of capacity with optimal allotment planning.
Finally, leveraging the power of analytics is essential, to enable high-level analysis, business planning and information management. Analytics used well enhances visibility to key performance indicators, with better profiling of customer behaviour and market trends, bringing greater efficiency through faster and superior information management.
As organisational needs vary, modularity in the software system is crucial, to allow deployment as standalone components or multiple components introduced over phases.
Other important factors in selecting a suitable platform include scalability, the ease of integration with existing systems and external services, and the level of support and maintenance services, so as to keep your company business-ready round the clock.
Increased visibility and better decision-making are essential ingredients to driving high performance.
Accenture’s research has shown that a mastery of standardised processes and integrated IT capabilities can yield superior returns to shipping companies, in some cases more than 50 per cent higher than their peers.
NOL reports US$50 million third quarter profit, 25 Oct 12 [https://www.nol.com.sg/wps/portal/nol/media/pressreleases/detail/?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/nolsharedcontentlib/st-common/sa-pressreleases/1059fc004d350c5aa059f2373b5faf47]
Shipping industry to stay challenging, The Business Times, 2 Jan 13 [https://www.timesdirectories.com/maritime/news/Shipping%20industry%20to%20stay/855153]
Software and services for the freight and logistics industry, Accenture