maritime operations and new business models elaboration · maritime operations and new business...

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS

Maritime Operations and New Business Models Elaboration

G. Keradinidis1, D. Aidonis2, I. Manikas3 1 TotalView, Athens, Greece

2Department of Logistics Alexander Technological Educational Institute of Thessaloniki, Katerini, Greece

3Department of Systems Management and Strategy, University of Greenwich, London, United Kingdom

1 [email protected], [email protected], [email protected]

Abstract

This paper aims to present and analyze operations and relationships between the different types of partners in the maritime ecosystem, present technological and business barriers for establishing a formalized common framework and evaluates the possibilities of applying modern business models to build such one. Over 15 different major types of partners are strongly involved in maritime procedures and although there is an enormous volume of information (structured and unstructured) been transferred, only in specific cases vertical or horizontal collaboration exists. Thousands of stakeholders geographically dispersed all around the globe, with high volume of transactions and amounts, complicated procedures and supporting documentation is the nature of maritime business. Security, competition, financial depression, complexity, procedures and documents diversity, communication problems are some of the problems analyzed and identified. At the last part of paper an evaluation of business models like “Long Tail”, “Network Effect”, “Freemium” and modern IT technologies like Cloud, GIS, Satellite Imagery, SaaS, Paas and “Big Data” is applied to the field.

Keywords: maritime, business models, information technology.

1. Introduction-The Business

Maritime transportation from the beginnings of human history has been one of the cornerstones of domestic and international trade and business. It is estimated that 90% of World Trade travels by sea, US$ 500 billion is the revenue generated by the maritime industry for the world economy, and 14 million is the number of people employed in the maritime industry. An overview of main routes and volumes is presented in the following diagram. Figure 1. UNEP/GRID-Arendal (2009) Trade overview of main routes and volumes


Mostly the financial-taxation regulations, is the reason for an interesting phenomenon in the industry, were

• the country of real owners company or person, • is different from the one of the company officially owning the ship, • that is different from the flag state declared.

The next two tables from United Nations Conference on Trade and Development (2011), REVIEW OF MARITIME TRANSPORT 2011 report demonstrate the figures and give an idea of the global importance of the sector. Figure 2. Number of vessels and tonnage by country of ownership


Figure 3. Number of vessels and tonnage by flag of registration

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS 2. Parties - Who is Involved

The industry of maritime transportation is a place that provides employment to millions of people that provide a wealth of services. In general the parties involved can be organized in some rough categories like:

• Build and operate partners • Technical partners • Commercial partners • Port Operations partners, and last but definitely not least • Onboard ship people, Officers and Seafarers

Figure 4. Maritime parties overview

The teams and their key partners are explained in brief, in the next pages. More detailed information can be easily retrieved from various sources.

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS Figure 5. Build and operate partners

Ship Sale Broker

University Naval Architect

Bank & FinancialServices

Owner Operator

International Shipping Organizations

Classification Society

Flag State

Shipyard

The most important party of Build and Operate team is the Operator. A Ship Operator is expected to be master of all trades relating to operations. Responsible for managing vessel performance, bunkers quality and quantity pricing, and ship routing, a good ship operator will have a keen eye on every element of a ship’s operations chain. That could also include supervising and monitoring ship insurance, commodity insurance and charterers’ liabilities, all the while calculating and monitoring general average, supervising the planning of cargo intakes, liaising with regulatory bodies, maintaining customer contact, negotiating claims, responding to problems and working closely with the financiers. Ship operator also need to understand charter policy, understand ships’ specifications and performance, have good knowledge of legal and insurance terms, and preferably knowledge of the cargo that he/she plans to carry. Classification societies are non-governmental organizations that set and apply design and construction rules during construction to ensure that vessel’s structures and their Shipbuilders comply with those rules. On delivery of a ship, classification societies institute a program of frequent inspections and Surveys during the working lives of ships, to check that their structures remain safe. Many nations have their own classification societies working closely with the Flag State of that country. However, the ten leading societies are all members of the London-based International Association of Classification Societies (IACS). Many Marine Insurance underwriters insist that vessels be classed by an IACS member as a condition of cover. Owners, Charterers and others including Classification Societies, Insurers, P&I Clubs and even marine surveyors and shipbrokers join or federate together in International Shipping Organizations to further their common purposes or to provide a unified body for lobbying strength, perhaps at IMO, the specialized United Nations (intergovernmental) agency mainly overseeing Marine Safety and Pollution Prevention. A specific type of shipbroking sees the broker acting as the intermediary between the buyers and sellers of ships. The Ship Sale & Purchase Broker,

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS as he/she is known, will discuss opportunities and market trends with shipowners, report on sales, value vessels, calculate freight earnings, advise on finance and try to find ships for specific employment opportunities.

