Solving the digital puzzle in container shipping - standards & cyber security

Pieces of the digital puzzle are falling into place in container shipping, ports and trade to allow all stakeholders to more rapidly deploy new tools and provide a better competitive environment for technology providers. But cyber security remains the fly in the ointment says Lars Jensen in this guest post ahead of TOC Europe 2019

To the casual observer it seems the shipping industry has only awoken to the digital agenda in the past 3-4 years. Shipping companies, as well as ports and terminals, are talking with ever increasing frequency and volume about the need for a digital transformation, and how this is pivotal to their future as commercial entities. A large number of technology providers are similarly jumping into the fray with digital offerings covering every conceivable need the industry might have.

But, if we look a bit objectively at what is happening, three key questions could rightfully be asked:

• Is the digital transformation really as new as it would appear in shipping?
• What are the key pieces of the digital puzzle which must be in place for this transformation to actually happen?
• And are they actually falling into place?

150 years ago, the shipping industry was quick to use the opportunities the new undersea telegraph cables provided. A company such as Maersk implemented the de-facto use of email in the early 1980s. Portals such as INTTRA and Cargosmart provided multi-carrier digital opportunities for information exchange from the early 2000s. Technological transformation is certainly not new to the industry.

Yet, it is also clear that the rapid digital transformation we have seen in the society at large in the past 20 years have outpaced the shipping industry on a range of parameters. Any newcomer to the industry is quickly baffled by the lack of transparency in the information flow and the manual disconnects in key business processes.

To some degree this is clearly because the industry has failed to be early adopters of the digital revolution – but to some degree it is also because of institutionalized governance processes which have proved difficult to change.

What are then the key impediments for the digital transformation? And is there hope that this is about to change? The answer to the latter question is a clear “yes”. A closer look at the former question uncovers why the answer is “yes”.

A digital transformation contains a plethora of moving parts, all of which are interconnected and need to fall into place. Some of the most fundamental aspects would be:

• Digital standards
• Willingness by both providers and customers to change processes,
• Willingness to provide a higher degree of transparency
• Willingness to invest

A pivotal part for a digital transformation is the presence of common data standards. Without this, tools and processes remain disconnected and technology innovators face a significant hurdle in getting widespread adoption of even the best of ideas. The new emergence of the Digital Container Shipping Association is the most promising initiative seen in this respect, and a successful outcome will allow a much more rapid uptake of digitalisation in container shipping.

As the use of digital tools have become ever more pervasive on all other parts of business, shippers, shipping lines, ports and terminals have a much higher willingness to embrace new digital tools in their own core processes, and hence another important piece of the puzzle is falling into place.

Transparency is not a trait the industry has been known for, where the mantra more has one of secrecy as a source of competitive advantage. The emergence of real-time tracking capabilities, use of machine learning across devices embedded in the ships and true online pricing are only a few examples of how transparency is quickly gaining traction. Not only does this allow for more streamlined business processes, it is also a prerequisite for tapping into the value pool associated with AI and machine learning tools.

The appetite for investment has also risen with both shipping lines as well as ports and terminals allocating ever larger sums for new (semi)automated equipment, new software tools as well as direct investments in start-up technology providers. And on top of this the influx of investor capital into the shipping industry, with the largest example being the USD1 billion investment in Flexport by Softbank.

These developments all point in the same direction – that the necessary pieces of the digital puzzle are falling into place in the shipping industry. This will allow all involved stakeholders to more rapidly deploy new tools, as well as allow a much better competitive environment for the technology providers.

The only fly in the ointment is the issue of cyber security. From being completely neglected, cybersecurity has been widely talked about in the industry, and was especially brought to the forefront in the wake of the cyber attack which bought Maersk to a complete standstill in 2017. However, the reality is that when you look underneath the surface, a large share of the shipping industry remains woefully ill prepared for cyber attacks. Many successful attacks continue to take place against not only the land-based systems with shipping lines, but also the vessels themselves. A large number of these attacks go unreported, or are reported as something else, as the organisations who are hit see no benefit from being seen as victims of successful attacks.

Cyber attacks can never be fully prevented – just as physical attacks (or accidents) can never be fully prevented. But the success rate of the attacks can be reduced, as can the impact. This is the piece of the puzzle which needs a higher degree of attention – attention in terms of actual action, and not words - to fit with the other pieces of the puzzle. And then the digital field is wide open for a new and better industry.

Lars Jensen is CEO & Partner of maritime advisory firm SeaIntelligence Consulting, CEO & founder of maritime cyber security consultancy CyberKeel,, CCO of LinerGrid, a cloud-based tool to optimise networks in liner shipping and Partner at LinerGame, an interactive simulation game for liner executives, among other engagements. A frequent advisor and contributor to TOC, he speaks this year in the Cyber Security and Business, Trade & Container Shipping Outlook sessions at TOC Europe 18-20 June, Rotterdam

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