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CONFERENCE
REPORT The Digital Ship Hong Kong conference, September
17-18 of this year, produced lively debate about many different aspects
of maritime information technology, including e-procurement, ship-shore
communications, e-chartering, information technology for containers
and managing supply chains online. This is our report. Patrick
Slesinger, Wallem Mark Haslett, Wallem Group Linda Ho McAfee, iShipExchange;
Paul Østergaard, ShipServ; Ken Nelson, Setfair Julian Longson, Purplefinder CC Tung, OOCL Joe O’Brien, Cargosmart Alex Fong, Hong Kong Port Roger Ingoldby, Cargobiz Mike Mudd, Rawmart George Eddings, Holman Fenwick Patrick Slesinger, chief information
officer with Wallem Group, said that he thought maritime e-commerce
is a lot like sex. “A lot of people are talking about it but few are
doing it,” he said. Mr Slesinger asked all of
the maritime e-commerce companies present to answer the three questions
i) what is your definition of e-commerce in the maritime industry,
ii) what value can you add over a fax and iii) what can you do which
differentiates you from your competitors. Mr Slesinger poured scorn
on ship suppliers who say that they are not going to provide electronic
ordering services because their customers are not asking for it. “If
we only provided things that people ask for, we wouldn’t have a lot
of things,” he said. Mr Slesinger asked if anybody
had opinions about whether the ship supplies e-commerce companies
would eventually consolidate into one company or if the exchanges
would all figure out how to communicate with each other (creating
essentially an ‘exchange of exchanges’”. Mr Slesinger said he believed
it would be very difficult persuading engine manufacturers to agree
to a common standard for part numbers, because it is in their interests
not to have standards, so they can tie a user to the same manufacturer
throughout the life of the ship and keep prices high. “Engine manufacturers
have fought long and hard to keep part numbers as subjective as possible,”
he said. Duncan Telfer, general manager
fleet, China Navigation Co, the deep-sea shipping arm of Swire Group,
said that he didn’t think much had changed in the first 120 years
of procurement at China Navigation. The company took a first step
into digital technology when it installed Xantic’s AMOS D maintenance
and purchasing software in 1996, taking over from a fax-based messaging
system. The company currently has one purchasing manager and one assistant
handling 20 vessels. In 2000, the company began
talking to various e-procurement companies, taking an initial interest
in the Arena system (now LINE) being used by Wallem Group. It approached
PrimeSupplier (since merged with OneSea to form SeaSupplier) to see
if it could achieve lower costs than it had already. “We asked Prime
Supplier for the costs of a list of items. After 30 days we chased
them up and they sent us a fax in response,” he said. After this, the company realised
that it was unrealistic to expect e-procurement to lead to a dramatic
reduction in the price the company paid for ship supplies; the benefits
of e-procurement were in reduced administration costs; the companies
which can achieve the greatest benefits from e-business are companies
operating a paper system. “We realised that our relationship
with suppliers is very important,” he said. “We pay on time, the suppliers
compete for our accounts and the discounts follow,” he said. “We don’t
want to be playing games with suppliers and hitting them over the
head. That would solve a very good relationship. Its up to the e-procurement
companies to get the price right.” Currently, iShipExchange is
evaluating several systems, including iShipExchange, Ulysses Systems
and the AVECS TiTAN systems. There is sceptism within the company’s
purchasing department about which systems will work the best. Planning purchasing is a much
bigger issue than actually putting through the transaction, he said.
Mark Haslett, general manager
of procurement with the Wallem Group, said that Wallem did not find
e-procurement difficult. Industry sources have hinted that Wallem
may purchase more ship supplies electronically than the rest of the
maritime industry does altogether. The company began building
a system to manage supplies from onboard the vessel in 1994, connecting
to 220 suppliers. “We believed that we were forming a community of
interest,” he said. The system has been gradually
developed over the following 7 years. Currently, its entire system
runs over an internet browser. “It helps provide good information,
to manage planning and replenishment,” he said Mr Haslett echoed Mr Telfer’s
remarks that the purpose of e-commerce is not to force down prices
and bankrupt suppliers. “You need to work together with your suppliers,
particularly the big important suppliers,” he said. “We need to discuss
by knowing exactly what our purchasing leverage is. We have to feel
each other out.” Mr Haslett did not believe
there was anything specifically he was looking to pay an e-commerce
company to do, saying simply “if you can show me where my dollar is
well spent then I’ll do it.” Nels Hendrickson, VP marketing
with ship chemicals supplier Drew Marine, a subsidiary of Ashland
Chemical, said that it is his company’s policy to communicate electronically
with any customer which demanded it. However since most of the business
comes under long-term contracts, there is not a great deal of demand.