Table 1. Shipping Organizations

Shipping Organizations

BIMCO

Baltic and International Maritime Conference

World’s largest shipping Organization with broad membership. Functions include a representative body, advice service to members, and publishing of standard charterparty and sale & purchase documents.

Baltic Baltic Exchange Shipping market in London, for shipowners, brokers, agents, managers and operators, particularly those in bulk market

BIFA British International Freight Association

Representative body of freight forwarders and the operators of road, rail, maritime intermodal and air freight services. Supports a code of conduct for members, training programmes, lobbies governments and publishes standard freight forwarding agreements.

BSC British Shippers’ Council

Represents the interest of shippers using air and sea transport

CoS

Chamber of Shipping of the United Kingdom (The)

Represents the interests of British shipowners and ship managers. Covers all issues on British shipping and its various sectors. The CoS was a principal proponent for the development of the UK’s Tonnage Tax.

DfT Department for Transport

Ministry responsible for transport in the UK, including shipping. Certifies and monitors the training requirement of tonnage tax companies.

ICS Institute of Chartered Shipbrokers

International body based in London, offering professional qualifications to shipbrokers (FICS and MRCS)

IACS

International Association of Classification Societies

Representative body of classification societies, based in London

INTERCARGO International Association of Dry Cargo Shipowners

Representative body for bulk ship owners, particularly Greek. Based in London.

INTERTANKO

International Association of Independent Tanker Owners

Representative body for about ¾ of the independent tanker fleets. Issues a number of standard documents for tanker operators. Based in Norway.

IAPH International Association of Ports and harbors

Worldwide association for ports and harbors to promote the interests of members.

ICC International Chamber of Commerce

Representative body for the promotion of international trade, based in Paris. Sponsors the International Court of Arbitration and the International Maritime Bureau.

ICS International Chamber of Promotion of the shipping industry worldwide.


Shipping

IMB International Maritime Bureau

International crime fighting bureau for maritime matters. Sponsored by the ICC.

IMO International Maritime Organization

The only UN Organization headquartered in London, concerned with maritime issues, particularly safety and pollution. Promoted the Convention on Safety of Life at Sea (SOLAS), as well as other international treaties and standards. All ships now identified by their unique IMO number.

ISMA International Ship Managers Association

Association for ship and crew managers. Promotes the ‘ISMA Code’ of standards for ship management.

ISSA International Ship Suppliers Association

Representative body for the suppliers to ships, based in UK.

ISF International Shipping Federation

The federation of shipowners dealing with matters concerning employees.

ITF International Transport Workers’ Federation

Federation of transport workers’ unions, based in London.

LTBP London Tanker Brokers’ Panel

Independent body of shipbrokers to act as adjudicators of charter rates for tankers. Decisions recognized by tax authorities as acceptable for transfer pricing. Publishes monthly the Average Freight Rate Assessment (AFRA) of rates for standard voyages.

MCA Maritime and Coastguard Agency

Executive agency of Dft, formed from the merger of the Maritime Safety Agency and the Coastguard. Responsible in the UK for ship registration, seafarer certification, maritime safety, and port state control of foreign ships.

MTT Maritime Training Trust

Trust set up to administer training of seafarers from PILOT payments received under the training requirement.

Mission to Seafarers

Seafarers’ spiritual and material welfare Organization, headquartered in London.

NUMAST

National Union of Marine, Aviation & Shipping Transport Officers

Trade union for masters, officers and cadets.

RMT National Union of Rail, Maritime and Transport Workers

Trade union for ratings.

SIGTTO

Society of International Gas Tanker and Terminal Operators

Trade association for liquefied gas tanker and terminal operators.

The Salvage Association

International Organization based in London for loss adjusting and surveyor services in connection with salvage and repairs of ships.

UKOOA UK Offshore Operators

Representative body for UK offshore oil and gas industry.


