Digital Shipping Platforms Cutting $684 Million ErrorsIsaac Arnsdorf
The shipping industry, which carries 90 percent of world trade, is finally going digital.
Until recently, if you wanted to send a couple pallets of television sets from Hong Kong to New York, you had to place your order over the phone with a human on the other end. Those humans make mistakes about 20 percent of the time, costing $684 million a year, according to Ocean Audit Inc., which examines invoices for retailers such as Macy’s Inc.
To cut this waste, customers and ship operators can now use digital platforms offered by Freightos, Amber Road Inc. and Inttra Inc. or by carriers including A.P. Moeller-Maersk A/S that make booking international freight as easy as reserving a hotel room or buying a sweater online.
“As an industry, I wouldn’t pride ourselves on being at the forefront of technology,” Carsten Frank Olsen, a senior director responsible for Maersk Line’s commercial business processes in Copenhagen, said in a June 12 phone interview. “To the extent that we can automate processes, we can speed up the processing time and make more accurate booking confirmations and invoices.”
Solutions range from shippers developing their own software to independent companies trying to make booking freight more like buying a plane ticket.
Zvi Schreiber, a British-Israeli software entrepreneur, created Hong Kong-based Freightos in 2012. He says he asked 15 companies in February how much it would cost to ship a couple pallets of cookware, clothing or electronics from China to New York, most of them took more than a week to reply.
About 160 million containers filled with goods crossed oceans last year, 13 percent of them bound for North America and 21 percent for Europe, according to London-based Clarkson Plc, the world’s largest shipbroker.
The ocean shipping industry hasn’t fully made the changeover because a single transaction usually involves multiple companies and jurisdictions with their own rules and procedures. Shippers prefer to keep privately negotiated rates secret, unlike airlines that publish fares.
Spokesmen for the World Shipping Council and the Transpacific Stabilization Agreement, trade groups representing shipping companies, declined to comment.
Maersk now takes about 87 percent of its orders electronically, up from about 80 percent for the past four years, according to Frank Olsen. About 40 percent of bookings on Maersk’s website are confirmed in 5 minutes to 19 minutes, and 90 percent are finished within two hours, a “significant improvement” from a year or two ago, he said.
In most cases, shipping a box load of goods around the world remains a time-consuming and labor-intensive process. Orient Overseas International Ltd. acknowledges online inquiries within 24 hours and then employees continue the booking process, according to Stephen Ng, the Hong Kong-based company’s director of trades.
Existing customers usually contact their account managers directly, Ng said in a June 9 e-mail. As companies develop their own approaches, it may be difficult to establish a uniform system, he said.
The current system is too prone to error, according to Steve Ferreira, founder and president of Miami-based Ocean Audit. “We need to be concerned about this because it’s a huge drain on our economy,” he said in a May 27 telephone interview.
Ocean Audit reviews invoices to find mistakes in customers’ favor, taking 50 percent of the savings, Ferreira said. Other startups seek to stop the discrepancies before they happen.
The biggest is Parsippany, New Jersey-based Inttra, whose network now processes 22 percent of all containers shipped globally, according to Sandra Moran, chief marketing officer. The company began 13 years ago as a collaboration among the largest shipping companies, she said in a May 30 phone interview.
While Inttra shows quotes from multiple carriers, Amber Road’s service plugs in the terms of a company’s negotiated contract, Ty Bordner, vice president of solutions consulting based in McLean, Virginia, said in a May 30 phone interview.
That allows users such as Honeywell International Inc. and GlaxoSmithKline Plc to enter the cargo, origin and destination, push a button, and see all the available rates and schedules according to their contract, he said. They can also book directly through the software.
“Just like you and I would do on a travel site, you say, OK, I want to go that one,” he said. “These contracts are an inch thick sometimes if you printed them out on paper, so without a software system to help a user discern what’s the best way to move from point A to point B, you can’t look through a contract to do that.”
Amber Road, based in East Rutherford, New Jersey, and Freightos include air and ground transport too. Schreiber compared his service’s route options like driving directions on Google Inc.’s Maps. The company now has more than 20 vendors who pay $50 per user per month, he said.
“The shipping industry is at least a decade behind,” he said in a May 28 phone interview. “There are more complicated things in the world that the modern computer can handle.”