Masaharu Ono, general manager
of marine logistics with Fuji Trading, talked about the problem with
differing communication protocols in e-commerce. “It is necessary
to find a compromise between parties which use different systems,”
he said. Fuji developed its own online
order tracking system in October 2000, dubbed Fuji Information Network
Enterprise (FINE), he said. “Buyers can track how they order; the
buyer can just access the website to see his own order.” Linda Ho McAfee, CEO of ship
supplies e-commerce company iShipExchange, talked about how e-commerce
offerings are becoming more sophisticated. The crucial factor is understanding
how things might work in an electronic environment. “Imagine with a click of a button you could find the spare parts
supplier you want,” she said. “We have come a long way,”
she said. “Year 2000 is referred to as the year that was. There were
unrealistic expectations, we saw the bubble burst. But it started
the revolution. Everyone played an important part in getting this
going,” she said. “We are now in a period of
adoption, where the atmosphere is sober and sensible,” she said. “Companies
feel like they are in control of their destiny. Buyers and sellers
have begun to show that they know what they’re doing.” “I think there is still a
lack of understanding about what e-procurement is,” she said. “There
are operational concerns, technology hurdles and psychological barriers.
We have to keep simplifying, educating and de-mystifying this thing
to our users. Knowledge dispels fear.” Rick Sheldon, VP of product
strategy for iShipExchange, said that he feels that his company’s
job is to enable e-commerce. “E-commerce is benefiting all of us in
order to benefit ourselves,” he says. “It is attacking the processes,
making them more efficient. Being integrated offline is only the first
step in e-commerce. It’s about helping companies manage their sales
and purchasing.” “We think that shipping first
and foremost is a business of relationships,” he said. “The e-commerce
provider has a relationship with buyers and a relationship with suppliers.
There needs to be one on one help.” Paul Østergaard, CEO of ShipServ,
said that he sees his company as a ship supply management company,
and its role to integrate different systems together. “I have previously tried to get away from being called an e-procurement
company,” he said. “I think e-procurement is one sided. Its a legacy
from the days when people talked about buyers clubs.” “At the end of the day, what
we’re trying to do is manage information,” he said. “We created tools
which allow us to do certain things with the information, and that’s
called software.” “The question which comes
up is, why do we need an intermediary between buyer and seller,” he
said. “But we use intermediaries whatever we do. The intermediaries
are the facilitators.” ShipServ’s role in connecting
many suppliers to a single hub makes things a lot easier for the buyers,
because it saves them from having to log onto the websites of lots
of different suppliers. The integration costs are
also dramatically reduced. Integrating a supplier’s system into a
hub or purchasing system can cost $25,000 to $100,000 in installation,
coding, software and training, with a further $25,000 to $100,000
each year in maintenance and software upgrades. With these costs, it is much
more cost effective for lots of buyers and suppliers to each integrate
with ShipServ’s central hub, rather than creating separate integrations
with each other directly. Answering questions about
the eventual end game in ship supplies e-commerce, Mr Østergaard commented
that the ideal situation was to have one hub which everybody uses.
“But is not a perfect world,” he said. “I don’t think we’re going
to end up with one hub for some time.” The balance of power would
naturally fall onto the buyers, he predicted. “The shipowners can
select an e-commerce company and ask all of their suppliers move onto
that platform. The suppliers will have to use multiple platforms.”
Ken Nelson, division sales
manager Americas with Setfair, says that he sees his company’s vision
being to offer a strong foundation, helping integrate buyers and sellers.
Setfair uses the TIBCO middleware
technology, he said, which is also used by Enron when it acquires
companies, as a means of integrating their existing systems into Enron’s
systems quickly without rebuilding from scratch. James Phillips of ship supplies
e-commerce company ILSMart said that 65 per cent of his clients are
still brokers of spare parts, which have certainly not been put out
of business by the internet. “They don’t go away, they still have
a niche looking after their clients,” he said. Mr Phillips said he was surprised
by the reluctance of ship suppliers to be more open to buyers. “This
is the only industry I’ve worked in where suppliers do not want to
tell anyone what’s in their warehouses,” he said. ILSMart has been in existence
for 26 years, currently handling 33,000 transactions per year, of
which around 14 per cent are in the maritime industry (the remainder
being mainly in aviation). It moved from an electronic communications
system onto the internet about 2 years ago. The company had absolutely
no competition at all for its first 23 years, he said; then it suddenly
found itself with about 20 competitors in each industry it worked
in. Mikal Boe, CEO of Telemarine,
which produces free of charge websites Bunkerworld.com and Tankerworld.com,
talked about the development of his two sites. Tankerworld, an information
resource about the tanker industry, currently gets about a third of
the traffic of Bunkerworld, an information resource for ship fuels
(bunkers). However Tankerworld users spend on average 16 minutes on
the site, compared to 11 minutes for Bunkerworld users. Mr Boe calculates that Bunkerworld
has 81 per cent penetration, based on the number of people in the
bunker industry who have signed up for usernames and passwords. Tankerworld
has 51 per cent. Bunkerworld is the of the
last 2 survivors in the e-bunkering business (along with OceanConnect);
there were 6 companies competing in the sector in September 2000.
