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Digital Transformation of Maritime Freight Market to Witness Steady Growth during the Forecast Period 2019-2027

Digital Transformation of Maritime Freight Market: Automation Remains the Top-Driving Engine

A mounting number of companies across various industrial verticals are modifying their business models with increased importance of consumer satisfaction, and the maritime freight landscape is no exception. With the market for maritime freight witnessing incremental growth in the service industry, it is undergoing digital transformation to improve transparency and offer a quicker response to customers’ needs in this landscape.

One of the recent developments in the technologically-advancing maritime freight landscape reflects a rise in the digital transformation of booking software. Digitization of sea freight booking through automation and cloud-based technologies is showing unprecedented growth in the digital transformation of maritime freight market.

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Cloud-based software solutions are poised to hold ~60% of the digital transformation of maritime freight market share by 2027; cloud-based solutions and cloud management tools are gaining popularity with their cost-saving benefits for stakeholders in the maritime supply space, thus triggering growth in the digital transformation of maritime freight.

For instance, in March 2018, Hapag Lloyd launched its cloud-based rate management platform – Cargo Sphere – which gives its customers fully-automated access to all its rates. The company further declared that, the platform can also deliver sales-related benefits, including more frequent selection of optimal booking and faster quoting to customers, ultimately to improve customer satisfaction by sharing accurate Hapag-Lloyd rates in real-time with its partners.

Automated contract management at the booking stage can enhance accuracy and significantly reduce business overheads by decreasing processing time. By obliterating email-driven spreadsheets and PDFs, such a robust innovation will move the digital transformation of maritime freight industry beyond incremental gains.

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Such innovations come at an opportune time when automated software solutions at the booking stage are set to grow at a CAGR of ~10% during the forecast period. Maximum digital transformational spending is likely to be recorded at the booking stage, giving market players in the maritime freight industry key insights on directing business development strategies towards these business operations.

Making the vision of a digitally-transformed maritime freight market a reality will need many different tacks. Shipping giants tantalized by the prospects of digitization are channelizing all their energies by developing a hi-tech online marketplace, which allows shipping customers to make reservations via a digital portal. This would help stakeholders in gaining more transparency in an industry that is opaque and fraught with volatility. Effecting a reconciliation between invoices and bookings can be error-prone, onerous, and time-consuming. Settling of freight invoices via EDI (Electronic Data Interchange) can be much more efficient at just the push of a button, and can enable stakeholders in streamlining their invoice processes, thus improving their bottom line.

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Trends Shaping the Digital Transformation of Maritime Freight Landscape

The technological juggernaut has already accelerated to a new level, holding the potential to completely transform the maritime freight sector. An emerging technology, dubbed TechnoMax, is all set to change the face of the shipping sector. A TechnoMax LNG carrier can be made of advanced materials such as graphene, to make a ship lighter, while sensors made of the same material will detect the ship’s emissions and pollution levels. In addition, Big Data Analytics on board will allow it to smartly monitor cargo information, navigation, and communication, and the right mix of diesel and biofuels will reduce the cost of oil, thus, driving the growth of the digital transformation of maritime freight sector.

Enhanced carrier capacity management and robust operational efficiencies should be a major emphasis point for maritime freight sectors that are looking at digital transformation. Increasing cargo intake has always been the foremost strategy of key market players in the maritime freight industry. Furthermore, the IMO (International Maritime Organization) has taken proactive steps; in 2018, it issued guidelines that all maritime freight containers will have to reduce their emissions by at least 50% by the year 2050. This will propel stakeholders to increase their investments in technologies that allow them to track and analyze cargo vessels for operational viability and environmental sustainability.

Next-gen Technologies to Incur a Drop in Stakeholders’ Operational Costs

Since the maritime freight industry has a very high turnover, most businesses are now focused on reducing worker attrition and enhancing their productivity. With the adoption of voice technology, stakeholders are successfully improving productivity at warehouses, and consequently, the digital transformation of maritime freight market is gaining traction with a significant rise in revenue margins.