Association

Table 2. Classification societies

Classification societies ABS American Bureau of Shipping BV Bureau Veritas (France) CCS China Classification Society DNV Det Norske Veritas (Norway) GL Germanischer Lloyd (Germany) HRS Hellenic Register of Shipping IRS Indian Register of Shipping KRS Korean Register of Shipping LR Lloyd’s Register of Shipping (UK) Class NK Nippon Kaiji Kyokai (Japan) PRS Polski Rejestr Statkow (Poland) RINA Registro Italiano Navale (Italy)

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS Figure 6. Commercial partners

Seller Byer

Shipper Freight Forwarder Recipient

Cargo

ChartererCargo Broker

A Freight Forwarder is an individual or company that arranges the safe and efficient shipment of goods via common carriers, airlines or road and rail freight operators to international destinations. Acting as a transportation coordinator, a freight forwarder will source the best form of transport to get goods where they are needed on time. Typical freight forwarding activities could include arranging packing, delivery and warehousing of goods; obtaining, checking and preparing documentation to meet worldwide regulations; arranging insurance and assisting with claims; and dealing with special arrangements for transporting delicate cargoes, such as livestock and medical supplies. Freight forwarding companies vary greatly in size and type, with operations on a regional, national or international level. Charterers are the controllers of cargo and the shipping industry’s customers. Almost everyone relies in their daily lives on products that charterers transport by sea. They are a diverse group – ranging from the world’s largest oil companies, to mining concerns, international commodities traders and grain houses. They deal in almost every commodity – from raw materials such as iron ore, bauxite, grain and Crude Oil to highly refined products such as aviation fuel and petrochemicals. Some charterers own ships themselves, either on a leased or permanent basis, chartering vessels from independent ship owners when the need arises. This is often a strategy to hedge against rising future freight markets. However, most charterers regularly hire ships, or space on ships, to move their goods, products and even passengers. Dry commodities are shipped on bulk carriers, general cargo, refrigerated and Container vessels while liquid and gas cargoes are transported aboard tankers and gas carriers. Charterers usually pay Charter rate in dollars and the price they pay may fluctuate widely depending on the demand and supply of ships. Ship Owners and Operators need to find cargoes to carry to make money and stay in business, but matching a ship with a cargo can be a difficult and time consuming process. There may be a shipment ready for loading at the start of

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS the week, but no ship available until the end of the week, or there may be a number of ships available to pick up that one cargo, so who should get the business? A ship Cargobroker sorts the pieces of this jigsaw and then, acting as an intermediary between the ship owner or operator and the Charterer, he/she will pair a cargo with a ship, assist in negotiating and finalizing the terms and conditions of the deal, and finish off by sending out a Recapitulation, often accompanied by a Charter Party. The whole process can take time and needs good contacts to find out what is going on where and which ships are open, or available, at any one time. While there are many ship broking centers around the world – Hong Kong, Shanghai, Oslo, New York and Hamburg, to name a few – many shipbrokers are based in and around London, UK. It is estimated that London’s 700 shipbroking companies account for around half of all tanker and 30%-40% of dry bulk chartering business.

Figure 7. Onboard ship people, Officers and Seafarers

The Captain’s ticket is the pinnacle of a career on the high seas. Quite simply, there is no higher level of qualification for a seafarer in control of a ship. While the role of the today’s Captain has evolved dramatically, there continue to be great career prospects both at sea and onshore for those holding a sought-after master’s ticket. Not so long ago, the Captain was expected to be proficient in the application of a barometer, chronometer, and sextant to direct a sailing ship; today the Captain must understand more high-tech means of navigating a ship, such as GPS, radar and electronic charts. There is also much more paperwork to be completed today, due in a large part to the growth in audits, surveys and technical checks that have been enforced to drive the safety of the industry. A qualified Captain will possess a Master Mariner certificate of competence, will have spent at least ten years working at sea and will need to have good communication and managerial skills to lead the crew in the safe operation of the ship. Interestingly, the professional community of mariners generally reserves the title “Captain” for a person who has held command of a merchant vessel, not for someone who may hold a command license but has never been appointed to a command position.