However Mr Boe said he still believes that trading bunkers on the
internet is a little ahead of its time. Mr Boe said he thought that
the way content is handled will change dramatically over the next
30 years, moving from what he termed as 2 dimensional content (ie
a book or magazine article which is read from beginning to end) a
3 dimensional content, where people drill down through links and submenus
as their inclination or need goes. Martin Taylor, chairman of
the Maritime E-commerce Association (MeCA) and senior VP business
development with e-procurement company MarineProvider, talked about
the recent developments at MeCA. MeCA was founded in March
this year as a non-profit organisation, with an objective to harmonise,
embrace and promote common industry standards. A second major objective
is to assist with marketing e-commerce to the industry and educating
about e-commerce. Its first annual general meeting was held in London
in September this year. MeCA has a board of 13 directors.
There is a procurement technical committee chaired by Paul Ashton,
VP maritime with Xantic; this committee has subcommittees covering
general procurement and bunker procurement. There is also an e-chartering
technical committee. The e-chartering committee
held an exploratory meeting in May this year, with a second in June.
It decided to look at ship descriptions, including estimated time
of arrival, daily vessel messages, port information, position lists.
Three companies involved in the sector have already taken membership.
In the articles of association,
the association decided to use existing standards wherever possible,
rather than inventing new standards specifically for the maritime
industry, which is a very expensive process. It will not define how
messages are transported. Mr Taylor is currently establishing
an office for Marine Provider in Hong Kong. Julian Longson VP business
development of Pole Star Space Applications, talked about how the
requirement for vessel tracking and surveillance systems is dramatically
increasing following recent incidents in New York.
"The world has changed," he said. "Security
is going to be absolutely paramount." "At a recent conference,
someone from the US Criminal Investigation Agency (CIA) perceived
that the biggest terrorist threat to America was a vessel sailing
into New York City with a nuclear warhead or some kind of germ warfare
capability," he said. "What would happen if the US government
said that all vessels must be tracked, otherwise they cannot gain
entry to US territorial waters?" "Virtually every plane
in the air: its known where it is, apart from military aircraft,"
he said. "This is not the case with shipping. The security implication
to merchant shipping is going to be quite severe." Pole Star produces the Purplefinder
vessel tracking tool. A hidden device is fixed onto a vessel which
transmits regular position reports over Inmarsat-C or D+. The tracking
data is then aggregated by Pole Star and can be distributed to end
users in various different ways, for example by indicating vessel
position as marks on a map. The system is very useful
in the event of a hijacking, because it tells the owner where the
vessel is. "When a vessel is hijacked, the pirates tend to want
to smash as much communications equipment as they can find,"
he said. "The Sat C equipment is normally smashed straight away." The onboard communications
unit is hidden inside an unobtrusive box; it is still able to talk
to the satellite if it works through plastic. It is normally powered
by the vessel, but has a battery which can last for 10 days, reporting
every 10 minutes, if it is disconnected. Installation costs are $1000,
with a fee of 25 cents per position report. "Its pretty small
package, it doesn't look like a communications device," he said.
www.tm-online.com Herry Lawford, vice president
of Thomas Miller Asia Pacific, talked about TRI-MEX, a company which
Thomas Miller has invested in, which provides services to track vessels
and cargoes by satellite. The satellite tracking can
be used for a variety of different services, including cargo protection
(temperature monitoring, gas sensing, tamper detection and reefer
control), asset management (providing proof of despatch and audit
trails), management reporting (benchmark analysis), cargo visibility
and administration. Providing adequate container
tracking services leads to enormous efficiencies in the supply chain.
"Globalisation of manufacturing is leading to longer, more responsive
supply chains," he said. "Expectations of the supply chain
are increasing." "Radio based shipment
tracking was first considered in the 1940s," he said. "But
the take up has been considerably lower than one would expect as a
rational man. We all know what that means; we're not being rational,
we're being wishful thinkers," he said. Satellite tracking is particularly
relevant when tracking refrigerated cargoes, because the cargoes are
destroyed if they take to long to be delivered. "There is a growing
demand for product quality freshness, and growing movement of temperature
controlled cargo," he said. "Temperature controlled cargo
rose 50 per cent between 1979 and 1998," he said. "The cargoes are usually
insured and some loss is expected," he said. Major global carriers
experience 7 per cent of the total number of claims from refrigerated
cargo, although this amounts to 28 per cent of the total value of
their claims." Theft is another major issue.
