Digital Economy: The digitisation of trade
Long before the Internet international trade routes the primary channel for the global spread of information. They've long since been overtaken by international telecommunications networks that today allow packets of data to span the globe in seconds this has helped open up global markets for goods and services to the extent that individual consumers can now purchase goods from the other side of the planet it at the Click of a button. This episode of the podcast examined the impact of digitization on trade in particular. We explore how digital technology is affecting the way goods shipped around around the world. The physical process underpins the global digital economy. We also examined the impact of e commerce on global trade and the role of digitization in the growth of trade services this month. I'm joined by Martin Home Global Head of supply chain management in ECOMMERCE logistics shipping giant Merck by Jenna Brown CEO and CO founder under a supply chain data management start up ship Max by my colleague Christopher Clegg managing editor at global editorial lead for trade and globalization. I started by asking marted. What is what is the current state of digitisation in the shipping industry. I think it's fair to say that the state of digitalization the shipping industries is really is still quite low. It's not on common that the cost of processing the paperwork is higher than the cost of actually moving goods across the world at least that's that's the that's the situation the container shipping space just to give an example in connection with US designing the the trade lanes platform color years ago we gathered all data such documents emails phone calls milestone data etcetera for for a number of shipments and and one of these shipments search was quite typical shipman contain of Avocados from Kenya to the Netherlands required more than two hundred physical documents so so quite a lot of of work on that site having said this. It's also clear that did slice Asian is now taking pace there's very high amount of venture capital missile coming in similize ahead of digitalization of for instance the travel industry and other industries and there's also a lot of initiatives by the incumbents real real time rates now available instant booking confirmations thereby leading playoffs and there's a lot of work on on optimization of operations also using shing a digital tool so it's warhead if it's not been as fast as you might have expected. Why why do you think that is I think it's a learning curve and this industry is has a lot of Sullivan heavy investments traditionally in in and ships and containers and pulse and trucks and so on and and the whole digital side has just not been coming along fast enough AH Essex on Baloney this year I an association was established for actually agreeing on a data standards in the industry and it's also stuff like that that that's been missing that even if you invest you don't know what the standards are going to be. Everybody's waiting for Jolo discussing the standards and and and we haven't been moving ahead as fast as yes we probably could have four or would have expected okay so so jenny. You have a slightly different voltage point. Is that as a starting startup helping shipping companies with their documents. How would you characterize the state digitization. Would you reflect Martin's comments to you the different view yeah. I think in part I think he can break it down a bit more say. I guess we're looking at the kind of communication aspect. I think there's a lot of progress been made in Let's say transactional elements logistics so for example if he want to book a container with a major shipping line there are companies like intra and all at the other end of the spectrum if go and customers the king containers with folders so flexible twelve colnago. DB Schenker Ohio I've invested law in platforms to make that smoother but do you agree with Maltese. Not the biggest pau kind of up for grabs right now which arguably is the highest volume is those operational communications so everything involved in getting something from eight to be and this is where anecdotally when we speak to customers US freight forwarders Mesa them have tried something like using an old edi technology but it's not worked very well because there are no data each stop us so what tends to happen is it tends to end up being a very manual process with emails flying around with with documents attached and I I think that's where Phil's still a little bit stuck in the past right and Jenner your your company in fact shipper Baxter's helped companies with extracting data from from the shipping documents so so so what was the opportunity that you saw what was told you that a new way was possible and how open and receptive have you found organizations to an alternative approach. 'em Yes I mean we actually started out in in the bulk shipping sector we had developed a technology technology stocks and data and structured as from from email communications and we had kind of turned to the A freight forwarding and industry as an additional market and yeah I think we found it's been incredibly receptive because again most of the problems people have is just kind of locked of data standards on there is no way of transmitting information mation from from player wound to play a twenty five so if you can build a technology talk of the infrastructure that already exists an then and just kind of plug and play and feedback into internal systems. What's very well. Why did you think because you both mentioned the issue with standard. Why do you think there haven't been standards in so many other domains. Obviously this is a challenge for all industries to find ways to share information in standard ways but progresses be made so the reason this sector has been so far failed to establish standards. Is it for lack of effort or or too many effort. I honestly don't think it's possible because I think you look at any industry. Where the already strong data standards it is. It is a more transactional well transaction when you're looking at operational logistics. It's a messy process and you've got an industry that is wildly fragmented so you want to take an extremely messy process of wildly fragmented industry industry. We've together by humans and put into one standard. It's it. That's a very daunting task so Martin is possibly the best known shipping company in the world. What impact has digitization had on the company and how have you adapted acted as a result I think at merced purposes we all purpose as facilitating global trade believing that that trading with these other really really generates additional value and prosperity and opportunity fold so of course seeing that actually processing older the the documents and the paperwork work is is more expensive now than shipping the cargo around the world. is something that we feel. we do something about and we actually feel that there's a huge shut which unity for false company so over the last few years we really been been ramping up to take a leading role in this sure and and also to try and get as many of the other players in the in the industry to come along exactly where the data's. Dan Nuts and maybe just back to that point. I think one of the reasons is that there's a truly global industry and every transaction has lots of parties across multiple sectors and multiple countries and that's where it gets really messy and difficult to agree on on the standards and but as I said I think it's a huge opportunity. I think you can look at it. Maybe in two tracts there's one which is the the product innovation and customer experience side a cobbler the things we've done there is the the the trade lynch plaque platform that really uses blockchain to significantly -nificant improve the the information flow and reduce the cost among the many players and of course increased the the validity of the documents when Sunday information that is shared and all the examples is captioned peed on an APP. We have launched to our customers shipping refrigerated cargo actually they can sit at home home and follow the the data the timber chore the Humidity And so on of of airflow inside the container and then they can change the settings they they can change the temperature or they can change the flow more nitrogen. All you know whatever they would like to see inside the container they can change that on the APP and and actually a moments later through I o t that's those settings are changed on the container even the middle of the ocean so so those are Cobb love love of USA stories of course the other tracks and the operational efficiency that we also talked about before and maybe a couple of examples there we're using weather data data now to optimize the routing of all our ships we already more than seven hundred ships. and we always have ships that a little bit ahead of each other behind each other. We're using data from our own ships and also buying whether data from those two then optimized the routing of the ships that following and therefore of course reducing using the the fuel that we use and an increased the likelihood that we arrive on time and time at the next port and more simple example blitzer is a small law APP that we call pitched up which is really to coordinate the porch space and all the activities that need to happen within that Porch Day so so these are some of the examples that that are already in motion but but there's a huge opportunity we are not very fond this journey and there's lots and lots of of of additional opportunities both on the product innovation and costumer experience. I had an on the operational efficiency side and in order to to introduce these these kinds of digital innovations what what organizational changes have you had to undergo did musk. Let's say five ten years ago half the digital capabilities to develop these and it was just a matter of getting through the work or if you had to change the at least to some degree the nature of the company and who you hire and how you operate yeah we've definitely had to mate Changes Pete so want the laws that that we had to start hiring data scientists and digital capabilities that we simply didn't happen and truth be told the beginning was difficult to attract people with these skill sets into a relatively the seen as a conservative and rosty industry and now that we have attracted a number of them into Murska they actually find this incredibly exciting the whole opportunity of digitalising trade and and and really helping to to grow the global economy on is very exciting and actually the digital. It'll challenges and opportunities are also very big. Huge data sets lots of opportunity we have as laid us in all our latest quarterly announcements. The stock market again reiterated that we are still hiring additional. It people and specifically data scientists NPR NPR's with with digital capabilities and an older. We're looking for several thousand additional. It people to really help us on this journey going forward.