Furthermore, the applications of connected technologies and Internet of Things (IoT) in maritime freight will give businesses a vantage point to peek into the merchandise that is present inside the cargo. A robust and complex IoT application provides protection for expensive and sensitive cargo, and with the combination of IoT and cloud technology, suppliers can track and connect with cargo moving from one part of the globe to another.

Restraining Factors in the Digital Transformation of Maritime Freight Market

Trade wars and global trade relations have always made headlines and brought about significant changes in the market landscape. Case in point, the massive trade war between the U.S. and China in 2018 saw the introduction of many tariffs on goods imported by both countries, and strained the relations between the two. Such impositions will restrict trade and the movement of cargo, and obviate the benefits of digital transformation of maritime freight and curtail its demand in the maritime sector.

New regulations, dubbed IMO 2020, will enforce a 0.5% sulfur emission cap, globally, on the maritime freight industry. Its economic impact will lead to a drop in the demand for high sulfur fuel oil and an increased demand for diesel. These dramatic fuel regulations will significantly impact freight rates, causing them to rise, which will be passed on to consumers. The hike in freight rates will have a cascading effect, leading to a reduction in the demand for digitized solutions in the digital transformation of maritime freight market.

Rising volumes of cargo bring bigger ships that cannot traverse narrow sea channels. Stringent rules of sea channels limit the entry of big containerized ships. The impact is heightened when two-way traffic on narrow channels is prohibited. Such restrictions hamper port growth, forcing maritime freight conglomerates to take their business elsewhere. This will negatively impact the growth of the digital transformation of maritime freight market over the forecast period.

Digital Transformation of Maritime Freight Market: Regional Perspective

North America is expected to hold ~36% share of the global digital transformation of maritime freight market by 2027. This can largely be attributed to the proliferation of cloud-based solutions vis-à-vis on premise deployment. Advanced analytics, storage, and data mining can be done on the cloud without incurring exorbitant storage costs. The volume of merchandise that is exported has increased dramatically in North America, propelling digitization in the segment of vessel scheduling. Within vessel scheduling, ECDIS will be the main technology driving the growth of the digital transformation of maritime freight market. Along with this, automated port calls are also likely to be deployed soon.

On the other hand, the digital transformation maritime freight market in Europe is also witnessing positive growth, with shipping companies in the region aggressively pursuing digitization, as maximum trade activities are taking place at ports in France and Germany. With rising competition among key market players, more and more companies are opting for digital transformation solutions to enhance their operational efficiency.

Competitive Landscape Scenario

IBM Corporation and Oracle Corporation are among the leading market players in the arena of digitization, with their prowess lying in the field of advanced cloud platforms, AI, analytics, SaaS solutions, Blockchain, and cognitive solutions. They have continued to dominate the market landscape of digital transformation of maritime freight, due to expertise in product diversification and strategic partnerships & acquisitions in order to enhance their product portfolio and customer base.

In March 2018, Oracle Corporation spearheaded the launch of a fully-autonomous data warehousing cloud platform as a supply chain management solution. This solution is highly innovative and path-breaking, as it self-drives, self-secures, and self-repairs. The solution boasts of an industry-defying performance, and will serve as a role model to emerging market players to embrace digitization and stay competitive.

In August 2018, shipping giant Maersk and IBM announced the creation of TradeLens, jointly developed by the two companies to introduce Blockchain into the entire supply chain market of the globe. Such timely collaborations spur industry-defying innovation, and also bolster information sharing and transparency.

Both, Advantech and Mindtree Ltd are emerging players who are pioneering robust solutions in the spheres of IoT, digital transformation, and technology services, with prime focus on customized digital solutions across the value chain. Advantech and Mindtree’s prime focus is to provide state-of-the-art solutions for their clients in order to enable them to outperform their competition.

In May 2019, Mindtree announced the launch of QuikDeploy, an IP-driven approach to rapidly deploy SAP S/4HANA into the Microsoft Azure cloud. This enables rapid digital transformation and customer-focused innovations on different platforms. Likewise, Advantech is majorly focused on industrial IoT due to its myriad applications and benefits.