"Theft in the maritime supply chain is estimated at $50bn a year,"
he said. "There is a vast amount of cargo which walks, and a
growing demand for positive traceability of cargo." Michael Smith, VP Asia Pacific
with Stratos, talked about Iridium’s satellite telephone offering
to the maritime industry, currently providing Iridium handset to Iridium
handset calls for just $0.50 per minute, plus a $20 per month static
charge. Short text messages (SMS)
of up to 120 characters are carried free of charge. They can be initiated
from a SMS-compatible mobile phone, an e-mail or a form on the Iridium
website. Iridium pagers are available
which bleep and receive messages although cannot be used for phone
calls. Handsets cost around $400, which are half the size of when
they were originally introduced, making them much more convenient
to carry around. Iridium was purchased recently
for just $25m under the US bankruptcy courts, with the original $6bn
development and launching costs written off the balance sheets. It
quickly signed a deal with the US Department of Defence worth $36m
per annum, providing communications to 20,000 terminals worn by soldiers.
As a US company, Iridium is
not allowed to offer a service in areas of the world covered by trade
sanctions, including Cuba and Taliban controlled areas of Afghanistan;
it has also been banned in several other areas of the world which
want to control communications and data traffic into and out of the
country. The technology has been configured
so that normal users cannot use Iridium phones in these countries,
he said. However he claimed that sea areas in international waters
nearby are not affected. The system was thoroughly
tested by the US Government prior to awarding Iridium its contract;
it found that the call success rate (percentage of calls which stay
connected through to completion) is 95 per cent. This is not high
enough for mission critical applications (such as emergency distress
calls) maybe but certainly good enough for most day to day telephone
calls. A major issue is the cost
of replacing the satellites, which have a limited life span; the current
business plan is geared around Iridium revenues recouping the $25m
costs of purchasing the company, rather than its initial $6bn costs
of putting the satellites in the sky. However now it emerges that
Boeing, the manufacturer of the satellites, has committed to a satellite
life of 7 years from April 2001, which is 2 years longer than previously
thought. There are 66 satellites in
Iridium’s constellation, each circling the world in 100 minutes. Calls
are handed off from satellite to satellite, with only one land earth
station in the world, which is in Arizona, USA. Stratos analysts believe that
Iridium will not affect Inmarsat’s revenue, he commented, because
it is unlikely to be used for the mission critical and operational
applications which Inmarsat tends to be used for. However there is
likely to be a enormous new market for Iridium handsets in the maritime
industry, particularly from seafarers, who can throw away their GSM
mobile phones which can rack up charges of up to $8 a minute for GSM
roaming and use Iridium instead to call home. Substantial comprehensive
information about Iridium is available on the website of Quadrant
Australia (www.quadrantaust.com.au <http://www.quadrantaust.com.au>),
one of the investors in Iridium. http://www.oocl.com “I believe that this conference is most timely as it follows in the
wake of the collapse of the dotcom industry,” said CC Tung, chairman
of shipping line OOCL. “In a way, this is the appropriate time for us to reflect upon the
situation and to chart the way going forward.” Mr Tung blamed the demise
of many dot com initiatives on bad management. “The answer lies in
the inability to effectively manage the application of such technology
into business processes. Indeed,
we have all spent too much time trying to distinguish between the
new world and the old world,” he said. “Perhaps the answer is that
instead of separating the new and the old, we should merge them. The new world tools are best utilized when
they are applied to enhance old world products and services,” he said.
“It is only with the integration of the business and technology processes
that practical, high value added and cost effective solutions can
be realized.” The objectives at OOCL are to figure out how to use information technology
to increase customer loyalty, improve cost efficiencies, enhance revenues,
provide a more competitive cost structure and create move value added
products, he said. “In other
words, how can we use new world tools to improve our old world products
and services? “Businesses should use technology
not as a vehicle to a higher market capitalisation, but rather as
a tool to create more competitive products and services,” he said.
“The benefit to businesses comes not directly from the technology
itself but from the application of the technology into existing areas
of expertise. “ “Ultimately, these new tools
available to the logistics industry will be valued by how effectively
they have been utilized rather than by their worth as a depreciating
asset. “ “The containerised transportation
and logistics industry is perhaps one of the most appropriate examples
to use in this discussion,” he said. “The industry is fragmented,
complex and highly competitive.” The range of services provided by the industry include inland and
sea borne modes of transportation and involve multi-jurisdictional
issues and various parties whose interests may or may not be in line
with each other, namely manufacturers, shippers, consolidators, truckers,
carriers, terminal operators, receivers, financiers, insurers, import-export
traders and governmental bodies,” he said. “The effective management
of this complex chain and varied list of interested parties is crucial
to our business.” “The containerised transportation
and logistics business is undoubtedly complex and certainly competitive. It is perhaps a text book case on how to apply
IT so as to produce more efficient processes and products within a
changing environment.” “We have made our attempts
to improve our product, our company and our industry at large,” he
said. “Sometimes wholesale changes are indeed difficult to effect.”
