Dharmendra Singh and Ashok Bafana take a look at cloud computing in the shipping industry
As an instrument ofglobal trade, the fortunes of the shipping industry naturally mirror the ups and down of the global economy. With the establishment of the World Trade Organization in the early 1990s, a truly global marketplace became a reality. As a result, the shipping industry flourished. An increase in demand for shipping across continents and the subsequent increase infuel costs led many big shipping companies to order and operate bigger ships with bigger capacities, which were not only more fuel efficient but also provided greater economies of scale. For example, in the early to mid-2000s container ships with a capacity of 15,000+ TEUs (Twenty Feet Equivalent) were launched.
However, the economic downturn of 2008-09 and subsequent drop in demand led to an oversupply of carrying capacity. On top of that, the average capacity of ships built in last three years has been in the range of 19,000 TEUs, thus exacerbating this oversupply of capacity.
While 2014 witnessed somewhat of an improvement in the industry; shipping companies are still trying to control their capital expenditure. Although fuel prices have decreased lately, there is still volatility in the market and there is pressure on the shipping lines to improve their bottom line by controlling capital expenditure and optimising operational expenses.
Cloud in shipping
One of the biggest changes in the IT industry in recent years has been the widespread adoption of cloud computing. It has lowered costs, allowed huge computing scale and is enabling other innovation such as big data and the Internet of Things.
Given that the shipping industry is under pressure to reduce its capital expenditure, cloud computing is a natural fit for the industry. Despite this, the shipping industry has been a little slow in cloud adoption.
The basic diagram on the right depicts how cloud computing looks in practice when applied in the shipping industry. Data and information flow seamlessly between shipping offices, fleets and suppliers (throughout the shipping and logistics chain – from intermodal suppliers to stevedoring suppliers at port). It also provides ubiquitous access to an organisation’s systems through multiple channels including the web, desktop computers, laptops and mobile devices.
There are a number of significant benefits for companies implementing this kind of model in the shipping industry. For instance, the complex world of maritime, commerce and shipping is characterised by multiple teams and vendors spread across global locations. Cloud computing can provide a much needed single and shared view of shipping activities across the globe. A common shared resource pool on cloud also enables greater real time collaboration between different stakeholders, thus reducing the complexity and execution time of shipping processes.
The elastic nature of the cloud computing also allows for the ramping up and ramping down of computing power as needed, therefore equipping shipping companies with better control of ondemand resources.
Real-time data collection and analysis, supported by the cloud, also has wide applicability in shipping. For example, it can enable real time analyses of fuel consumption, slot capacity management, re-routing of cargo and ships to overcome the constraints such as network congestion and at transhipment ports.
Perhaps the most important benefit for shipping companies is the fact that they no longer need to invest in buying non-core assets – in this case onsite servers and associated hardware – and instead can leverage cloud computing, in a payper- use model. This frees up much needed capital which can be used instead for core shipping assets such as hiring staff, leasing ships or buying fuel or go towards much needed working capital.
Looking to the future and particularly to the coming revolution of the Internet of Things, there are many examples of how cloud could benefit the shipping industry. For example, it could enable remote monitoring of assets, such as ships and containers, and more importantly of shipment and cargoes. Refrigerated containers and temperature controlled cargoes of perishable commodities and chemicals can be remotely monitored through on-board sensors providing for immediate and timely response to fluctuations and failures. This reduces the operational cost and hassle of manual inspections.
So, cloud computing has wide applicability in the shipping industry, and proper implementation of this revolutionary technology can enable operational transparency, effective execution of processes, lower overall costs, integrated technical management of the fleet and management of the supply of ships and cargoes.
What should organisations do now?
To capitalise on cloud technology, companies should adapt their people, infrastructure, and processes. The key to a successful use of cloud services lies in the choice of the right cloud and the right deployment for the organisation. For a shipping organisation to identify what it requires from the ‘cloud’, the organisation should conduct an evaluation as to which processes, systems and data can be moved to cloud and understand the benefits that would be gained from doing so, and prepare a subsequent roadmap for cloud adoption.
(Ed’s note: For a more indepth look at Cloud-based ERP.)
Dharmendra Singh is Global Head of Solution Definition for Travel, Transportation & Hospitality vertical, Wipro Limited; and Ashok Bafana is Managing Consultant, Domain Consulting Group, Travel, Transportation & Hospitality vertical, Wipro Limited. Wipro Ltd is a global information technology, consulting and outsourcing company with 160,000+ workforce serving clients in 175+ cities across six continents. The company posted revenues of $7.6 billion for the financial year ended Mar 31, 2015. www.wipro.com