Shipping in the age of Industry 4.0

What are your expectations on the Singapore ASEAN chairmanship and on the future of ASEAN?

ASEAN turned 50 last year. I would like a Singapore-chaired ASEAN in 2018 that can reflect the will of the people of ASEAN. Not just as citizens of our 10 separate countries, because ASEAN people know we are inter-connected, our destiny is intertwined and common. Our national and ASEAN policies and politics must keep up and evolve with the realities of a globalised world we live in today. As Singaporeans, we must not just have farther sight and broader mind, but also a bigger heart. With an active ASEAN leadership and pursuit of its aims and purposes, capitalizing on each member state’s unique strength rather than taking a competitive attitude, we all can look forward to a diverse, inclusive and prosperous 630-million-strong ASEAN.

What has been the impact of the AEC on the shipping sector?

There are tangible benefits. In terms of seaborne liquid chemical trade alone, exports from the region grew 13% or by about 1.8 million tons, while import also grew to over 16 million tons at about 9%, in 2017. More notably, Intra-ASEAN trade grew 14% to 6.1 million metric tons from 5.4 million metric tons in 2016. We expect to see such ASEAN growth to continue with inclusive and cooperative policies.

On the one-year anniversary of the CFE report, what is your analysis of its success and your expectation moving forward?

It may be too early to call success or failure, but we do see follow-up actions. In general, the Singapore government’s continuous efforts are commendable. If I had a wish-list, specifically I would like to see adjustments in these areas: 

1. A more balanced emphasis on ‘high-tech’ startups. It is not just in high-tech that we will achieve great results. In fact ‘low-tech’ companies can and do produce many innovative ideas. Sometimes, we cannot achieve high-tech innovations before we get low-tech to work first. For eg. in digital transformation, if we don’t get companies to adopt digitalization, we cannot capture digitalized data, which is a basic ingredient for high-tech applications like AI to work.
2. A more balanced approach on entrepreneurial quantity with quality, so that efforts and resources can channel towards these identified entrepreneurial qualities to achieve better returns.
3. Tweaks on our manpower policies for more proportion of diverse talents from our ASEAN neighbors. On the other hand, to have Singaporeans acquire deep skills, and enterprises strengthen innovative capabilities effectively, some fundamental changes in our approach are required.

It is necessary to shift to a more skill and performance than a qualification focus that we have today. We need to encourage our people by giving plenty of room for individual creativity to experiment, create, apply, learn from mistakes, re-do and thrive. Coincide it with education. It may take time. But, once we start moving to be less pragmatic in our attitude, we will be on a clear path in building a new social norm where creativity is allowed to thrive, those 7 strategies will have better chances of success.

What are the impacts and implication of the Sea Transport ITM in your sector and how strong have you seen the tripartite approach?

The Sea Transport ITM was launched only in Jan 2018, so it is not meaningful to talk about its impact now. But we do see a few initiatives taking place, for example an agreement by MPA, Singapore Customs and Singapore Shipping Association to look into digitalizing trade and maritime documentation. The tripartite approach is a sensible one which we practice in Singapore. A key point is continually ensuring that such tri-partism is upheld fairly and meeting its objectives for all stakeholders. 

How important is the IMC 2030 strategy for the Singapore Maritime sector to flourish?

Our maritime sector cannot flourish without continuously active participation, engagement and involvement of the various stakeholders. I believe the IMC 2030 committee which included 22 members are good representations of these very diverse stakeholders. It was formed by MPA to undertake a strategic review and chart a development strategy to take Singapore’s IMC to 2030 and beyond, so both the public and private sector stakeholders did not only participate, engage or involve but actually stake our commitment in charting the strategy together.

MPA Chairman Mr. Niam Chiang Meng described the Strategic Report as one that maps out a set of bold recommendations for Maritime Singapore; and some of the recommendations dovetail ongoing efforts under the Sea Transport ITM. In other words, these are not isolated but are coordinated efforts. These strategies and recommendations when effectively executed will no doubt help Maritime Singapore develop our strengths further, seize prevalent opportunities and flourish.

The overall attractiveness of Singapore in terms of infrastructure, finance, service ecosystem, as well as the legal framework, will play a crucial role in attracting more players to the city-State. How would you describe the competitiveness of Singapore versus other IMCs? 

Besides those you have clearly and correctly identified, Singapore IMC differentiates from other IMCs in not just a few ways. In any case, I see different IMCs serve their respective and specific purpose. As soon as they lose such competitiveness or stop offering values, they lose serving that purpose. Same applies to us and Singapore IMC. Singapore strategic location, the port and its extensive maritime connectivity has always been a vital part of our economy and history. Over 170,000 of us who are employed in this industry know this very well. Each of us plays an important role, and we must make it count.

Digitalization is set to play a role in the sector moving forward. Can you tell us more about the impact of technological disruption in the sectors and the opportunities it is set to create?

There are both public and private sector digitalisation initiatives but it is early days and I think the maritime sector is still in a conundrum today. It is not without reasons. First of all, many of the shipping Uberisation ideals and startups have failed to create real digitalisation benefits. Secondly, because of the B2B nature of the maritime business, major disruptions are less likely to come from tech alone like it has happened for Uber, AirB&B, even the FANGs which succeed through effectively acquiring numbers as a B2C business. So we do need to see more industry own efforts to move forward. Thirdly, a long chain of parties including intermediaries deals with a significant amount of paper documents required in the maritime business poses both a challenge and opportunity. Any undertaking to change this could be as big as the disruption it will bring about. But more realistically, impact is limited currently as digitalisation efforts are not yet wide spread. I believe most efforts will be stepped-in and mainly focused on efficiency rather than creating new business models, until the time is right.