“OOCL will continue to contribute
in its own small way to the establishment of virtual shipping communities
for information empowerment, to the creation of value through collaboration
and the process of integration with customers, partners and vendors.” “We will continue to use IT
innovatively to seek and adopt new ways of doing business and to provide
solutions to enhance the efficiency and connectivity within our industry.” OOCL’s first foray beyond
mainframe computers was in 1993, when it built Integrated Regional
Information System (IRIS), designed to provide front line staff with
access to the internal system. This enabled them to carry out booking,
documentation, tracking, job ordering and accounts receivable. This
improved the quality process and internal efficiencies. It includes an interface for
customers, enabling them to retrieve shipping information, co-ordinate
shipments and communicate by EDI. The system uses object technology,
which makes it easier to mass customise to customer needs and make
changes to. IRIS-2 was awarded the ComputerWorld Smithsonian Award
for Innovation. “We are now sharing this comprehensive
IRIS-2 solution with COSCO Container Lines to upgrade their services
to customers and we would be happy to share it with other carriers
in the industry to improve carrier services and efficiencies in the
maritime industry generally.” he said. “OOCL was one of the first
to launch a functional website in the industry and to introduce secure
Internet bill of lading printing,” he claimed. “We are now extending
the web further to be XML (extendable Markup Language) based, which
will allow personalization, collaboration, knowledge sharing and training.” “We are working
with banks to reduce manual documentation handling in the letter of
credit and payment processes. Standards are important in
the exchange of information especially in relation to security standards
between the industry and government,” he said. “We need to work together
to facilitate and speed up the adoption of common Internet standards.”
“We came to understand that
the unilateral application of technology into our organization was
not, in itself, sufficient. In order to utilize the power of technology
fully in the world of business, one has to create solutions which
enable all parties involved to benefit from the enhanced process.”
“At OOCL, we continue to promote
collaboration, the sharing of information and experience and the establishment
of common industry platforms. The
more that we are able to connect and integrate totally different modes
of transport and peripheral activities such as terminals, warehousing,
consolidation, or even banking and insurance, the better operational
efficiencies we shall achieve.” “Customer access, instant
communication between parties and sufficient backend support will
together provide customers with the power to create and, most importantly,
to change solutions literally at their fingertips.”
“This will constitute the
advent of truly comprehensive and instantaneous tailor made solutions. Such developments will enhance customer loyalty
further and result in the receipt of a well-deserved premium for our
existing services.” Mr Tung talked about OperationSmart,
a family of tools which many carriers and vendors can use, if they
choose to. Probably the most
important is CargoSmart is a tool which enables carriers to access
information about their shipments, competing with INTTRA and GT Nexus.
“Today’s customer is very
demanding requiring real-time shipment visibility and the ability
to manage shipments proactively,” he said. “He needs to be able to
focus on problematic exceptions, to increase productivity, to manage
information flows easily, to integrate with vendors’ business processes
and ideally, to access all shipments among all carriers online through
a single window.” “To this end, CargoSmart was
launched by OOCL in August 2000.
It was the first fully functioning common carrier portal in
our industry. CargoSmart is a web-based HP hosted neutral
shipping community designed specifically for the customer.” “It includes 24 by 7 access
to on-line detailed information, automatic notification, improved
communication, customisation of information sharing and end to end
shipment visibility. It also
memorizes past usage patterns to enrich the user’s experience,” he
said. “CargoSmart is also an engine
for information sharing and collaboration, allowing information to
flow directly from carriers to the customer’s own logistics partners. This in turn facilitates efficient and concurrent
communication among all parties in the shipment cycle and customers
maintain a complete control over the level of information seen by
all parties.” “One of the latest features
of CargoSmart is the “Private Label” option,” he said. “This provides
a neutral engine to the shipping community to allow Carriers, Forwarders
and Shippers to harness the power of CargoSmart while maintaining
their own company name or “branding” in the market place.” “COSCO and MISC have joined
as carrier members of CargoSmart,” he said. “ We look forward to other
ocean carriers joining in order to share the benefits of this shipping
community. There are two other tools
in the OperationSmart family: DepotSmart, an e-commerce tool for container
depots, enabling them to integrate with carriers, container owners
and equipment operators, exchanging electronic information with their
customers and vendors. Today,
there are already over 70 depots connected to the DepotSmart community
globally. ClaimSmart is a Cargo Claims
management system covering the entire cargo claims process from registration,
information gathering, liability assessment, prevention, settlement
negotiation, payment, recovery, expense accounting and litigation
administration. The current
version is easily convertible to an ASP environment and to external