In April 2019, it announced the launch of a modular data collection gateway for edge IoT application. Its thrust into the innovation of newer technologies is allowing it to capture larger market shares, globally.

Analysts’ Viewpoint

A comprehensive view of the digital transformation of maritime freight market has led our analysts to conclude that, the market is growing at an impressive rate, with North America and Europe holding a large chunk of the global demand for digital transformation of maritime freight and its applications. The rising demand for digitization and its versatile usage in diverse fields such as booking, vessel scheduling, and delivery is spurring its demand. The impact of the high demand for digitization for bookings on the digital transformation of maritime freight market will remain high, globally. Strong financial position and technological innovations of key market players will also give impetus to the digital transformation of maritime freight market.

Technological breakthroughs such as AI, IoT, Blockchain, robotics, and sensor technology could provide timely succor as a cost-effective and time-saving strategy, thereby increasing the profit margins of market players. Companies with research & development capabilities and technological prowess will gather momentum and profitability in the digital transformation of maritime freight market. Leading players who are leveraging technology will continue to grow exponentially and have a vast market revenue share. However, cyber security and trade restrictions could restrain the growth of the digital transformation of maritime freight market.

Digital Transformation of Maritime Freight Market in Brief

  • The digital transformation of maritime freight market is projected to register a CAGR of ~10% between 2019 and 2027. The market is projected to be driven by increasing levels of trade across the globe.
  • The global digital transformation of maritime freight market is expected to reach ~US$ 38.4 Bn by 2027 from ~US$ 18.2 Mn in 2019. Fewer technologically-advanced vendors in the shipping industry is expected to boost the global digital transformation of maritime freight market.
  • The digital transformation of maritime freight market in Asia Pacific is anticipated to expand at a rapid pace during the forecast period, followed by North America.
  • North America remains the dominant leader in the global digital transformation of maritime freight market, with revenue in 2019 estimated to reach ~US$ 6.6 Bn. Increase in the number of trade agreements as well as increased importance of technologies such as blockchain and artificial intelligence for the better and flexible management of trade have led to the rise in the demand for digital transformation of maritime freight.
  • Asia Pacific is projected to see high growth in the global digital transformation of maritime freight market during the forecast period. This is due to the exponential increase in exports and imports within the region, specifically in China and India.

Digital Transformation of Maritime Freight Market: Definition

  • The digital transformation of maritime freight market report provides analysis of the global market for the period 2017–2027, wherein, 2018 is the base year, and 2019 to 2027 is the forecast period. Data for 2017 has been included as historical information.
  • In this report, we analyze the growth drivers that are increasing the value of the digital transformation of maritime freight market, and how shipping organizations can increase their scalability and flexibility by integrating digital technologies with manual operating models. Moreover, increased emphasis on customer satisfaction, which enables a company to provide the real-time data of ships as well as the ports, has led to growth in the global digital transformation of maritime freight market.
  • Shipping companies are adopting the digital transformation of maritime freight solutions rapidly due to its numerous benefits, such as reduction in paperwork and manual errors, enhanced response time to manage the quantity of freight, and forecasting of the route, besides many other benefits.

Asia Pacific Digital Transformation of Maritime Freight Market: Snapshot

Asia Pacific is one of the fastest growing regions in digital transformation of maritime freight market, where countries such as India and China are dominating the digital transformation of maritime freight market with rapid advancements in technology, and integrating them with shipping companies. Moreover, Asia holds the largest population in the word, which leads to the increased demand for products, and this has resulted in a rise in trade across the globe. The adoption rate of digitization in maritime freight, specifically in this region, is high in order to effectively and optimally manage such high volumes of data related to ships and vessels, quantity to be traded, and number of ports.

