Will digitalization kill brokers?
Brokers across various industries historically fear digitalization. But should they rather not learn from those industries, where markets went digital?
Many fear, that digitalization will replace brokers. After all, these are valuable professionals, with knowledge, experience, and connection. It’s hard to imagine brokers today, who physically meet their clients each time they find what they want. Neither do they communicate by telex or fax — mainly used in the 1970s and 1980s. And yet they largely fear digitalization, promote “the old ways” and find it hard to change.
Shipbroker’s activity is quite diverse, as some prefer to be cargo-centric, and others ship-centric, and even chose to specialize on just a fleet sizes, there is one thing in common — they all remain the main traders in the industry.
While some companies are large enough to employ brokers internally, appointing them as their chartering or shipping managers, others are smaller and chose to work with external — independent — brokers. Or even combining the efforts of both.
“Shipbrokers are professional traders in the transportation industry. No industry can be efficient without professional traders.
But shipbrokers can not longer afford to remain focused on one size or trade. Access to data — is the key to efficiency and success” — Alexander Varvarenko
These complicated and obscure set-ups, where shipping managers, employ shipbrokers, to communicate with chartering managers, are quite common. And the usual form of communication by email and messaging has, over the last two decades, formed what we know today as the “Shipping Market”.
We do not question the efficiency of building such ties. There is certainly more to it than just matching demand and supply. And yet the flows of emails and messaging have drastically increased over time. The Shipbrokers of the 21st century was no longer expected to find a suitable ship, considering all the restrictions and requirements, and the freight. They were also expected to collect all the relevant data, pertaining to the voyage (ship’s speed and consumption, routing, current position, port costs, congestion and weather data, loading and discharging rates, bunker prices, etc.) and use their insights, forecast data and professionally build their assumptions on analytics.
But how to collect this data, internationally, with over 50.000 vessels, 5700+ ports, large time difference, and a multilingual environment? The email, and later messaging, begun to further increase. And so, did the number of brokers, each of whom is specialized in his or her own field.
Diversity of trade, and the need for faster and more advanced solutions complicated things. Brokers could no longer write letters and wait a day to get a reply. So, the search for more accurate real-time and historic data has spun up the technological race. As brokers enhanced themselves with digital solutions related to fleet search, port data, weather data, routing calculations, and analytics, traders became ever hungrier for more and faster solutions.
The access to data, has, nonetheless, not solved the main problem associated with the flow of emails (messages) and the need to be efficient and fast in freight search.
Shipbrokers, as well as chartering and shipping managers, still spend about 65% of their time on reading emails and 20% more on the search for data.
Some companies receive over 10.000 emails per day, and adding more managers to process it is not a solution. Some requests, especially from new clients, remain unattended or attended inefficiently just because they may be outside the specialization of the shipbroker.
Artificial intelligence (AI) in shipping, with the help of natural language processing and machine learning, finally brought an important shift to the industry. The use of artificial intelligence helps shipbrokers (as well as chartering and shipping managers) simplify and speed up email processing to seconds, therefore saving 85% of the time.
SHIPNEXT , a company founded in 2016, patented the process of using artificial intelligence for email and data processing in an attempt to build a new and efficient shipping market — an ecosystem of a centralized marketplace and corporate freight-trading solutions. Larger shipbroking companies no longer spend time on freight search, but rather collect and feed data and intelligence into their freight-matching “terminal”, which is then used for an even faster and more accurate solution search.
This process speeds up the search of freight solitons down to seconds and gives access to valuable forecasts based on predictive analytics. Each broker, therefore, becomes faster, diverse, and universal in his or her ability to help the client (trader or shipper) with freight search and supply-chain management.