hosting to allow utilisation by other carriers. Joe O’Brien talked about CargoSmart,
where he serves as director of marketing. Cargosmart was established
by shipping line OOCL as a means for shippers to communicate with
multiple shipping lines. Cargosmart provided access to managing shipments
for OOCL from the outset, and recently added shipping lines COSCO
and MISC. It has over 500 customers. Cargosmart was developed by
OOCL, and uses OOCL technology and OOCL developers. However it is
hosted neutrally by Hewlett Packard, to give an indication to other
shipping lines that any confidential data they have on the system
will not be revealed to OOCL. Mr O’Brien talked about his
previous employers, GoCargo, which went out of business trying to
put together an auction site for container shipping. “It was run by
Wall St people,” he said. “They said, lets capture 2 per cent of the
container market and all be millionaires and have an IPO. That was
truly their mindset.” GoCargo was eventually defeated
by the maritime industry, he said, which had very strong reservations
about supporting an auction site. “The shipping industry is slow to
change and they didn’t really hold their hand,” he said. Managing pricing is a very
crucial issue for shipping lines, he said; shippers can utilise auction
tools to drive down prices. “As you start taking down the rates, you
set a precedent,” he said. “Its a spiralling down. That’s really why
the auctions didn’t succeed.” An emphasis is on providing
exception management, he said, alerting shippers only when there is
a particular problem with a shipment, such as a delay. There are plans
to incorporate online banking and insurance into Cargosmart. An interesting initiative
is the “private label concept.” Shipping lines can make use of the
Cargosmart tool to provide a service to their customers, but brand
it as their own online service; customers do not need to know they
are using Cargosmart. Mr O’Brien said he thought
that the end game would be to have a single point of connectivity
for all shipping lines; in other words, shipping lines will either
eventually work with all of the portals (GT Nexus, INTTRA and Cargosmart)
not just the one they are backing, or, alternatively, there will be
one overall winner out of the three. However, Cargosmart does not
see INTTRA and GT Nexus as its biggest competitors, he said. “Its
the carriers’ own sites. APL HomePort is very good, and Maersk Sealand
has a very good site.” Paul Stephen, general manager
Asia Pacific with INTTRA, talked about his company’s ambition become
a one-stop shop for managing shipments with all shipping lines. The
full service will be launched in October this year. Carriers currently participating in INTTRA are Columbus, Crowley,
Hapag Lloyd, Hamburg Süd, MSC, Safmarine, Alianca, CMA CGM, Maersk,
ANL and P&O Nedlloyd. Altogether, these shipping lines amount
to 40 per cent of global container shipping capacity, he said. Two
additional carriers are likely to be joining INTTRA shortly. INTTRA
recently counted freight forwarders Kühne and Nagel, Schenker, Danzas
and Panalpino among its supporters. Mr Stephen made parallels
with the airline industry, which is in the process of consolidating
from hundreds of small travel agencies to a few online portals for
booking flights. Similarly, the booking process for container shipments
will evolve from thousands of shipping agents around the world to
a few online portals, he suggested. Mr Stephen said that INTTRA
is not a product in its own right, but a means of access to a product
(transportation services). Crucially, the site is paid for by the
shipping lines and not the users. All the carrier sales representatives
of shipping lines behind INTTRA are able to train customers to use
the system, amounting to 800 carrier sales representatives in total.
The product offering is currently
divided into INTTRA Act, an internet portal for managing shipments,
and INTTRA Link, an EDI / XMI communication system for direct integration
between shippers and shipping lines. There are no plans to offer electronic
pricing on the site. www.info.gov.hk/pmb Alex Fong, secretary to the
Port and Maritime Board, Hong Kong Government, talked about ways to
encourage all of the different logistics companies involved in the
port to communicate better electronically, which would enormously
improve the quality of the supply chain. There have been discussions
about building a central online tool for managing container shipments,
similar to the Port of Singapore Portnet system, but it is difficult
to see how that would work in Hong Kong, because there is no central
control. “Portnet had investment from the Singapore Government; everybody
is required to use it,” he says. “But commercial people here said,
this is not a government thing,” he said. The problem is finding a way
to encourage commercial organisations to agree on a common structure.
“The supply chain is a very big thing, there are many players involved,”
he said. “The answer doesn’t lie in the technology; the technology
is here,” he said. “The problem is the politics. All companies want
to dominate.” “There’s no substitute for bringing people together. When you get
people around the room and talk, very interesting things happen. People
don’t know what each other is doing.” Nicholas Ng, sales manager
with bulk chemical logistics management system Optimum Logistics,
said that over 11 major chemical manufacturers currently use the system
to manage the transport of chemical products around the world, including
by parcel tanker, tank container, road tanker and rail tank car, with
associated storage terminals. It also has over 100 logistics service
providers connecting, including inspectors and classification societies.
Optimum Logistics was originally
developed and financed by chemical transport company Stolt Nielsen.
