You don’t need to look far to see the effects of digital transformation on our lives. We can ask our phones what the weather is like, pay for goods with the tap of a card, and we’re even on the cusp of self-driving cars. However, there’s one industry in particular that technology is having a significant impact on – shipping.

Shipping has come a long way since the days of brass, sails and barrels of rum. Yet, despite transporting up to 90 percent of the world’s trade in today’s modern economy, it has been relatively cautious to adopt new technologies. However, the transformation tide is turning.

Research shows that investments into new shipping and logistics technology hit $3.3 billion in the last few years. From automating cranes and trucks at ports, to reducing ship emissions and even predicting vessel maintenance, we’re seeing technology drive commercial and operational efficiencies in all areas of maritime. So, how are technologies like artificial intelligence (AI) and machine learning (ML) driving digital change and transforming how the industry operates?

A complex sector

20 million containers travel across our oceans every day. Chances are, most of the goods you consume on a daily basis are transported via the sea. It’s not often that the average consumer thinks about how their goods get to them from around the world. However, shipping is a more complex sector than meets the eye.

To demonstrate the complexity of the industry, it’s important to appreciate the shipping ecosystem, including how all stakeholders operate. First, we have the shipowner, who owns a vessel or fleet of vessels. Ships are expensive assets and an underutilized ship means a shipowner could potentially incur unrecoverable costs from crew wages or fuel. With this in mind, shipowners need a real-time view of potential voyages to ensure they can manage their ship or fleet effectively.

Then there’s the charterer. This person has a commodity, like gas or oil, that they need transported from A to B safely, and on time. Often there will be multiple ships competing for the same cargo, so price also plays a major factor. The shipping market is a hugely volatile environment, with costs and asset values constantly changing. Charterers needs access to accurate, up-to-date information about market fluctuations to ensure they are choosing the right ship and for the best price.

In the middle of this process is the broker, who gathers information from shipowners and charterers about ship prices, locations and cargoes. A broker’s success depends on having the best market knowledge and exploiting this to strike profitable deals. Ultimately, the more accurate information they provide, the better the relationships they will have as other stakeholders will turn to them again in the future.

Information overload

Trading between these three groups has become considerably complex as the availability, variety and quantity of information has grown dramatically. Communication about potential deals and contracts is still predominantly done via hundreds of emails a day. Not only are these emails in differing and confusing formats but data analysis is done manually so information gathering is slow. As a result, information often expires and it’s difficult for stakeholders to get an accurate view of industry movements. Commercial decisions are therefore frequently made on assumptions, rather than actual facts. Many stakeholders are dealing with information about million-dollar deals so they can’t afford to make errors – or risk losing those millions!

Other sectors, such as financial services, have addressed the challenges associated with extremely large data sets by embracing new technologies. However, shipping continues to rely on older systems, meaning there is a large amount of guess work during decision making in the ‘deal making’ phase.

Riding the digital wave

According to estimates, the shipping industry generates 100-120 million data points every day, from ports, couriers, vessel movements, etc. For more informed decisions to be made, the industry needs a system that can absorb, automate and cross-reference these data sets with other commercial, legal, regulatory and environmental factors.

AI and ML can be used to mix and analyze an array of both private and public shipping data and present this in an intelligent and easily digestible way – all in real-time. This takes away the headache of manual data processing and also means that stakeholders have a more comprehensive view of the entire ecosystem. As a result, deals are based on accurate information, removing uncertainty.

For shipowners, this means a more realistic picture of market volatility, enabling them to make better pricing decisions and load choices. The technology can be used to predict a ship’s future movement, recalculate routes and even forecast future capacity. For charterers, it means faster decisions with the confidence that they are striking a deal with the right shipowner, at the right price and route. Finally, for brokers, having a better understanding of the market means they can better advise charterers and shipowners on more lucrative deals, and therefore build longer-term relationships.

It’s clear this age-old sector is realizing the power of technology, particularly AI, as a driver for increased productivity and profitability. One thing for sure, though, is that shipping is on the cusp of a digital wave.

Ioannis Martinos is founder and CEO of the Signal Group, whose Signal Ocean platform uses artificial intelligence to modernize ship management.