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS Ship Owners and Charterers cannot be present at every Port their ship Docks at, or watch over every deal secured for employment; there simply isn’t enough time if they want to build their business. But, as you would expect, they also do not want to wash their hands of the day-to-day operations of these multi-million dollar assets. The middle ground comes in the form of a Ship Port Agent, a person or firm who transacts all business on behalf and under the direction of a ship owner or charterer. When a ship calls at a foreign Port, the Ship Owner or Charterer will want to ensure that the visit goes to plan. The Port Agent is the organizer that will do everything within his/her power to make sure that this happens on behalf of the ship owner or operator. For example, if there are language issues, the port agent will ensure that they are overcome; if there is paperwork to be filled in, the port agent will make sure it is perfect; if port services are needed for the ship call, the port agent will book them; and he/she will make sure the Berth and Stevedores are ready for the ship at its allotted time.

Figure 7. Technical and Port Operations partners

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS 3. Cargos – What is all about

Table 3. Cargo types

Cargo category Subcategory Cargo Type of Ship

used

Liquid Bulk

Crude oil Crude oil Crude tankers

Oil products

Dirty products Product tankers, Parcel tankers

Clean products Stainless-Coated-Epoxy tanks

LNG-Liquefied Natural Gas LNG

LPG-Liquefied Petroleum Gas LPG

Heavy chemicals Fosforic acid Chemical tankers

Liquefied chemical gases Amonia Chemical

tankers

Dry bulk

Coal Metallurgical-Coking coal

Bulk carriers

Steam coal Iron ore

Grain

Wheat Maize-Corn Sorghums Soybeans Rye Barley Oats Flaxseed Rapeseed Soyabean meal Brown rice Sunflowerseed

Bauxite & Alumina Phosphate rock

Minor Dry bulks

Steel products Stell plates Bulk carriers

Steel coils Steel pipes

Forest products

56 types of Logs Log carriers

Woodchips Lumber Pulp

Cement Bulk Cement carriers Bags Tweendeckers

Fertilizers Ammonium sulphate

Bulk carriers

Urea Potash

Non-Ferrous metal ores

Manganese Nickel Zinc Copper


Sugar

Raw sugar Refined sugar Molasses Tankers

Salt Bulk carriers

Sulphur Dry Special bulk

carriers

Liquid Stainless-Coated tanks

Specialized cargoes

Refrigerated Meat Reefer

containers Reefer

Fresh milk Fruits & Vegetables

Vehicle Car carrier

General cargoes

Break bulk General cargo Deck cargo

Pallet

Container

Open top

Containership

Reefer Ventilated Insulated Flat racks Tank Platform Bulk High cube

4. Ships-The medium

Ship can be roughly categorized in the following types:

Table 4. Vessel types

Oil Tanker

Crude Product (Clean)

Bulk carrier

Bulk Ore Multi-purpose combined carrier

Containership


General cargo

Reefer RoRo (Roll-On / Roll-Off) General cargo (single/multi deck)

Other ships

Chemical

LPG (Liquefied Petroleum Gas)

LNG (Liquefied Natural Gas)

Car carrier

Lumber

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS The distribution of tonnage and the trend year over year is engraved in the following table, United Nations Conference on Trade and Development (2011), REVIEW OF MARITIME TRANSPORT 2011.

Figure 8. World fleet by principal vessel types, selected years a (beginning-of-year figures, millions of dwt).


5. Information, Documents and Procedures

The Lifecycle of a ship begins in the office of a Forecasting / Market Trend Analysis Provider, or the Owner’s desk. Transportation market relies heavily on the general trade and development status of the world. However the rest is really complicated as can be seen in the following figure from United Nations Conference on Trade and Development (2011), REVIEW OF MARITIME TRANSPORT 2011.

Figure 9. Maritime sectors along a ship’s lifecycle

1. Ship building: A manufacturing industry that conceptualizes and assembles different vessel types.

2. Ship owning: The company purchases the ship through its own or external financial resources, and becomes the legal proprietor of the ship.

3. Ship operation: A ship operator is usually responsible for management of the crew, route planning, servicing and maintenance. It also takes the entrepreneurial risks related to capacity utilization and operational efficiency. Particularly in the case of containerized liner shipping, operation and ownership of ships often lie in different companies.

4. Ship scrapping: Includes the breaking up of a ship at the end of its lifecycle and is often referred to as “ship recycling”. The ship scrapping company mostly benefits from the reuse of the scrapped steel and some other components, although hazardous elements have to be recycled or disposed of.

During this lifecycle, the ship will require numerous support services, six of which are discussed in further detail in this chapter: 1. Ship financing: The process whereby a lender, such as a bank, provides

the financial resources to a ship owning company to purchase and maintain a vessel.

