On March 23, 2021, a ship – Ever Given – was passing through one of the crucial trade routes of the world; unfortunately, it was caught in a severe sandstorm which caused the ship to swing towards the bank. It wedged deep into the land blocking the entire canal for six days. The canal accounts for $9billion worth of global trade per day. This means that the incident caused a loss of $54 billion, not to mention the toll-collection loss of $90 million for the Egyptian authorities.
The whole incident, the huge loss could have been avoided if the ship used an AI-based system to get weather forecasts.
AI can hugely benefit the shipping industry and increase its efficiency while lowering the cost of operations. Maritime logistics is an industry where timing is extremely crucial for successful operations. AI systems can enhance predictive capabilities to streamline operations and prevent bottlenecks with the help of real-time analytics and predictive scheduling. Furthermore, to automate processes in the shipping industry, we need AI as well.
Read on to know where the shipping industry is heading in terms of AI adoption, the barriers to this adoption and what the future holds.
Pain Points in the Shipping Industry
The industry leaders are highly confident that AI can solve many pain points that the maritime industry faces today. What are these pain points?
- The shipping industry is an intrinsic part of the supply chain. Despite technological advancements, different areas of the industry are not connected with each other. No matter if you are an exporter, a freight forwarder or a shipping line – a lack of smooth information flow constrains the success of the industry as a whole.
- Since the areas of the maritime industry are not connected, manual data entry can’t be avoided. For example, since the freight forwarders act as a broker, there is no way that the exporter and the shipping line can digitally negotiate between each other. Multiple invoices will be generated, and then they have to be digitally stored, which is a cumbersome and error-prone process.
- As we explained in the example initially, forecasting weather patterns, assessing ETAs/ETDs, fuel consumption can drastically reduce the operational cost. But these things are not used in a big way in the shipping industry.
- Lastly, the shipping industry is a dynamic one. Freight rates change often. Regulations change all the time. Without a flexible system, these changes can obstruct the smooth flow of delivering the containers.
Can AI In Shipping Industry Solve These Pain Points?
AI-based systems can solve and are already solving most of these problems for forward-thinking companies.
Companies create automated technologies within their ERP system to create individual portals for suppliers, carriers, brokers, etc. This ensures a streamlined shipping process with no back and forths among various stakeholders. Information gets passed on quickly. The AI-based system can intelligently send relevant information to relevant apartments. You can use ERP to forecast bottlenecks. Based on historical data, it can forecast whether there will be any delay in shipping any item. And based on this report, you can take action to prevent bottlenecks.
AI-Based Text Extractors
Even if the stakeholders in the industry are not connected with integrated software, we can still take advantage of AI-based text extractors to automate entering data on invoices and emails into computers in a structured form. We already have effective text extractors. But without AI, these text extractors can’t understand the context of the extracted texts. So companies have started using Intelligent Document Processing which is powered by AI.
AI-Based Fuel Consumption Forecast System
With data from the ship’s sensors and a lot of benchmark data, AI can predict fuel consumption. This prediction can be used to optimize a ship’s fuel consumption. For example, AI can combine the sensor data with the weather data to chart a re-routing strategy. This weather-based rerouting can save almost 10% of the fuel and related cost.
Volume Prediction With AI In Shipping Industry
Shipping carriers or shipping lines can predict volumes based on historical data. This enables them to scale up or scale down their resources which prevents bottlenecks and unnecessary spending.
AI-Based ETA Calculator
Many stakeholders in the supply chain industry are using AI-based tracking technology that uses forecasting models like real-time weather data, GPS, distance, etc. With this, they are now quite accurately able to gauge when cargo is going to arrive. The most significant use of this technology is that companies can drastically reduce the number of backup stocks in their warehouse since they now have a real-time cargo tracking system.
AI-Based Freight Rate Management Process
Freight rate is one of the things that fluctuates so much that creating a quote seems daunting. However, with an AI-based freight rate management system, creating reliable and instant quotes saves a lot of frustration.
Some Challenges In Adopting AI In Shipping
Despite the promising potential that AI holds, the implementation of AI-based systems in the shipping industry has many obstacles in the path-
- There are so many stakeholders in the industry. To create an integrated AI-based system, they need to work together and share data. Bringing them together and aligning their goals can be challenging.
- To create predictive models and insightful analytics, we need accurate data from all the stakeholders. But, unfortunately, in the shipping industry, gathering accurate data can be a challenge.
- And then there’s the fear of job loss among the people working in the industry. This slows down the AI adoption rate.
- Lastly, AI-based digital transformation systems need a systematic way of development. In the dynamic shipping scenario where change is the only constant, creating an orderly method of Digital Transformation can be a bit challenging.
Yet despite all these challenges, more and more shipping lines, exporters and importers, charterers and freight forwarders are pushing towards AI-based systems to cut costs and achieve unprecedented levels of efficiency. It’s just the beginning. The shipping industry and, along with that, the entire supply chain will be revolutionized as companies march towards AI. It’s exciting to be in the shipping business.