In an exclusive interview to SAFETY4SEA, Alexander Varvarenko, Founder & Owner, Shipnext explains how the implementation of data-management tools, and a wider use of machine learning and AI, will drive operational efficiency and highlights that competition and innovation inevitably pushes the industry in the right direction.
However, it is important industry stakeholders to be aware of how digitalization evolves and have access to the right digital solutions and tools to remain flexible and diversified on their decisions.
SAFETY4SEA: Tell us a few words about the SHIPNEXT platform. How can data and real-time information dramatically improve ship operations?
Alexander Varvarenko: Shipnext is a digital shipping platform, that uses natural language processing, machine learning, and AI for freight search, email and data processing, trade, and automation of workflow. Ever since the 90s, with the shift of international shipping and transportation onto the internet, email communication, and later chat applications, represent the shipping market. Emails and messages are used for the search for shipping data, updated information, freight solutions, and the exchange of commercial offers. Shipnext allows turning all this unstructured data into meaningful data-flows and gives a powerful tool to freight-related managers working in shipping and transportation. The total processing power of an average human brain is limited to just 40 bits per second. In comparison, an average desktop can process 64 billion bits per second. At a certain point, the human brain cannot efficiently process real-time data, which leads to either huge loss of time, mistakes, and, ultimately, financial losses.
S4S: What are the top priorities on your agenda for the next five years?
A.V.: We would like to create an open-source ecosystem, that would allow anyone in shipping – freight brokers, and transport managers, to have access to real-time industry data, and be efficient regardless of where they are based and the trade they are in. Reaching our goal is not only limited to building the missing features, or onboarding key industry players but also partnering with Shipping and Transportation institutes and universities, supporting small and medium-sized companies in their path to digital transition.
S4S: From your perspective, what are the key challenges that the maritime industry is currently facing?
A.V.: First of all, and I will continue putting an emphasis on this, there is no such thing as the maritime industry. And the fact that there is so much confusion out there about which industry we all are, in brings so much chaos into where and how to spend on digital innovation, and what our long-term strategy should be. To answer your question, let us, therefore, separate the transportation industry from the shipbuilding industry. All the challenges of the shipbuilding industry, which are usually related to engines, fuels, ship designs, and innovative technology – we shall leave aside. The challenges of the Transportation industry are those of the service industry – to remain competitive. The maritime sector competes not with other modes of transport and is greatly impacted by many other factors, with geopolitics, climate, and even corruption among many. It is the decision taken by the key decision-makers in trade, that impact the transportation industry, and those mistakes that are made in the transportation industry that impact the trade and the final consumer. Innovation and digitalization that currently takes place, are an attempt to bring the cost of transportation down, and efficiency up, thus allowing transportation companies to keep their margins. The industry is however very fragmented and international, and any disruptive innovation that can impact the industry requires wide adoption. Until then we will see some companies burn budgets on home-grown innovation, and others seek ways to collaborate with the industry visionaries. There is some momentum gained, but it’s still not enough for a successful transition. Too many mistakes are made over and over again causing companies to go out of business.
S4S: What role do you see enhanced digitalization and the introduction of Big Data, Machine Learning, and AI playing in the maritime sector?
A.V.: Let’s not forget, that the Maritime sector has many common similarities with other modes of transport, including public transport. The efficiency of shipping partly depends on the efficiency of voyage planning, and access of market data – in other words optimization of intake and reduction of ballast runs. There is technology in place that has already improved other sectors of the transportation industry. Maritime sector is next to see this transition. Shipnext aims at bringing that change, this is what we patented, and this is what we aim at doing – replacing emails with a digital marketplace and helping the industry players get access to real-time data. When speaking about AI, we have to clearly differentiate it with automation. Automation helps reduce routine repetitive work, simplify big-data analytics and reduce human error. While AI helps with decision-making on a much more advanced level, taking into consideration the development of possible scenarios, and the ways of resolving them based on previous experience, big-data analytics, rules and behavioural patterns. The way this would be first implemented in shipping and transportation is in suggesting the best way of shipping cargo, the best way of employing the vessel or vehicle, and the best route to follow in delivering the cargo. The solution is recommended by the AI, the final decision will, however still be made by people on basis of ethics, contextual understanding, creativity, emotional intelligence and intuition.
S4S: According to data from your platform, have you identified any alarming trends/ key areas that the maritime industry needs to shed its focus on?
A.V.: Shipnext monitors the movement of all commercial cargo fleet worldwide. There is a lot we can say on the state of today’s shipping sector and its problems, some of which are known but not yet solved due to the diversity and fragmentation of the industry in general. Due to the big-data analytics, we can identify the segments of fleet which have not seen enough investments, and are now heavily overaged. We can also identify the over- and under-capacity of certain types of tonnage in certain areas, and could forecast this in advance in certain trades. The bigger problems, however, still exist in offices of shipping and trading firms. Shipping has largely been a people’s business, due to its diversity and worldwide coverage. Data was largely exchanged by emails, messages, and could never get captured, stored, processed, and used for future planning and improved prroductivity. Company owners do not own the data they so much depend on, and in the era of data-driven economics this is odd and short-sighted, to say the least. We help company leaders tackle this problem and bring them on a new level of corporate management.