2. Ship classification: Classification societies verify and certify compliance with technical rules and safety and other national and international standards for ship construction and operation. They work on behalf of the shipbuilder, the flag state, or other interested parties.

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS 3. Ship registration: This includes the process of national registration of a

ship by a country under whose flag the vessel sails. 4. Ship insurance (P&I): This section focuses on protection and indemnity

(P&I) clubs. A P&I club is a non-profit association that typically consists of shipowners, ship operators and ship charterers. It provides its members with mutual ship insurance services that also cover third-party liabilities, such as cargo or environmental damage.

5. Seafarers: A ship’s crew consists of officers (e.g. masters and engineers) and ratings (such as able seamen, oilers and cooks).

6. Terminal operators: Terminal operators carry out the logistical processing of containers between ships and other modes of transports. Particularly in the case of container shipping, loading and unloading operations are mostly undertaken by private stevedoring companies which are often also responsible for the terminal operations, superstructure and IT systems.

The Commercial operation of a ship is done by chartering. Even if the company owning the ship is also operating it, there is a common framework for handling the relationships and rules of chartering. Furthermore the chartering department usually is a different company under the same holding. Five major charter types represent the different forms of chartering a ship.

Table 5. Charter types

Voyage charter

This is the most commonly used Charter Party. Under this particular agreement, the owner of the ship agrees to lease the cargo to the charterer for a particular voyage. The cost paid for such a lease includes costs like fuel, loading and unloading of the cargo etc. The vessel owner supplies the charterer with the vessel and sometimes the crew for a voyage to a designated port. However, there is a specific time limit under this kind of contract. The time mentioned in the lease contract includes the time needed for loading and unloading of the cargo, exceeding which may need the charterer to remunerate the owner in terms of compensation charges. Also, the charterer remains responsible for any incidental charges. Being a voyage bound trip with availability of crew, voyage charter party becomes one of the most famous charter parties.

Time charter

Often confused with the previous charter party, this charter party refers to lease of a vessel by the owner to a charterer for a specified period of time. The owner only offers his vessel at a predetermined rate. The charterer agrees to bear all the expenses incurred on running of the vessel in return of availability of vessel for that time.

Bareboat charter

This is a typical agreement where there is no maintenance liability or any kind of claim on the vessel by the owner for the period of lease of the vessel. The owner agrees to lease the vessel without any administration, financial or technical responsibility for it. The charterer acts as the sole owner of the ship and is responsible for all the maintenance and functioning costs of the vessel including fuel, crew maintenance, repair, custom duties, port expenses etc for that time. It is the most suitable for tankers and bulk carriers.

Contract of affreightment

This type of charter party particularly suits to bulk cargos that often need more than one voyage for complete shipment. Under this contract, the owner offers to carry the mentioned cargo at a price decided at rate of per tonnage or per voyage. This type of contract is especially found in industrial cargos like that of coal, stones, building material, metallurgical


materials etc.

The number of documents exchanged in the industry is enormous. Only for the commercial-operational coverage of chartering there are numerous charter parties depending on the cargo, the charter type, the geographic location of business and the favor party. A non-exhaustive list mainly from BIMCO is representative.

Field Voyage Charter Parties

Bills of lading documents Waybills

Coal AMWELSH93 Grain AUSTWHEAT1990 AUSTWHEATBILL

BIMCHEMVOY2008 BIMCHEMVOYBILL2008BISCOILVOY1986 BISCOILVOYBILL BLACKSEAWOOD BLACKSEAWOODBILL

Cement CEMENTVOY2006 CEMENTVOYBILL2006 Chemicals CHEMTANKVOY CHEMTANKVOYBILL CHEMTANKWAYBILL85Coal COALOREVOY COALOREVOYBILL General CRUISEVOY Fertilizers FERTICON2007 FERTICONBILL2007

FERTISOV FERTISOVBILL Fertilizers FERTIVOY88 Gas GASVOY2005 GASTANKWAYBILL General GENCON94 GENWAYBILL Grain GRAINCON GRAINCONBILL General HEAVYCON2007 HEAVYCONBILL2007 General HEAVYLIFTVOY HEAVYLIFTVOYBILL

HYDROCHARTER HYDROBILL INTERCONSEC76 MURMAPATIT1987 MURMAPATITBILL NANYOZAI1997

Coal NIPPONCOAL Ore NIPPONORE Grain NORGRAIN89 NORGRAINBILL Wood NUBALTWOOD NUBALTWOODBILL General NUVOY84 NUVOYBILL84 Ore OREVOY OREVOYBILL General PANSTONE Coal POLCOALVOY POLCOALBILL