Now Aspen Technology, a developer of supply chain software, has purchased
20 per cent of the business. Roger Ingoldby, managing director
of e-chartering site Cargobiz Asia Pacific, talked about how he sees
the roll out of e-chartering tools. “I do believe there are large
sectors of the market which will benefit from e-chartering, but I’m
not sure if we’re talking about one year or two,” he said. “But I’m
quite sure that in a couple of years we will be talking about a whole
different picture.” The current e-chartering offering,
mainly geared around bulletin boards, will gradually be replaced by
something more functional and wide reaching, he said. However systems
where people do business anonymously will never work. The growth of e-chartering
will be much more driven by charterers than by owners, he thought.
E-chartering will never replace brokers, he said. “Our industry is
one which deals with physical things, such as storms and disasters,”
he said. “For this, you always need good physical people.” “The law of disruption says that social, political and economic systems
change incrementally and technology changes exponentially,” he said.
“The exponential change is very unwelcome in some quarters.” “I don’t think anonymous bidding
works very well within the bulk chartering market because people want
to know who’s at the other end,” he said. Cargobiz has chosen to charge
a fee per transaction concluded on the site, rather than by subscription.
“We charge 1 per cent commission which is paid by the shipowner,”
he said. We want to encourage liquidity. But on the other hand we
have lots of people signed up who don’t do any business on the site.”
Matthew Canham talked about
Asia Shipping Market, an e-chartering site he is managing director
of based in Hong Kong. Asia Shipping Market deals in dry bulk chartering
only, and does not cover containers and tankers. 80 per cent of the
users are inter-Asian players. The site only recently started
charging people; there are currently 1200 members, with fees of $100
a month per company which uses the system for unlimited use. The company
will be cash flow positive “shortly,” he said. “It is one of the few sites in Asia which is working, growing at
30 to 40 per cent a month,” he said. “At any given time we have 2,000
orders and 700 open cargoes on the site.” The site charges a subscription
charge to access the information on it, and does not follow up how
much of the information actually leads to fixtures. Most of the members
are shipbrokers. “The broker acts as a bridge between the charterer
and the technology,” he said. The main business objective
is helping people to manage the enormous quantities of information
they receive. “Most owners are swamped by useless orders,” he said.
The beauty of Asia Shipping
Market is its simplicity, he said. It does not require that any shipping
companies change the way they do business; they can continue using
the same documents and processes which they are comfortable with.
“They can’t afford to integrate with new technology and are often
against it,” he said. Mike Mudd talked
about Rawmart.com, an online trading network for raw materials, including
agribusiness, chemicals, energy, metals, minerals, plastics and paper,
established by the Noble Group. Mr Mudd is CEO of Rawmart. Rawmart's focus is on integrating the supply
chain for its customers, linking trading of commodities into the transport
chain, building public and private exchanges. "Online exchanges are
a fairly new phenomenon," he said. "They mushroomed last
year, crashed and burned this year. There used to be 2,500, now there's
700, and they're declining by the day. They tried to do too much too soon." Rawmart is linking the maritime
industry into the commodity exchanges, and is in discussion with several
of the e-chartering sites with a view to working out how this might
work. "Ships do exist for cargoes," he said. "Shipping
is a key component in global trade." TradeCard is an online company
originally developed by the World Trade Organisation, to help manage
people's financial supply chains, connecting together all of the parties
involved and helping them to track where the money is going and making
sure all of the money is in the right place. "There's a lot of
working capital being tied up in areas where its not supposed to be,"
she said. "The financial supply
chain is all about giving people the tools and information,"
she said. "Logistics services and financial services are both
important to support trade. Tools to help finances is one of the top
10 initiatives that financial controllers would like to see happening,"
she says. Creating tools to help companies
better manage the flow of finances is a natural follow on from the
process improvements going on in how companies manage their cargoes.
