How is digital affecting the shipping industry? To answer that question, we recently surveyed 30 senior managers at leading transportation and logistics companies. As expected, our research revealed that most companies recognize the significance of more accurate and real-time visibility across the entire supply chain (aka “connected shipping”). Consequently, many are beginning to adopt e-commerce, with the goal of fully automating shipping processes such as rate comparisons, shipment booking, vessel schedules, documentation and freight payments.
But many executives are proceeding cautiously on these initiatives, citing the following reasons: Increased reliance on shared data providers, the need for IT infrastructure to maintain real-time connections among all parties and the struggle to balance the conflicting priorities of running successful shipping companies while keeping an eye to the future.
Five Key Findings
When planning, developing and implementing initiatives for digital transformation, respondents (who work for companies with revenues of between $100 million and $10 billion) prioritized the following:
Digital is more than a buzzword.
Almost every shipping company is pressured to become digitally enabled and improve how it interacts and transacts with customers, competitors and shareholders.
E-commerce is big.
More than 65% of respondents had either implemented or are going live with e-commerce platforms; 25% were still gathering information. Interestingly, only 10% were in the R&D stage. Most (57%) prefer to adapt and customize packaged software than build in-house (see interactive Figure 1 below for details).
Collaboration is necessary.
While there is no “one size fits all” solution in shipping, the industry can reap many benefits from an automated, collaborative e-commerce platform that allows businesses to access and share accessible, high-quality, timely information.
Customer experience is the focus.
The ability for customers to have supply chain visibility (55%) and on-the-go information access (48%) are seen as key market differentiators.
Full automation is the goal.
Currently, most aspects of the order-to-cash cycle are semi-automated. This is an opportunity for shipping companies to plug gaps, further reduce manual dependency and enable more seamless processes.
All respondents made it clear that they cannot remain indifferent to e-commerce. While 17% agreed that e-commerce is now critical to their business today, that percentage rose to 73% when viewed over the next three to five years. That said, many are proceeding cautiously due to the large investment required and uncertain speed of return on investment. Additionally, most shipping companies have competing priorities, such as procuring vessels, containers, material-handling equipment and other capital-intensive purchases that take precedence over IT investments. Balancing these concerns is clearly an imperative.
Furthermore, nearly 60% of respondents acknowledged that a lack of standardized processes had led to manual, inefficient processes across the value chain. Data quality was a concern for 17% of respondents, while 13% cited personnel training and development as an issue. To overcome these challenges, many respondents use a single e-commerce platform to enable all shipment participants to share and view information from platforms such as Inttra and GT Nexus.
In our view, transportation companies must develop a connected shipping strategy and business plan, backed by a separate budget and performance measures in areas such as customer retention, operational efficiency, trade lane development and cost leadership. Failure to do so will only result in competitive stagnation. The good news is that participating respondents were confident that external advisors and vendors can help them overcome their two greatest needs: adequate IT infrastructure and e-commerce implementation skills.
In part two, we’ll examine additional insights from our executive survey and detail specific next steps for success.