Market data will be the next digital revolution in shipping


Posted on Sep 3, 2021 4:23 PM by

Dmitri G. Vassilacos

It may be surprising that the shipping industry has been relatively stable since WWII, income volatility aside. The major problem for the industry has been to manage the availability of tonnage to meet cycles of demand. Ships have gotten bigger, but their design and capacity has generally been more evolutionary than revolutionary.

Today we are on the cusp of a new revolution, and it will come in the form of data – not the operations-driven ‘big data’ solutions that industry insiders are talking about today. , but market data. The majority of industry discussions pay little attention to this topic.

Shipping companies have always thrived on confidential information and personal relationships. There are a few types of data available to all stakeholders – for example, weather conditions – but shipping groups rely on confidential information about upcoming increases in raw material production or the availability of cargoes at one location. specific. These exclusive insider links have traditionally been a source of significant difference in the financial performance of every shipping company, and they can be a defining part of the business, especially during weak markets. This is an area in which many family businesses have excelled.

Today, in an age when little remains hidden under the sun, it is becoming increasingly difficult to gain an advantage based on a constant flow of private information. Instead, access to data crunched intelligence is becoming increasingly relevant to business management decisions. Beyond relating industry-related data points to known causal relationships – for example, the relationship between upstream production and downstream cargo volume – some companies use datasets that do not appear unrelated, revealing new correlations through data analysis. This is what Big Data is. You could even say that in the future the game will no longer be about ship management, but data management.

This “information revolution” is likely to have multiple effects on the way maritime transport operates. For starters, while shipowners have proven themselves to be great at managing ships, there are many non-maritime entities that handle data better than any maritime operation, no matter how sophisticated. Some of them (think Amazon) rely on shipping as a fundamental part of their business, and one could easily predict that they would storm specific sectors of shipping in the process of integrating their own chain. valuable.

Shipping – a niche business by global standards – might succeed in developing industry-specific ‘data management champions’, but that would be a difficult feat. Scale is extremely important in data management. Although such sector companies are already developing, it can be difficult for them to remain independent for long.

The skills and resources required to develop a data intensive business are very different from those required to manage or own vessels. This is such a different business that instead of following the pattern of other asset-heavy industries – like aviation or hospitality, where the separation between ownership and asset management has occurred. decades ago – the main segments of maritime transport can go further and opt for a division into three of the company. It might look like the following separate functions:

  • Very few ultra-large data managers, sitting at the top, compiling data and selling information for business management purposes.
  • A group of third-party ship managers seated directly below, providing the ship management service.
  • More institutional investors (and some of the existing private companies) acting as non-operating shipowners.

The industry may develop in a different way, but the information revolution is unlikely to leave shipping in its current form. As in all major changes, this transition is likely to offer plenty of opportunities for the smartest players – but it is also likely to give shipping giants good value for money, even if they seem today. untouchables.

Dimitri G. Vassilacos is a partner at Ship Finance Solutions (SFS), a financial consulting firm specializing in the maritime transport sector. Previously, he held various positions during a 20-year career in the banking industry, including Managing Director and Head of Greek Shipping at Citibank and Director of Shipping Division at National Bank of Greece.

The opinions expressed here are those of the author and not necessarily those of The Maritime Executive.

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