PROJECTCON Fertilizers QAFCOCHARTER QAFCOBILL Wood RUSWOOD RUSWOODBILL General SCANCON SCANCONBILL

SOVCOAL1987 SOVCOALBILL SOVCOALATICTermsSOVCONROUND SOVCONROUNDBILL SOVORECON1987 SOVORECONBILL

Grain SYNACOMEX2000 TANKERVOY87 INTANKBILL 78 TANKWAYBILL81

General WORLDFOOD99 WORLDFOODWAYBILL Fertilizers YARACHARTER YARABILL YARASEAWAYBILL

Field Time Charter PartiesBills of lading documents Waybills

General BALTIME 1939 (As


Revised 2001) Chemicals BIMCHEMTIME 2005 Containers BOXTIME 2004

BPTIME3 GASTIME GENTIME INTERTANKTIME 80 NYPE 93 SUPPLYTIME 2005

COMBICONBILL COMBICONWAYBILL CONGENBILL 2007 CONLINEBILL 2000 GERMANCONNORTH MULTIDOC 95

LINEWAYBILL MULTIWAYBILL 95 GASTANKWAYBILL

Field Bareboat Chartering Bills of lading documents Waybills BARECON 2001 BARGEHIRE 2008 Field Time Charter Parties Bills of lading documents Waybills GENCOA INTERCOA 80 VOLCOA

Other types of commercial and operational documents include:

Table 6. General Commercial Documents

General Commercial Documents Agent Nomination Letter NoR - Notice Of Readiness BoL - Bill Of Lading LoP - Letter Of Protest LoI - Letter Of Indemnity SoF - Statement Of Facts CoO - Certificate Of Origin Invoice Waybill Payment PEoD - Proforma Estimate Of Disbursements Disbursements Account Marine fuel purchasing contract Cargo Manifest Cargo Fixture Ship Fixture

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS Time sheet Stowage Planning Crew management CREWMAN A (Cost Plus Fee) 2009 CREWMAN B (Lump Sum) 2009 Towage TOWCON 2008 TOWHIRE 2008 Salvage WRECKFIXED 2010 WRECKHIRE 2010 WRECKSTAGE 2010 Sale and Purchase Sale agreement BIMCOSALE Demolition agreement DEMOLISHCON New building contract NEWBUILDCON Ship sale agreement SALEFORM 2012 Ship Repair Ship Minor Repair Contract MINREPCON Ship Repair Contract REPAIRCON Security Security Services Provision GUARDCON Ship Management Ship management agreement SHIPMAN 2009 Dangerous Goods Management Dangerous Goods Container / Trailer Packing Certificate Dangerous Goods Declaration Ship Agency FONASBA Standard Liner and General Agency Agreement FONASBA Sub Agency Agreement FONASBA International Brokers Commission Contract Container STANDARD CONTAINER INTERCHANGE BOXCHANGE BOXLEASE SLOTHIRE

In all of these documents, there is a lot of structured and unstructured data, many times handwritten, that cannot be easily transformed to information. Repetitive and manual data entry, prone to errors is a problem that modern software applications like BIMCO’s IDEA.2 are able to resolve.

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS 6. Barriers

Figure 10. The maritime industry globalization

It is well-known in the industry the problem arising from the complexity of relations in operations of ships. One of the most inspired sayings is from the front page of The Independent, But who takes the blame (22-02-1996), after the accident of Sea Empress tanker. The same complexity applies also to regulations, safety, commercial, financial, manning and many others fields of the industry.

Also the competitiveness and globalization force the parties to be extremely carefully in sharing data and exchanging information. If it is done, it might be thru highly secure manners between trusted stakeholders. It is quite oxymoron that so much information could be exchanged, while so much security and privacy ought to be incorporated. Modern solutions are able to help partners and provide the necessary coverage for these needs.