Can you tell us more about the inception of ShipsFocus and define for us in practical terms your concept of aggregated shipping?

Maritime shipping is a capital intensive yet cyclical business that goes through periods of boom and bust. Usually boom is short with a longer down period because supply responsiveness is limited due to the time it takes to add new ships and space when demand surges, and over-supply when demand cannot sustain. This, on top of how trade-flows work, means there is always wastage and unoptimized utilization. In the chemical tanker trade, which ShipsFocus specialises in, the trade-flows are a little more dynamic than one-way like in other shipping segments. But still, we can see such wastage and under-utilisation. In the context of Industry 4.0, we believe such wastage can be substantially minimised through what we term as “Aggregated Shipping” conducted on an inclusive platform. ShipsFocus was set up to achieve it.

A chemical ship has multiple tanks so it can carry varied types of chemical cargoes for several shippers from various load ports to many discharge ports. In current independent systems and mainly an exclusive model, intermediaries compete for business but do not help carriers nor shippers aggregate their demand and supply. Ships end up competing and calling similar load ports and discharge ports, incurring high voyage costs. “Aggregated Shipping” utilizes the power and clarity of an AI-enabled platform and rationalizes such demand and supply.

Very briefly, in a past model where a ship either fixes a combination of say three different cargoes (say from 3 different load ports to 3 different discharge ports) totalling 10,000 tons at an average of 40 dollars per ton, or fixes a single bulk cargo of 10,000 tons at 30 dollar per ton, now through the Aggregated Shipping platform, supply (of ships) is more clearly distributed according to the rationally sorted and aggregated demand. A ship can fix 3 parcels but from a same load port and possibly going to a same discharge port, totalling 10,000 tons at an average rate of 35 dollars, leaving other ‘rationally aggregated’ cargoes for other ships with similarly minimised number of port calls. The result is a much better financial outcome for the customer and the carrier, less congestion at port, and lower GHG emissions.

How have you been able to leverage on Industry 4.0 to service the shipping industry with their digital transformation?

We are in our early days, and even years. For ShipsFocus, internally we are learning and moving rather rapidly between the business domain, intelligence and technology teams, continuously challenging each other with new ideas, creating prototypes and developing innovative products as we engage and investigate the market place. But for the maritime shipping industry in general, in Industry 4.0 terms, things are moving very slowly. This includes our early adopters who have already signed up. After all, digitalization is a system transformation. Let me explain:

We are somewhat stuck in what I term a ‘shipping efficiency paradox’: As I mentioned earlier, in maritime shipping, a significant amount of paper documents and their physical inspections are required and a long chain of parties are involved. It has taken time for companies to build up their systems, processes and linkages, and for people to work well with the systems and become very well-versed with the processes and linkages. This resultant efficiency is what they achieve and want to uphold naturally. Fast forward to Industry 4.0, digitalization means a change of system. Now all those systems, processes and linkages – many of which are seen as costly – could or should be replaced or displaced to achieve new efficiency. This explains at least partly why things are not happening faster.

In one of those instances, where readiness to embrace digitalization is not there yet, our team came up with a ‘transitional’ service. That was how James and his team developed the “Aggregated Marine Services” or AMS, mainly port services like: “Aggregated Tug Service”, “Aggregated Launch Service”, etc. So we continue to engage the customers with an offline service we provide, while we adopt the digitalization solutions on our end to help them cultivate, capture, and accumulate digitalized data. These customers know that when they are ready to take the red pill, the system is in place.

On top of the technology from industry 4.0, your company offers intelligence and consultancy services. Can you tell us more about the added value you bring to your clients?

What is valuable and really differentiates ShipsFocus is its hybridity in the maritime domain and the startup technological front, and our focus on chemical shipping. On one hand, the intelligence team builds on a background of a shipbroker, access to a wide market coverage and experience in understanding market nuances, pitfalls and opportunities. On the other, with the advent of big data, the team applies ships AIS data and AI to generate new analytics, giving perspectives and granularity market did not have before, and continuously finding new ways for customers to make money.

ShipsFocus Intelligence also has several very well-developed chemical freight indices based on time-series freight rates since 2003 which closely track and reflect both key global and regional freight markets. Freight and other forecast products are built on robust modelling that feeds on such historical and new data. Being a platform where we can access more data sources, these indices are continuously enriched and providing ever better reflection of the markets.

ShipsFocus Services offer consultancy that capitalises on these capabilities, that help customers in market positioning, identify market opportunities, negotiate better deals, formulate digitalisation strategies, adopt and manage changes.

You define your company as a startup with a startup mentality. Can you tell us more about your vision over the next 10 years?

Sometime between probably 5 years and 10 years from now, is a tipping point when Industry 4.0 shipping applications will start to come together and make sense more apparently. I hope I am wrong and this happens sooner. But they will consist of cohesive systems connectable via APIs linking networks together like trade, banking, insurance, ship-chartering and operations etc. in a new and unencumbered ecosystem charged with a new efficiency. This includes the Blockchain, and results from various experimentations that are going on now. If I liken it to the Internet, we are just in the slow ‘dial-up’ days with prevailing stovepipe systems, so it may be hard to visualize now.

But there is much in store for maritime shipping – no less a major transformation from a largely unsexy or even undesirable industry to one that is more deserving of recognition for the work it does for world trades and many lives it helps improve. ShipsFocus and all that we are doing now position us to be right there, being both part of this wave and an enabler of this change. We will continually help companies digitalise and create value, from port services, shipping agents, ship-operators, ship-brokers to linking with the charterers and their trades. The hybrid nature and our empathy will play significantly as we sooth companies into taking the digitalisation red pill. I can see James and his team realising the Aggregated Shipping vision in a new and completely refreshing maritime seascape in the next 10 years.