Written by: Mikael Lind and Juan Carlos CrostonArticle No. 49 [UNCTAD Transport and Trade Facilitation Newsletter N°85 - First Quarter 2020]
Traditionally, a ship agent (as a representative of the owner, the charterer -or both- of a visiting ship), ensures that the essential requirements for a ship visit are arranged and met. Therefore, they have an important monitoring role, before and during a port call, taking the necessary actions to avoid or minimize disruptions. Ship agents also guarantee that involved port actors are paid at the right level of compensation.
Enhanced digitization and collaboration in the maritime transportation sector, through implementation of digital data sharing, is an inevitable and unavoidable change and one that will affect the ship agent’s business.
The current article explores emerging opportunities, and prerequisites to harness these.
The traditional role of ship agents as the ship’s port call coordinator
The shipping industry is a self-organizing ecosystem where all its members are capital creation systems. They each develop their specific recipe for creating capital by converting capital from one form to another form of capital. For example, a shipping company uses economic capital to hire human capital to staff ships.[i] The combination of individual members’ capital and their related systems for transforming capital from one form to another is the shipping ecosystem.
Ship agents provide two major types of capital. First, they provide social capital in the form of a network of connections with a port’s service providers because they typically have personnel physically located in a port’s city. Their specialized local social capital means they know whom to contact for routine and special services.
Second, they have developed routines and procedures, organizational capital, to deal with the local laws and regulations and atypical features of their port and its environment. They have created efficient procedures to weave together the various local requirements and services needed for a successful port visit in their territory.
Digital challenges for the ship agent
Traditionally, the port and its operators have relied primarily on the information provided by ship agents to understand the current and future status of a port call. However, increased implementation of digital data sharing among port actors is changing that.
Enhanced digital collaboration, by direct digital data sharing, creates a dynamic, up-to-date, common situational awareness as the basis for the alignment of activities in the port call process. An increased focus on port call optimization offers significant opportunities for efficiency improvements and environmental gains for service providers and consumers. But this requires rethinking many port call activities and roles.
In this context, digital data sharing and collaboration could challenge the power of the ship agent as the primary information hub for all involved in a port call and may be interpreted as a force reducing the value proposition in the ship agent’s business concept. For instance, agents’ social capital will decline in value if they do not accommodate digital data sharing for establishing the phasing of a port visit and managing its execution. For example, communicating by individual phone calls or emails could be a time consuming, costly and inefficient alternative to a seamless digital data exchange with service providers to establish when, where, and what services will be provided and to update these as circumstances require.
Shipping agents who want to continue to participate profitably in the ecosystem will need to re-blend their social and organizational capital to match the digital connectivity and standardized digital data exchange that will dominate the execution of the future port visit.
Revisiting the foundations: The role of the ship agent in a maritime digital ecosystem
The future role of ship agents is now coming under the spotlight. That role will be influenced by digital systems of record and data sharing that provides dynamic high-fidelity situational awareness for all stakeholders. Digital data sharing and greater visibility of plans and their modification could enhance the role of agents willing to embrace digitization.[ii]
With the growing ability of the ship agents to collect and analyze incoming data streams, their value proposition for both the ships as well as the port actors opens new opportunities to change and enhance their business model. They could go beyond organizing the delivery of local services to ensure that they are delivered with full satisfaction and predictably as well as validating invoices against real time data. This means that a ship agent could become the provider of information and optimization services to transport buyers and cargo owners by becoming the physical and informational integrator of maritime operations in the global transport chain.
An agent’s organizational capital needs to be reformulated as software that can seamlessly connect with all parties within the port because the ecosystem is being rewired with fiber optics, WIFI, 5G, and satellites. To facilitate interoperability between information systems, the agent must also use an established data exchange standard, as well as building data analysis capabilities.
A digitally connected and coordinated agent can contribute to lower costs for the shipping company or charter. For example, if the ship agent has greater certainty over ship arrival times because of digitization and data sharing, then crew replacements as well as inspections could be supported without the need for extended overnight accommodation in hotels.
Traditional social capital maintained through informal means, such as a dinner or coffee together, will still have its place. It will remain a source of innovation and reinvention as it will keep the shipping agent aware of what its port partners are planning in terms of new services and facilities. Every formula for success, even in past traditional times, requires an ongoing recipe rejuvenation because of changes in practice and technology. Routine interactions will be digital, but the future will be socially constructed by shipping agents and service providers and then digitally engineered.
Collaboration (and sustainability) are key drivers for the future of shipping and supply chain industries. The enhanced degree of digitization and collaboration now occurring in the maritime transportation sector offers greater efficiency, predictability and profitability for the involved actors.
Although it will change the capital creation recipe of many actors in the maritime transport ecosystem, this development should be welcomed by ship agents. By embracing the digital port scenario, ship agents can continue to be the primary source of local information in port call visit coordination and can create new business opportunities. The implementation of data sharing for enhanced transparency and harmonization among port actors creates opportunities for ship agents to deliver faster and higher service quality empowered by digital means and new services, including some of those mentioned in this article.
Mikael Lind is Associate Professor and Senior strategic research advisor at Research Institutes of Sweden (RISE) and Chalmers, Sweden. He has initiated and headed several open innovation initiatives on ICT for sustainable transport and has co-founded Maritime Informatics │ [email protected]
Juan Carlos Croston is VP Marketing & Corporate Affairs with Manzanillo International Terminal (Panama). Croston serves currently as President of the Caribbean Shipping Association and as member of the IMO MTCC Network’s global stakeholder committee │ [email protected]
[i] Watson, R. T. (2019). Capital, Systems and Objects: The Foundation and Future of Organizations. Athens, GA: eGreen Press.
[ii] The UNCTAD guidelines for shipping agents, published in 1988, would accordingly need updating, to reflect these developments - https://unctad.org/system/files/official-document/unctadstship13_en.pdf