Making Waves #5: Learning how to sail in an ocean of data

The Tip of the iceberg ??

“That’s cool!”: a contender for understatement of the century. This was the reaction, after a gruelling 80-hour week I had just put in, to the first time I had used data analytics and shipping in the same sentence. At the time, I was working as a consultant to the container shipping industry in Singapore. My team and I had decided to try and make sense of hundreds of thousands of Excel spreadsheet lines reflecting account payables, to better identify areas of risk for bad debts. “It looks really nice” emphasised the Group Controller, further adding to my sense of under-appreciation. What he was talking about was mostly the “cool” (here I am using that word) visualisations we had created to better illustrate our insights. That’s mostly what data analytics meant to most professionals at the time; a novel way to make otherwise boring datasets visually attractive.

Fast-forward 8 years and what turned out to be an early foray into a nascent field, has evolved into a full-blown revolution. Data is now gathered, processed and used in novel ways to support decision-making in the maritime industry. I work every day at Vortexa with a unique and exciting setup that consists of the very best data scientists, engineers and energy analysts in the industry. With our technology and expertise we are truly able to harness the power of data. Our aim is to increase transparency and make sense of what is hidden from the view of not only the general public, but often also from insiders, in what still remains an opaque and complex industry. Understanding the way troves of data are being employed and how this impacts our industry is the subject of this month’s newsletter.

Cartoon of the month: “The Tip of the Iceberg” - Courtesy of Sheridan Hart

With data value lies in transformation, not creation ??

For analysts, traders and charterers within the oil and gas industry, gone are the days of relying purely on anecdotal or word of mouth oil market intelligence to base trading strategies. Last December, I sat down with one of the world’s leading shipbrokers as well as a Danish shipping company operating in both the dry bulk and tanker segments. The subject of our discussion was “Adopting freight analytics for a winning edge”. We all agreed that the digital landscape has changed for the industry. What was privileged and tradable information owned by a handful of larger companies on refineries or big maritime fleets is now widely available. So how does that really make a difference?

"[...] gone are the days of relying purely on anecdotal or word of mouth oil market intelligence to base trading strategies."

Firstly, data needs to be accessed and or acquired. Usually that’s not the difficult part as most companies will be able to source data the same way as everyone else, by using their own. Having access to multiple datasets is more challenging, especially when this involves data not easily accessible to the general public such as information on vessel bookings, also known as fixtures, or detailed cargo information, usually only accessible through port agent records. The difficult part - and the one most companies fail at - is integrating that data into their respective workflows. That means extracting its value and making it available to decision-makers in a fast way, and most importantly in a language that is understood and easily digestible, which is easier said than done! The risk is that large amounts of data will be gathered and end up as what I call “data silos” within the organisation without any significant value extracted. Like a ship owner once said to me: “It’s no use hiring fifteen PhDs if you don’t have a vision for your data!”. So what would a vision for one’s data look like in the maritime space? Time to introduce Freight Analytics 101.

At the moment we track close to 12,000 vessels using more than 150 satellites orbiting the Earth

Freight analytics 101 ??

Before defining freight analytics, it’s worth focusing on analytics. So how have analytics come about? Gil Press, senior technology contributor at Forbes, argues it emerges from the marriage of the very old field of statistics with the relatively new one of computer science. In turn, analytics are now understood to belong in four different fields, a classification we explored during our most recent event: The Rise of Freight Analytics (available on-demand if you click here). We are going to walk through each of them and use an example relevant to the freight industry:

1. Descriptive analytics

Descriptive analytics use data to describe (surprise) what’s happened and/or what is happening. An example of this in freight would be the aggregation of tonne-miles data on the VLCC Middle East to Asia route. This analysis could then be used to look at the impact of Covid-19 on volumes on this route for example. Shipowners can use this analysis to track their performance against competitors for example, to measure how well utilised their fleet is versus others.

2. Diagnostic analytics

This type of analytics is a bit more subtle. Beyond descriptive capabilities it seeks to answer the question “why did this happen?”. An example of its application can be seen through the business case of our data partners, Windward. By analysing vessel behaviours, Windward are able to assess why a vessel may have come under the threat of sanctions following suspect and/or potentially illicit activities. In turn this allows their clients to address sanctions risk and take the appropriate actions to protect themselves against it.

3. Predictive analytics

Predictive analytics is currently the name of the game. The introduction of technology such as machine learning, that allows us to predict possible outcomes, really starts to introduce a wide range of possibilities. Infinite really, only limited by one’s imagination. Seeing what the future holds seems a lot more possible with predictive analytics. Vortexa’s freight analytics such as vessel availability, that allow to assess how many vessels will be able to be in one place at a given time in the future, allows to infer critical information as to the future of freight rates and/or one’s own trading opportunities, for example. Our use of our proprietary machine learning technology allows the extraction of more value from our data, to better meet our users’ needs.

4. Prescriptive analytics

An enhanced version of predictive analytics, prescriptive analytics are the ultimate goal when it comes to harnessing the power of data. This is the moment you hear the slot machine go bonkers in the casino. Prescriptive analytics encompasses using analytics to not only show you what happened, what is happening and what could happen but also goes as far as recommending a certain course of action based on all the latter. Taking the example of a list of available vessels generated by an analytics dashboard, prescriptive analytics would let that same dashboard pick the best vessel for your needs based on a range of factors that could be tailored to each user, each company. This has the potential to turbocharge earnings whilst minimising costs by increasing the efficiency of the chartering process.

"I believe no company is better placed to help [freight market] participants than Vortexa."

What’s next? ?

The energy and shipping industries are worth a combined $7 trillion, yet remain ripe for disruption as most trades occur behind closed doors and flows of product away from the public eye, far out at sea. This incredibly fragmented industry could benefit tremendously from complete analytics to change the way data is being collected, processed, transformed and consumed. The goal of this month’s newsletter was to highlight how troves of data are being used in novel ways, using cutting-edge technology, to give participants in the energy freight markets an edge. I believe no company is better placed to help these participants than Vortexa. I’d love you to join me, as we present our latest product offering with a new range of freight analytics tools, by clicking this link. I look forward to seeing you all on June 16, to dive with more detail into some of the groundbreaking capabilities we’ve been working on in the freight space!

• If you want to be a part of our Freight Analytics launch event, click here to register.
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About Arthur Richier

Arthur is a Senior Freight Analyst for Vortexa based in London. Prior to this he was on the freight pricing desk at S&P Global Platts, covering dirty and clean tanker markets.

As part of the conversation around freight markets, and their impact from energy markets to our everyday lives he has been lucky to contribute to Bloomberg, TradeWinds, Al Jazeera, Tanker Shipping & Trade (part of Riviera Maritime Media), Ship & Bunker, The Moscow Times, The Business Times (Singapore), The Houston Chronicle and Gulf News among others.

In his spare time he sits on the board of the Shipping Professional Network of London, where he aims to bring together young professionals from all aspects of the shipping industry to network, socialise and learn more about the industry he proudly forms part of.