S4S: What are the next steps in post-pandemic shipping where the challenges of digitization and decarbonization prevail?
A.V.: I would not necessarily tie them all together. Decarbonization has always been the ambition of many, as shipping companies spoke of zero-emission, electric and autonomous transport. The post-pandemic era, on the other hand, in shipping in particular, demands flexibility on the part of the top management. Both in supply-chain management, as well as in the working environment. Managers want to, and on the other hand, have to be given an opportunity of being as efficient working remotely, as they are in office. Shipnext aims at giving everyone the tools for being efficient in managing their freight-related tasks irrespective of whether they are in an office in Hamburg, Singapore, or in a remote village on an island.
S4S: Is there a need to train the wider workforce on the use of data and analytics?
A.V.: With implementation of data-management tools, and a wider use of machine learning and AI, the everyday work of workforce should become simpler, and yet more efficient and productive. The whole aim of the properly built digital solutions, is automate routine and repetitive workflows. This is why the training, in most cases, would not be required. Same applies for data collection, mare more advanced algorithms are available to extract important data from the everyday communication, thus replacing the manual data input with automated data-scraping.
S4S: How will the ongoing global supply chain crisis evolve in the coming years from your perspective? What is your advice to stay competitive amid these challenging times?
A.V.: The global supply-chain crisis had shown that countries should stay diversified, and maintain balanced approach to sourcing their resources. The imbalances in supply-chain and trade we have seen during covid have already had an effect on countries and companies and pushed them towards building that necessary sustainability. To the large extent such volatility that we seen during the pandemic can be forecasted. Remember, I already spoke of the similarities between the maritime sector and the other modes of transport. This is why it is always easy to forecast imbalances, just like we can forecast lack of taxi and ques for public transport after a massive concert. The solution to that problem, however, is in diversity of options we have and timing. And certainly, the price we are able to pay to solve it. This is why our advise to anyone in transportation in general, and shipping in particular, is to remain flexible and diversified, have access to market data, and plan ahead. Innovation distinguishes between a leader and a follower.
S4S: Do you believe the industry is moving in the right direction? What do you see as the defining trends driving the maritime market in the next five years?
A.V.: Competition and innovation inevitably pushes the industry in general in the right direction. This is an inevitable process. Whether or not this is a good long term plan, or just a short-term solution – time will show.
In shipbuilding we see companies split between those that build flexible fleet, and one of the best trends we see in the long-awaited replacement of the old coaster fleet, and those that tend to building a very specialized fleet for particular trades. In shipping, as part of transportation industry, we have seen a trend to overspend of trendy initiatives, such as “sustainable supply chain”, “cargo tracking” and others, that have not yet delivered to the expectations. Over time, however, shipping in particular, and transportation in general has moved from the “most antiquated” to being the “most innovative” industry for sure.
S4S: If you could change one thing in the shipping industry from your perspective, what would it be and why?
A.V.: I believe the transportation industry needs more education of how the digital tech usually develops. There are several reasons for saying this. One of them is the fact that in the past 5 years Shipping and Transportation have seen a huge influx of Chief Digitalisation Officers, Heads of Innovation and Chief of Digital Transition. However, most of them stay in their position for just year or two, before they move on to other companies. Innovation should, in my opinion, be pushed from within. The main KPI of any manager should be the ability to automate most if not all of his or her daily routine. When this is done efficiently, the Manager should be promoted. The next is, however, to make sure the manager studies, compares and uses the best of solutions that are available already before suggesting to build something from scratch. This way we can prevent overspending.
S4S: Do you have any new projects/ plans that you would like to share with industry stakeholders?
A.V.: Shipnext continues to build a new and efficient ecosystem. While Shipnext remains as a shipping platform for small and medium-size companies, some larger companies have approached us to help them build customized solutions and helps improve real-time data management and work-flows. We see a trend of building networking in different sectors of the industry. All this partly happens in an attempt to collaborate and get access to real-time data across the industry. We had foreseen this trend, and already have more real time data than any small or medium-size broker company. Shipnext today unites over 11.000 shipping professionals in the industry, and their number grows each day, and will soon become the biggest workspace for shipping professionals. We believe that such transparency would help bring the long-sought transparency, reliability and efficiency to the industry and its players. Every manager, broker or shipping professional must concentrate on interpersonal relationship and build trust, and we, along with other digital solutions, must give them the tools to do so.
S4S: What is your message to industry stakeholders with regard to a more sustainable future for the maritime industry?
A.V.: When I visit people I know in the industry, and I know quite a few over the 23 years I spent working in the shipping business, I was astonished to know that only a few of them want to or will see their children join the industry. Most of them complain that it’s too demanding, non-stop and stressful. “If you always do what you’ve always done, you’ll always get what you’ve always got.” We will change all that, and there is a new generation of brokers that are highly motivated and growing to be the industry leaders!
The views presented hereabove are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes discussion purposes only.
