The shipping industry unites to embrace the digital age
Every day, we rely on products that are carried by container ships. With the industry crucial to global trade, imagine the repercussions if it came under threat.
Fiercely competitive, container shipping has big-name operators that are recognised the world over. However, investment in digitisation and the need to replace outdated IT systems to bring shipping on par with other industries that have seen significant innovation have impacted the industry’s profitability.
The world’s trade engine needed a joint effort to help them chart a safer course. Given our connections to several major shipping lines, we took the matter into our own hands.
Steering a sea change
We approached industry leaders who, together, account for more than half of the world’s container market. In May 2018, they met for the first time in Singapore.
“The companies were aware that the challenges were beyond the power of one company to address, but they didn’t really talk to one another,” explained Deloitte Denmark consultant Philipp Schwörer. “Trying to get them to work together was a risk, but the pressure they were under could have threatened their existence.”
It was a successful meeting and soon the Digital Container Shipping Association (DCSA) was established by five of the world’s largest operators – Maersk, Hapag-Lloyd, Mediterranean Shipping Company, CMA CGM and Ocean Network Express. Announced in November 2018, it received regulatory approval from the Federal Maritime Commission five months later and officially formed in Amsterdam in April 2019.
Neutral and not-for-profit, the DCSA’s aims include bringing the industry into the digital age and standardising processes. All ocean carriers are invited to join and, just weeks after the launch, several were keen to come onboard. In June 2019, the DCSA announced four additional members, increasing the market representation to over 70 per cent.
Philipp, who has been responsible for the operational and legal aspects of setting up the association, continued, “90 per cent of world trade is carried by sea. Inefficiencies in container shipping impact every business and everyone.”
“The whole process of shipping can vary between companies. There are IT interfaces that don’t talk to each other and paper-based processes that aren’t efficient. Standards developed by the DCSA allow the companies to develop solutions that work for the entire industry. This could have huge effects on profitability and make trade cheaper and more effective.”
“For the first time in 20 years, the container shipping industry has come together with a common goal to move the industry into the digital era.”
A global response
A project this size called for skills from across Consulting, Risk Advisory and Tax and Legal.
However, bringing together worldwide expertise – four member firms and eight nationalities – and fierce competitors weren’t the only challenges. The association’s formation also had to be approved by antitrust authorities in the United States.
Philipp added, “There was a time when nobody thought we would be able to establish this association. It is one of those projects you’ll look back on in 20 or 30 years and say: ‘I am proud to have been involved.’
“We’ve helped the shipping industry take their fate back into their own hands. It shows the impact we can make when we think big.”
”The container shipping industry is an essential part of world trade. Yet in spite of its impact to the world economy, digitisation is still relatively modest in an industry where physical paper flows and manual labor processes are common. Five of the world’s largest container carriers created Digital Container Shipping Association (DCSA) with an aim to fast-track digitisation in the container shipping industry. Deloitte played a crucial role in the establishment of DCSA by safeguarding neutrality, fostering collaboration and challenging the industry players on both strategy and technology”