Key Growth Drivers of the Digital Transformation of Maritime Freight Market

  • Fewer Technologically-advanced Vendors in the Shipping Industry: Companies specific to digital transformation of maritime freight are few in number. The shipping industry is dominated (nearly 90%) by a few top players who can bear the cost of fully-automated and digitized systems in maritime freight. This indicates that the large numbers of small players are yet to integrate digitized systems at a significant scale.
  • Increased Importance and Dependency on IT & Digitization within the Shipping Industry: Dependence on IT and digitization is increasing in almost every segment. IT and digital transformation in the maritime freight and logistics industry has optimized operations and boosted the business of companies. It enables the digital transformation of maritime freight market to move with a structured vision by the integration of business potential with networking. Carriers are installing IT systems in the business to gradually enhance their business, which they need to do to sustain in this competitive world.
  • Rising Importance of Customer Satisfaction: Shipping companies are more focused on customer satisfaction and customer engagement. Client retention is the key to fast growth and to gain a competitive edge over other market players. Client focus is more in the marine freight industry, as it is a service industry where client responsiveness and intangible assets need to be measured and appropriate steps needs to be taken. This is expected to drive the digital transformation of maritime freight market.

Key Challenges Faced by Digital Transformation of Maritime Freight Market Players

  • The cost related to the narrow schedule movement of freight and cargo is very high. Ships and other water transport vessels entail huge cost related to goods and their transfer, when the route is short or the path of movement is narrow. This restrains the digital transformation of maritime freight market, as it demotivates the transferor from accepting such proposals as well as to digitalize the marine freight system.
  • Many countries have increased trade protection and changed their policies regarding shipping through waterways. This has impacted the digital transformation of maritime freight market. For instance, rising trade tensions between the United States and some of its trading partners may impact the global digital transformation of maritime freight market.

Digital Transformation of Maritime Freight Market: Competitive Landscape

  • In June 2019, The Ministry of Transport of Russia and Denmark-based shipping major Maersk signed a memorandum of association in order to facilitate international trade. According to the agreement, a blockchain-enabled platform would be developed jointly by IBM Corporation and Maersk.
  • In October 2018, Oracle Corporation launched the Oracle Blockchain Applications Cloud. This launch would enhance transparency and traceability across the supply chain process.
  • In September 2018, to automate and modernize port processes, Tech Mahindra announced the building and maintaining of an enterprise business system (EBS) at five Central government-owned ports in India.
  • In March 2019, Kintetsu opened its second warehouse in Amsterdam, the Netherlands, to strengthen its just-in-time delivery services. This warehouse is located at a distance of nearly 70 miles from a prominent sea port in Europe, which would make the process of freight transport more easy and convenient for the company.

Digital Transformation of Maritime Freight Market: Company Profile Snapshot

IBM Corporation: Founded in 1911, IBM Corporation is a prominent player in the field of cognitive solutions and cloud platforms. The company was founded as Computing-Tabulating-Recording (CTR), and was renamed as ‘International Business Machines’ in 1924. IBM manufactures and markets computer hardware, middleware, and software. It also provides hosting and consulting services in diverse fields, ranging from mainframe computers to nanotechnology. Currently, it is working with Maersk Line to provide solutions related to the digital transformation of maritime freight.

SAP SE: Founded in 1972, SAP SE is a leading global player in the field of software and software-related services. The company provides advisory services, support and success plans, premium engagements, cloud services, and implementation services. Based on market capitalization, SAP is the third-largest independent software manufacturer in the world, and has 130 regional offices, globally.

Oracle Corporation: Founded in 1977, Oracle Corporation provides a complete suite of services, including software as a service, platform as a service, infrastructure as a service, and data as a service. It has its presence in 175 countries across the globe. The company is focused on offering applications, platforms, and IT infrastructure products and services. It operates through three business segments: Cloud and Licensing, Hardware, and Services.

Other major players operating in the global digital transformation of maritime freight market and profiled in the report include

  • Syntel Inc.
  • Hexaware Technologies
  • ABB Ltd.
  • Tech Mahindra Limited
  • Kintetsu World Express, Inc
  • Advantech Co., Ltd.
  • Mindtree Ltd.
  • DigiLogistics Technology Ltd.
  • Partner Tech Corp
  • 3GTMS, Inc.
  • 4flow AG
  • Logistic Solutions, Inc.

Companies are shifting toward the adoption of AI, machine learning, blockchain, and upgrading their skills to gain a competitive advantage in the digital transformation of maritime freight market, apart from maintaining their position in the market.

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