7. The IT scene today

To support the procedures mentioned before, and many more that is out of the main scope of the paper, the IT industry has developed over the years an extensive portfolio of solutions. An extensive research gives the following table:

Table 7. Software application categories

Technical Management Environmental Management Cad/Cad Environmental analysis Accounting Computer aided lofting Pollution control Cost tracking Condition monitoring Cleaning General ledger Data logging Navigation Documentation control Engine monitoring Navigation Marine databases Engine performance Integrated Positioning Market forecasting Engine trend analysis Celestial navigation Marketing analysis Engineering analysis Chart correcting Project/investment analysis Equipment cost analysis Electronic charts Project planning/scheduling

2nd INTERNATIONAL CONFERENCE ON SUPPLY CHAINS Equipment history Bunkering Simulation/modeling Hull form analysis Consumption analysis Equipment rental analysis Hull fouling calculations Consumption optimization Rate forecasting/analysis Hull strength analysis Route optimization Ship management Machinery analysis Quoting and Purchasing Strategic planning Machinery maintenance Cargo Intermodal planning Machinery repair Ballasting analysis Insurance Naval architecture Booking Insurance claims New building information Tally Import documentation Performance monitoring Damage controlling Purchasing Planned maintenance Forecasting Salvage operations Preventive maintenance Hazardous handling Warehouse control Propeller analysis Loading Food service management Repair planning Stowage optimizing Spares inventory Ship design/drafting Workforce Management Stores inventory Ship stability Crew medical histories Commercial Ship repair management Crew payroll Chartering analysis Ship survey Crew records Laytime calculation Speed/power optimization Crew scheduling Voyage accounting Vibration analysis Crew agency Voyage estimating Remove monitoring Medical locker inventory Freight forwarding Port operations Office payroll Brokerage management Bridge automation Personnel management Ship broking Mooring monitoring Training Sale/purchase brokerage Export documentation Weather Automation

Customs documentation Weather-based routing optimization Data communications

Tariff systems Meteorological services Electronic mail Pilotage Ice operations Messaging Notifications Database Replications


Many of the above challenges are handled with custom in-house solutions with the following characteristics:

• Spreadsheet or MS-Access based • E-mail the info • Data consistency and back-up • Support by IT department

Initially they are flexible and adaptable, but after a while (from some months to a few years) they become:

• Inherently risky • Data inconsistent • Expensive to maintain • Difficult to integrate

Communication and collaboration between partners can be made mostly thru the following major ways. Document-based exchange of information or action request, Web services invocation and application/portal utilization.

• Document based exchange is built on top of file formats that can be delivered thru FTP, SFTP, HTTP, HTTPS, AS2 or VANs:

• EDI – Widely adopted market standard (UN/EDIFACT and X12) for system-to-system integration for booking, shipping instructions, shipment status, and B/L details

• XML – Provides flexible method to organize, integrate, and transmit your multiple carrier shipment data

• Other File Formats – Used to exchange shipping information between systems with different data element structures and is ideal for customers without a formal EDI/XML system. Other file formats include flat file, PDF, and comma-delimited files.

Besides the document based exchange, the more sophisticated way of web-services is a platform-agnostic, highly-secure and performance effective solution of requesting or posting information like Contract and Rate search, Rating Request, Sailing Schedule search, Shipment Status inquiry, Order Status inquiry, Booking Submission, Document submission and Invoice Status inquiry. The APIs required to access the various functionality is published using WSDL. Requests are made using HTTPS and data is sent back as XML using SOAP binding.

Finally, there is an extensive list of software solutions, mostly web-based and less desktop, that a user is able to interact with the system to search for information or provide data to the system. These solutions can vary from a simple informative nature, to a full-blown system that can reach the boundaries of an ERP solution. Also the diverse path is an emerging option, where ERP-based platforms, initiated from the “strong” partner side, incorporate b2b and marketplace initiatives.

The initiatives that belong to before mentioned solutions, try to gives solutions to the industry for problems like the following.

Vessel position Automatic Identification System (AIS) is the free service providing

information about the current position of a vessel and even a short history of its route. Paid services include bigger timeframe for the route and even satellite tracking for the areas that it is away from the shore and it is not possible to track.


Distance calculator One of the most used services in the market is distance calculator where

a combination of GIS technology, canal passage info and port (in more advanced solutions berth) information, gives the ability to users to plan a voyage, estimate the total distance and even the cost if more data is included. Because of the niche nature of the technology and the amount of pre-recorded data, it is a common practice for a software solution to incorporate seamlessly or not, the use of 3rd party Distance Calculators. Voyage Calculation is one of the applications that heavily rely in this ability.