"We look at the financial process that goes with the supply chain
activity," she said. In order to be most effective,
the integration must connect the finances of all the companies involved
in international trade, including shipping lines. "By putting
everyone together you allow the buyer and seller to really work directly,"
she said. George Eddings, partner with
London-based law firm Holman, Fenwick and Willan, talked about the
legal implications of electronic documentation, trying to replicate
a real transaction by a virtual transaction. An example is Bolero's
initiatives to replicate a paper bill of lading with an electronic
document. International law varies about
what is required to indicate that a contract has been agreed. "English
law is pretty informal," he said. "There are no particular
requirements for conclusion of a contract. The few exceptions are
the sale of land and marine insurance, which have to be in writing." Steps are already in place
to change this, he said. "The Electronic Communications Act 2000
allows the government to put in a subsidiary declaration allowing
electronic communication of these messages." "It is important for
parties to know if they have a contract," he said. "Sometimes
parties think they have a contract when they haven't, for example
if a message hasn't been received. If the parties fall out, you need
to know whether the contract has been formed." "Over the years, we've
developed a number of different rules for this. For example, the postal
rule in the UK is that a contract is concluded at the point someone
puts a letter in the postbox. But in the majority of cases its the
delivery rule; a contract is concluded when the recipient receives
it," he said. There is some debate as to
whether a contact concluded electronically (for example by an e-mail
or over the internet) is actually concluded at the point the communication
is sent or when it is received. "The internet is not instantaneous
and the communication doesn't get transmitted in one whole bit,"
he said. Bolero, a secure document
communication service, has developed a sophisticated rulebook indicating
the terms very exactly, which all participants must sign. "You
don't have to worry about offer and acceptance, its already been provided,"
he said. "Bolero is a trusted third party. It can certify that
things have been looked at." "Bolero has a framework
which covers how the registry passes from one person to another. The
buyer will say to Bolero, I've transferred this bill to he bank. This
replaces the situation where the bank is physically holding the bill
of lading." "Whilst Bolero sells
itself as being a cheaper alternative in the long run to paper transactions,
the scheme is still a comparatively cumbersome one. Membership fees have to be paid, the rules are complicated and one
can only deal with fellow members," he said. The cost of issuing a bill
of lading document to a small carrier is very low; it is just a paper
document. There is not a great deal of incentive to pay the joining
fees to Bolero. But it is essential that all of the parties involved
in the chain, shipper, bank, trader, carrier and consignees, are members
for the system to work. "For example if an oil trader is not
a member, you have to find a trader who is or print a bill of lading
out, then the system grinds to a halt," he said. "Bolero replaces the
position of the carrier," he said. "It is appointed the
agent of the carrier, acting as a core registry. The carrier contacts
Bolero. If anyone wants to find out who is concerned with the registry,
if there's any dispute about the holder, they can ask Bolero who the
holder is. A potential problem is that
the concept of passing an electronic bill of lading from one party
to another is legally untried, if the parties fell out with each other.
"Many courts are familiar dealing with paper with bills of lading
but may not recognise electronic documents and the validity of the
transfer," he said. Many shipping lines are currently
offering services to print out bills of lading. "A number of
carriers have authorised particular shippers to issue bills of lading
on their behalf," he said. "That is very dangerous. A bill
of lading makes various declarations on behalf of the carriers about
the cargo." There is a risk that a shIpper
can issue lots of copies of a bill of lading to different consignees,
in effect saying that each one of them owns the same container load
of cargo. "You can't prove the originality of the document,"
he said. "The bill of lading has
4 functions: i) being a receipt for goods, saying goods have been
received by the carrier in particular condition ii) terms of contract
(on the back) iii) title to sue and iv) key to warehouse. If you issue
a bill of lading you have to make clear that terms on it are the ones
which bind you," he said. Mr Eddings talked about @GlobalTrade,
a system developed by US company CCEWeb to manage electronic documents
associated with carriage of goods. @GlobalTrade is based around the
Waybill, essentially a Bill of Lading "light", which is
not a document of title; ie, it does not define who actually owns
the goods, merely serves as evidence of receipt of the goods by the
carrier. As such it aims to avoid what it considers to be the cumbersome
and expensive aspects of Bolero. "Waybills have traditionally
been used in situations where goods have not been sold in transit
or have been sent to an associated company," he said. Offering online container
tracking services is also a bit of a legal minefield, he said. Carriers
have always been very careful not to guarantee that a container will
make a particular arrival time or be loaded onto a particular transhipment,
because there is too much out of their control and the liability of
doing so would be too high. If they provide services indicating where
a container is, it could easily be accidentally construed as such
a guarantee.
DIGITAL SHIP HONG
KONG
Patrick Slesinger, Wallem
Duncan Telfer, China Navigation
Co
Mark Haslett, Wallem Group
The supplier’s perspective
Linda Ho McAfee, iShipExchange
Paul Østergaard, ShipServ
Ken Nelson, Setfair
James Phillips, Ilsmart
Mikal Boe, Telemarine
Martin Taylor, MeCA
Julian Longson, Purplefinder
Herry Lawford, Thomas Miller
Michael Smith, Stratos
CC Tung, OOCL
Container transport
OOCL’s approach
IRIS-2
Data
standards
OperationSmart
Joe O’Brien, Cargosmart
Paul Stephen, INTTRA
Alex Fong, Hong Kong Port
Nicholas Ng, Optimum Logistics
Roger Ingoldby, Cargobiz
Matthew Canham, Asia Shipping
Market
Mike Mudd, Rawmart
Elke Chan, TradeCard
George Eddings, Holman
Fenwick
for free access
to the site.
Digital Ship Ltd, 213 Marsh Wall, London E14 9FJ, UK, tel (+44 207) 510 4935, fax (+44 207) 510 2344, http://www.thedigitalship.com, jeffery@thedigitalship.com