Digitalising the supply chains increases transparency and gives rise to new operating models in the logistics industry.

Digitalisation, accelerating fast, has revolutionised many aspects of commerce and industry over the past few years. Exploiting the possibilities that digitalisation offers is a strategic objective for Steveco, which is presently driving a large-scale digitalisation project aimed at taking the company’s services to a whole new level.

“We can see a decades-long IT development arc in port operation that is still going on,” says Ari-Pekka Saari, Deputy Managing Director, Steveco. “So far, though, we haven’t seen a revolutionary disruption in business models – there is no Uber for cargo containers yet, although that doesn’t mean one might not emerge from somewhere.”

Steveco has been a forerunner in port IT for decades, and EDI messaging has been an everyday phenomenon for a long time. In recent years, the volume of messages has grown exponentially, which requires increasingly tight integration into customers’ data systems. “As far back as the late 1980s, we realised that our business moves as much or even more data than goods. We have been a forerunner in this area in Finland, and we can genuinely provide IT expertise that others don’t have. First and foremost, of course, we are a logistics company, but even Finnish companies have purchased expert IT services from us,” Saari says.

Making use of digitalisation can be seen in all of Steveco’s main business areas. On the stevedoring side, equipment management and maintenance are central operations that have been digitalised to allow equipment manufacturers, for example, to monitor the servicing needs of machines more accurately than before. In forwarding, the company has introduced an electronic reporting system that makes the management of transporters significantly faster.

Digitalisation, however, makes its biggest mark in shipping services, an area that has experienced great changes from previously used methods. “Earlier, a shipping agent boarded the ship with a big briefcase and took a hundred signatures on various forms from the ship’s master. These days, all reports to authorities and cargo data are handled electronically, and in advance,” says Saari.

From paper forms to blockchain

The future will see even broader changes in traditional shipping operating models. “In practice, this means renewing principles of marine law in relation to shipping documents that are hundreds of years old. For example, the Bill of Lading is a central cargo document that has traditionally been issued in three original copies, and only the holder of an original document has been entitled to receive the cargo. Paper documentation in a matter like this, of course, is not today’s way of doing things.”

One of the most frequently emerging concepts in digitalisation is blockchain, which is expected to revolutionise commerce, industry and global logistics. Blockchain is a dispersed, public, peer-to-peer maintained and encrypted method of recording digital events such as trading transactions.

In the logistics industry, expectations for blockchain are high. This is because it can enable faster and more cost-efficient supply chains where, for example, all certificates, permissions and transport data are available to all parties in real time and in verifiable form. In August 2018, Maersk and IBM announced their collaboration in introducing blockchain technology to the logistics business. Close to one hundred companies and other organisations, from port operators to customs authorities have already joined the TradeLens platform developed by the two companies.

Heading towards the next big revolution

Over the decades, maritime transport has taken great strides going from one development step to another. The shift from piece goods to containers revolutionised shipping in its time. Will digitalisation mean the next big, similar change in the industry? What will port operations look like in future?

Ari-Pekka Saari thinks that the biggest change will become apparent only in the long term. “After five years, this business will probably look much the same as today. We will certainly have smarter tools for work planning, and equipment is constantly renewing. I doubt, though, that we will have seen a radical change in logistics by that time. After twenty years, however, we may be looking at a whole new situation.”

The wildest visions even foresee maritime transport becoming obsolete if 3D printing enables users to build products and equipment directly. “Equipment and applications will certainly become smarter, but even if 3D printing becomes a significant factor for the manufacturing industries, it won’t change the fact that physical products and raw materials must be moved from one place to another, even in the future. The need for cargo transport will probably never disappear – rather the opposite is more likely,” he predicts.

In logistics chains, the change brought about by digitalisation is often visible in the form of increasing transparency, but it can also be seen in tightening competition. “The disruptions will probably take place somewhere other than Finland, but here we have the opportunity to be forerunners in technological innovation,” Saari says. “In Finland, the logistics volumes are small on a global scale, but we do have the capabilities and the attitude to be pioneers, if we have the resources to invest.”

Elsewhere in the world, ports and warehouses are quickly becoming automated, and autonomous ships have become a hot topic in maritime digitalisation. Finland is doing pioneering research and product development in this area, and digitalisation is a strong factor in determining where the big actors are heading. “Many companies that are traditionally known as manufacturers of maritime technology are quickly transforming into IT integrators offering digital services, and they are presently hiring hundreds of coders for new projects,” Saari points out.

Steveco is keeping its finger firmly on the pulse of digital development, and the company is closely following what is happening globally. Instead of fanciful future visions, though, they are mostly looking to provide concrete benefits to customers and to deliver even better service.

“During the year, we have evaluated our operations in detail and looked for processes that we should pay particularattention to,” says Saari. “How can we identify those silent and a little louder signals that indicate what is happening around the world? Is there a new idea coming from our industry or somewhere else that we should embrace? The focus should always be on talking with customers and listening to their needs from their business viewpoint. That’s exactly why we are in the business.”

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Flexport modernises the logistics industry

The Californian company Flexport is an example of a new-generation logistics operator. Founded in 2013, they offer a novel service model, making real-time, internet-based tools available for following shipments everywhere in the world.

The company does not own any physical assets. Instead, its business model builds on combining existing transport connections more efficiently through digital means. Currently, Flexport employs 600 people, and its primary operational focus is evident in its recruitment effort to hire dozens of new software developers.

www.flexport.com

Text: Thomas Freundlich
Photo: Jukka Malm