THE FIGHT FOR PORTS
The importance of ports in supply-chain, and the race towards reduced costs and faster cargo handling has led to a new spike in industry transformation.
The role of Agents may soon be undergoing significant changes. The agency activity, which, historically, related to cargo canvassing, inward and outward clearance, crew-support, ship supply, port handling and documentation, has been of significant importance for cargo transshipment and inter-modality.
As a meeting point between different modes of transport, port stay and cargo handling, as well as storage, and other operations add up to significant expenses. Port costs contribute to as much as 40% of transportation costs. The rest 60% comprise mainly of fuel cost and daily operational costs of each mode of transport.
While competition between different modes of transport and individual companies ensures rock-bottom transportation costs, competition between ports is less evident. Each port or stevedoring company has a unique method of pricing their cargo handling and navigational services. Arranging timely berthing, saving costs and time on cargo handling, and providing seamless interconnectivity between maritime and land transport has been and remains the main task of agents. Third-party agents have kept this as their main source of income for generations, while the actual carriers and forwarders could not afford physical presence overseas.
In the last years, the importance of physical presence in ports has been growing both for agents, as well as forwarders. Larger forwarding groups and agency networks have taken steps to further international expansion. Handling data related to cargo and ports, while trying to reach efficiency and reduction of costs to remain competitive, pushed forwarders, carriers, and agents towards digitalization.
It is widely known, that digitalization leads to transparency and reductions of costs. With this, the role of agents and forwarding companies began to evolve. And the need to find additional sources of income and the struggle to remain competitive leads to overlap of activity.
Considering the trend towards autonomous transport, digitalization of documentation-flow, and interconnectivity, the role of a port agent may become, to a great extent, supervisory. The importance of reliable and real-time port data, on the contrary, has significantly increased. It is a key to reduced transshipment costs and shorter transit time.
Coincidentally, the digitalization path taken by Forwarding and agency companies has been quite similar. Larger forwarding groups could afford to build in-house solutions, with ticket sizes reaching, in some cases, over a billion dollars. Others, particularly the smaller and more conservative companies chose to adopt third-party solutions.
Forwarding groups, such as Geodis, DHL, Agility, CEVA launched platforms for supply chain visibility. Others, like K&N, decided to seek opportunities in e-commerce instead. Flexport — the first self-proclaimed digital forwarder, pivoted twice from being a digital forwarder to a forwarder and then a platform. These attempts to digitalize supply-chain visibility help offer reliability and transparency to attract international clients.
Parnity, FreightScope, Shipsta, Twill, although mainly related to containerized transport, are among several well-known third-party solutions for forwarders.
Agency companies — Inchcape, GAC, Wilhelmsen, Sharaf Shipping — built their port-data platforms. This helps them target internet users and new customers, by providing their local knowledge and informational support.
Small and medium-sized agencies, particularly those, that represent one port, find it increasingly difficult to digitalize, as their role and scope of activity has been significantly squeezed by larger players and industry transformation.
Port DA and Shipnext have, therefore, taken the path to build a large international network of agents, who, collectively, will dedicate themselves to creating greater visibility and accessibility of real-time port data while having access to an online platform where they can exclusively represent their own ports and operational support.
Finally, there are Ports and Port Operators themselves turning towards shipping platforms. Earlier this year DP World took over the control of SeaRates, a Ukrainian startup dedicated to container freight.
It is yet to be seen which strategy prevails. One thing is for certain, that the digital race continues, and shipping is not as old and conservative, as it was before.