Brokering – cargo to ship matching Today the majority of communication is done thru email exchange. This

gives an enormous amount of data that must be transformed to information, kind of difficult to be done effectively as a number of several hundred emails are not unusual. One solution to this is email scanner applications that try to recognize at least the key data from an email, and feed them to ERP or matching applications.

Baltic Spot and Netpass are among the companies that provide a portal solution cargo matching.

Bunkering Bunkering is one of the biggest issues in shipping and extensive

research has been done Omar Besbes (2009) and Perez (2009). Products like BOptimum from LQM Petroleum, use dynamic programming, vessel port call schedule and a lot of bunker prices data and forecasts to advice for best port and volume of refueling.

Ship information Because of the ever changing usage of vessels, especially in tramp

sector, it is important for parties (mostly chartering) to be able to gain as much as possible knowledge about the ship that will carry their precious cargo. Many solutions can provide standard data of ship such as date build, shipyard, structure or even previous cargo transferred. Fairplay Seaweb from Lloyd’s Register is one of the most complete solutions.

Virtual arrival shipping Historically, the shipping industry has always taken a 'hurry up and wait'

approach, meaning merchant vessels would steam to meet a pre-agreed schedule, regardless of fuel was burned with 'full ahead' steaming, leaving vessels often sitting idle at port awaiting berthing slots. Virtual Arrival from BP-INTERTANKO AND Oil Companies International Marine Forum (OCIMF), on the other hand, uses weather analysis and algorithms to calculate and agree a notional vessel arrival time, so that the ship will arrive 'just in time'. This radically reduces bunker fuel consumption and emissions, while easing congestion and enhancing safety. Importantly, the authority of the vessel's master remains unchanged. Furthermore, waiting time compensation, or what is known as 'demurrage', is calculated as if the vessel had arrived at the originally stipulated time, hence the name 'Virtual Arrival'. Post-voyage, any savings in bunker costs or carbon credits are calculated and split between the counterparties. Aside from the financial incentive, Virtual Arrival could also offer a significant prize in the reduction of many millions of tons of greenhouse gas emissions if it was adopted widely.

Containerships


In this over diversified sector, there are also a lot of different levels of integration and collaboration. One of the most inter-connected sub sectors is that of container cargos. The big (and continuously growing) volume of containers leads to adoption of well-formed established forms of communications. The key players of collaboration are CargoSmart, GTNexus and Inttra. Thru their networks, over the half of world container trade is been exchanged using either EDI/ANSI messages like the following, custom XML or other format files.

Table 8. Common EDI messages

Messages UN/EDIFACT ANSI-X.12 Booking Request IFTMBF 300 Booking Confirmation IFTMBC 301 Shipping Instructions IFTMIN 304 Manifest or B/L Information IFTMCS 310 Shipment Milestone Status / Cargo Tracking IFTSTA 315 Transportation Carrier Shipment Status N/A 214 Message Acknowledgement APERAK 997 Control Message CONTRL N/A

Port Disbursement Data

Data from port agent about port disbursements that usually come in a fax, email or spreadsheet format can be exchanged thru systems like Diabos and DADesk.

9. Conclusions

“We are entering a new era for e-commerce in shipping, with the rise of ‘collaborative consumption’ where people will want access to products and trade direct peer-to-peer”, says Paul Ostergaard from ShipServ, a leading ship chandler portal at Shipping and marine, (2012), The internet of trust.

Connectivity, information and trust, are the cornerstones of ecommerce and data sharing platforms that are needed to build upon them a viable and long term solution. Modern (or not so much) business models are here to use.

Public and Private cloud implementation can help to minimize costs and maximize security (some times better than on premise), availability levels and scalability. Factors that are all critical to the industry. GIS solutions sided with weather information and forecasting, or anti-piracy information can provide more secure and economical voyages. A solution that could be deployed as “Catching the Long Tail” can provide sophisticated features of more advanced solutions to smaller partners and finally thru a “Network effect” be established as a major competitor. Finally the wealth of information that is stored inside these systems could be part of an “Big Data” initiative, to provide guidance and protect partners from misleading assumptions.

Maritime and Software industries have done very much so far, but there is also a very wide and long road ahead to travel together.


Acknowledgement

This research has been part of the deliverables for the program TotalView Innovative Technologies, with code ΝΕΚ-00570 of the National Strategic Reference Framework (NSRF) - Research Funding Program: “Nea Kainotomiki Epixirimatikotita”, which took the highest rating among 1.147 projects all over Greece. References

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