Alphaliner has argued that the container
shipping industry is peculiarly resistant to radical transformation despite the
considerably hype and money spent by freight and logistics start-ups in Silicon
Valley and elsewhere.
The basic contention is digitization has
not been widely accepted as expected in container shipping. Bulk of bookings
for container shipments continues to be made manually and e-commerce
capabilities have not proved so successful even after about 15 years. Even the
entry of Amazon has not impacted the container shipping in any considerable
level, falling short of expectations.
the first generation of shipping portals was launched in 2000, the container
shipping market has not seen any transformative change in the way business is
conducted,” it said.
“The three main multi-carrier shipping
platforms, INTTRA, GT Nexus and CargoSmart, provide only basic software service
solutions to handle cargo bookings, shipping instructions, track and trace and
exception management and reporting.”
It added that attempts by carriers to
create freight e-commerce platforms and marketplaces had “flopped”, while the
partnership between Chinese e-commerce platform Alibaba with a number of
carriers since last year “have generated very little volumes, despite the initial
fanfare”. And a logistics cooperation with China Shipping was launched in 2014,
but was “silent within its first year”.
Alphaliner further argued that the award
of an NVOCC license to Amazon to book freight on the China-US transpacific
route triggered “a stream of speculations on how Amazon could potentially
revolutionize the shipping industry”.
But, it said: “More than a year after
Amazon’s entry, its actual shipping volumes remain very small and the company
has failed to produce any disruptive breakthroughs in the shipping market.”
However, investors and tech analysts
alike have put their money behind a slew of projects, while bankers have
eagerly arranged huge loans for would-be acquirers to consolidate their
position in the sector.
Alphaliner calculates that since 2010
container shipping-related start-ups have raised over $500m from investors,
including an increasingly familiar line-up of names – Flexport, Freightos,
Haven, iContainers. Xeneta, NYSHEX, Clearmetal, Kontainers, Traxens and
Cargobase among them – “while transactions involving shipping-related
technology buy-outs have exceeded $1bn, led by Infor’s acquisition of GT Nexus
in 2015, which valued the company at $675m”.
However, it also argued that none of
these start-ups, while much better funded than tech companies from the previous
two decades, were able properly to meet the challenges that the face the
industry as a whole.
“Each of these new initiatives addresses
specific challenges in the supply chain, but overall they remain fragmented and
lack the ability to integrate all relevant processes.
“Even within their individual focus
markets, actual demand appears to be overstated, and the industry’s poor track
record of embracing change could undo most of the promised benefits these new
digital initiatives are supposed to deliver.”
Alphaliner added: “There is a need to
avoid the hype that some of these new technology providers for container
shipping are trying to advance and examine more closely the practical
challenges they will inevitably face.”
The future of container shipping has
become hotly debated at industry events and in publications such as The
Loadstar, and insiders say what the Alphaliner analysis fails to appreciate is
that “the history of social and commercial revolutions rarely take place as a
result of one specific initiative or incident, but more often due to a
‘paradigm shift’ as described by philosopher Thomas Kuhn“.
And if container shipping were to change
in this way, it is the glaring inefficiencies inherent in the industry that
will force that change, even if it is in incremental steps, because there are
simply so many cost savings that could be achieved by automating a host of
processes, it has been argued.
But Alphaliner countered: “About half of
all bookings for container shipments continue to be made manually, while up to
a third of shipping invoices are reported to contain errors, despite the
introduction of e-commerce capabilities by shipping lines more than 15 years
Indeed, a white paper by SWG, which has
created a freight audit platform for shippers and forwarders, finds that just
17% of invoices issued in the freight industry are correct, with the remaining
83% of inaccurate invoices resulting in the overcharging of freight costs by
SWG founder Steve Walker said: “I really
do think that away from the headlines there is a lot of work going on to
improve the industry through introducing automated processes – but it is also
the case that anyone who thinks they have split the freight atom is clearly