Container lines target track-and-trace standardization

Container lines target track-and-trace standardization

Track-and-trace will be one of the first areas looked at by the new Digital Container Shipping Association. Photo credit: Shutterstock.com.

HAMBURG — A newly expanded group is focusing on creating container data standards for track-and-trace systems, paving the way for major carriers to address rising demand for such services while mitigating the higher cost of delivering to shippers and forwarder customers.

The founding members of the Digital Container Shipping Association (DCSA) discussed the new initiative Thursday at the Global Liner Shipping Conference in Hamburg. Having expanded from four to nine carriers, the group now controls 70 percent of global container shipping.

“When we started, we put a list together of the problems we want to solve, and in an hour we went from a list of two to a list of 16, so it is not like there is a shortage of things to look at,” said Adam Banks, chief technology and information officer at A.P. Møller-Maersk.

“But there are two core areas we will focus on. Firstly, we want an industry blueprint that identifies what the key events are in the transportation flow that we can then all align around. The second is to create standards around tracking and tracing, so we have a standard way of requesting data from each other and for customers requesting data from us, and a standardized way of replying that request.”

Founding members of the DCSA — Maersk Line, Hapag-Lloyd, Mediterranean Shipping Co., and Ocean Network Express (ONE)  were joined on May 14 by CMA CGM, Evergreen Line, HMM, Yang Ming Marine Transport Corporation, and Zim Integrated Shipping Services.

Value in transparency, wider data access

With the carriers targeting track-and-trace, there is an implication of commercial value in making it a priority, said Lars Jensen, partner at SeaIntelligence Consulting and chairman of the panel session. He asked whether improved transparency would increase profits for the carriers.

“Transparency improves cost; whether it improves profits is a commercial choice,” Banks said. “Do you want to pass that cost reduction on to the customer? Reducing that base cost through transparency, and if we can lower door-to-door cost, it has to be a good thing for all the actors in the equation.”

Carriers collaborating in any area attracts attention from competition authorities, so the DCSA obtained regulatory approval from the Federal Maritime Commission in April and appointed Thomas Bagge, former chief commercial officer at Maersk, as the association CEO. The DCSA headquarters are in Amsterdam.

The broader idea behind the association is to allow other stakeholders, such as shippers, third-party logistics companies, ports, and terminal operators to access data and software across all carriers. André Simha, chief information officer of MSC and chairman of the supervisory board of DCSA, was asked at the Hamburg conference why only carriers were members of the association.

“By starting off with just carriers, we can immediately try to implement what we need. If we have too many members it will slow down the process. The goal is to bring in as many players as possible, but if we sit in a room with 30 people it will slow down things,” he said.

Rajesh Krishnamurthy, executive vice president at CMA CGM, said the fact that nine of the top carriers had come together to define and adopt standards was a strong message to the industry that liner companies were serious. China’s Cosco Shipping Lines is the only remaining top-10 carrier that has yet to join the association.

“We will reduce complexity, take cost out, and improve the speed to transact,” he said. “This is not something being done in isolation. Yes, we wanted to get started with a smaller group because it is easier to manage, but the objective is to collaborate with other standards bodies and supply chain players.”

Krishnamurthy said carriers owed it to their customers to provide better visibility of the cargo being transported, but while the technology tools were available, lack of standardization was the stumbling block.

“Even though the carriers here compete on a lot of trade lanes, we are also partners and we routinely carry each other's containers,” he told the conference. “Even collaboration between our own companies is suffering. Take dangerous goods, for example. Lack of standardization could create serious security issues. There are many reasons to standardize, and transport and logistics industry has been a laggard. It is time to catch up.”

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.

Comments

"The second is to create standards around tracking and tracing, so we have a standard way of requesting data from each other and for customers requesting data from us, and a standardized way of replying that request.” It's called EDI, which has very rigid standards

It should be interesting to see the argumentation of FMC...