Get Ready to Hear this More Often – AI is Today’s Biggest Competitive Advantage in the Container Shipping Industry
From losses to gains – this is the golden age for carriers
“Way behind other industries, the container shipping industry has a lot to catch up on when it comes to digitalization, IT system’s modernization, automation, and smart technologies,” says Eyal Ben Amram, Chief Information Officer at ZIM, one of the world’s top 10 leading container carriers.
Once reluctant to adopt new technologies, the global container shipping industry is now opening its gates to Artificial Intelligence and other advanced technologies in the hope of reducing operational costs and improving well-deserved customer experience. With more than 80% of the world’s goods being carried by ocean shipping (estimated at $4 trillion yearly), this seems like a blessed, necessary change.
Eyal Ben-Amram, ZIM’s CIO, has been leading the implementation and adoption of advanced technologies across the company’s tens of branches all over the world. After lagging behind other industries’ leap into digitalization and smart technologies, it seems now is the golden time for the global container shipping industry, but what does this journey really entail, and how much business value can be derived from AI and other advanced technologies? Ben-Amram thinks business benefits are already in place, and this, he believes, is only the beginning.
But in order to understand how the practical application of AI, ML, IoT, and other smart technologies impact the business bottom line, we need to start with today’s most significant challenges in the industry –
Challenges in Global Container Shipping Industry Today
For nearly a decade now, the carrier industry is suffering losses, mainly due to its inherent structural capacity surplus: carriers around the world have acquired bigger ships in the purpose of achieving better operational efficiency per container. However, while global demand for shipping goods is constantly on the rise, it’s still not fast enough to catch up with the excessive supply in the industry. This process had naturally induced lower prices, which in turn had forced a few of the biggest global carriers to either merge with others or simply go bankrupt.
But that’s not all; as mentioned above, since the global container shipping industry has lagged behind technologically for too many years, its operational workflow is lacking accuracy; poor logistics efficiency, no end-to-end visibility in the supply chain, and wasteful expenses.
“Predictive analytics, Big Data, or optimization models were a long way from entering the container shipping industry. It is only just recently that these digital platforms and smart technologies have started drizzling into the carriers’ world,” says Ben-Amram.
In this reality, it’s clear that technology-driven management by transformative technologies such as AI, ML, IoT, and blockchain is vital to reduce expenses, increase efficiency, and improve carriers’ ability to deliver
Leveraging AI and smart technologies to gain the competitive edge
Though not one of the biggest carriers in the world, ZIM is one of the top 10 leading carriers, and it specializes in niche markets. As such, it is vital for the company to develop its own competitive advantage in order to stay in the game. “We wanted to start leveraging smart technologies in our core systems to offer our customers the same kind of fast, interactive, and easy-to-use service they are used to getting in other industries.”
“Smart technologies, and Artificial Intelligence in particular, are the users’ eyes and ears. Management and the entire team should be able to monitor the company’s performance across different sections to gain real-time visibility and view the big picture while also be able to drill down, identify ongoing problems, and find root causes to fix them as quickly as possible.” This was all difficult to achieve with the capabilities of BI tools and traditional industry KPI, which were only capable of reporting past events.
“But the real difference lies in AI’s ability to provide anomalies management through real-time alerts,” says Ben-Amram. “In a standard KPI system, you need to analyze the reports, identify the anomalies, and decide where you want to drill down to find the problem. But with the Machine Learning-based AI solution that we are now using with Okapi, you don’t have to look for the anomalies; they are given to you on a silver platter via personalized push notifications.”
This carries significant business benefits. Here’s how –
A major part of improving customer service and user experience lies in giving customers the freedom to get the information they need independently, without having to wait in line or talk to representatives. With AI push notifications, customers can be notified on their mobile on anything from schedule and ETA changes to the temperature of their refrigerated cargo.
The data gathered and analyzed through AI and ML algorithms allows carriers to optimize their travel times and better plan the resources needed for moving cargo. A good example here is how predictive analytics can assist in the infamous repositioning trips of empty containers costing carriers hundreds of millions of dollars a year: machine learning algorithms were already shown to more accurately predict future chassis demand. This results not only in lower repositioning costs, but also in reduced environmental impact by the elimination of unnecessary chassis repositioning trips.
But AI is also about enabling better response time in case of an ongoing event: in the world of container shipping, the chances for unexpected events such as unpredicted weather changes or employee strikes are extremely high. That’s why the ability to react in real-time to minimize the damage is critical. This is where AI can be a vital tool, enabling a quick recovery by providing the right solutions on time, such as finding alternative routes, alerting on scheduling changes,
Costs are also reduced as a consequence of improved equipment maintenance: AI notifications can alert on anomalies in smart containers in real-time, thus enabling faster response times and preventing both equipment break-downs and damaged goods.
When supply and demand are better predicted, and prices are tailored to meet the market’s current demand, cash flow is better managed and revenues can be optimized. Improved customer service, on the one hand, faster time-to-resolution on the other, and real-time visibility to fix anomalies on time, all enable better planning of travel times and resources, ultimately resulting in reduced costs and higher revenues.
Best practices for quick implementation and high adoption rates across the organization
So how can the industry take that leap to smart technologies implementation with its legacy systems and outdated KPI tools? Ben-Amram thinks that the more the solution is simple and intuitive to use, the easier it’ll be for the employees to adopt it in their daily tasks. But even more importantly, he says, it has to come from the top down: “It all starts with management; once they start using the insights AI solutions are giving them on a daily basis, the rest of the organization will soon follow.”
AI capabilities and other advanced technologies provide executives with the ability to predict where their business is going by identifying trends and gaining visibility in real-time. Ben-Amram has already begun to see real business value from the smart solutions he had integrated across ZIM’s systems, and considers AI and other advanced technologies as today’s biggest competitive advantage in this field.
Read more on the practical advantages of AI for operational excellence