Tech-Driven Innovation Transforms The Shipping Industry
(coauthored with Han Bao, senior research associate)
As we enter 2020, talks of recession are widespread. This is scary for all industries and in particular for shipping, as its fate is tightly linked to the health of the global economy. In recent years, we have seen distorted supply and demand, weakening global GDP growth, and geopolitical uncertainties, all causing decline in container ship volumes, but also mergers and acquisitions and bankruptcies that have affected the landscape. The shipping industry is in need of a transformative force to overcome challenges from macroeconomic woes while generating new growth opportunities.
Orient Overseas Container Line (OOCL) is one of the leading ocean carriers. Throughout the firm’s 25-year transformation journey, technology has played a significant role, and CargoSmart was created to provide and enhance the firm’s tech capabilities. Recently, my colleague Guannan Lu and I had the chance to speak with Steve Siu, CIO of OOCL and CEO of CargoSmart. This is what it takes to transform a traditional business like OOCL:
- Continuously experiment with emerging tech to drive business breakthroughs. Increasing demand for precise, real-time cargo visibility and operational optimization requires OOCL to actively invest in and experiment with technologies such as the internet of things, big data, real-time processing, advanced analytics, and machine learning. And this is what Forrester defines as technology-driven innovation: an advanced discipline of rapid technology experimentation to unleash disruptive changes.
- Expand customer obsession to the entire ecosystem. As the transformation moves from OOCL to the entire shipping industry, the focus has shifted to understanding the pain points of shippers’ customers and the different stakeholders participating in the global supply chain network, as well as design solutions and systems that collectively improve the performance of the industry and of each stakeholder.
- Develop talent as much as developing new tech innovations. New tech innovations require talent to build and operate these systems. As the existing talent pool is not yet ready to take on advanced systems, helping logistics experts become comfortable with increasingly automated systems and helping tech talents develop a fine understanding of supply chain processes become crucial to the success of the transformation.
The tech-driven innovations helped OOCL improve its operational efficiency, for instance by reducing bunker consumption while accelerating vessel sea time. The innovations also helped OOCL generate new revenue streams with insights services.
If you are interested in learning more about this story, please read our report, “Case Study: Tech-Driven Innovations Transform Global Shipping.” If you’d like to share how your company is transforming via tech-driven innovations, please reach out to Guannan (email@example.com).