How Digitalisation Can help Solve Logistics Matters
FIATA was thrilled to present this exciting digital panel at its 2023 FIATA World Congress in Brussels, titled ‘How Digitalisation Can Help Solve Logistics Matters’, featuring high-level speakers Lynn Ng, Head of the ICC Banking Commission/ING, Erwin Verstraelen, Chief Digital and Innovation Officer of the Port of Antwerp-Bruges, Mike Bhaskaran, Group COO, Digital Technology, DP World, Noura Albraheem, Director, Bonded Zones, ZATCA, and Bram Vanschoenwinkel, Artificial Intelligence Expert, Customaite.
To set the scene, FIATA’s Director General Stéphane Graber, who moderated the session, shared of FIATA’s involvement as a founder of the FIT Alliance, together with BIMCO, DCSA, the ICC and Swift, who recently ran a study about the main obstacles to digitalisation and adoption of electronic Bill of Lading (eBLs) amongst their respective audiences and supply chain stakeholders.
In the wake of this study, the FIT Alliance launched the ‘Declaration of the electronic Bill of Lading’, realising that there is a need for international collaboration between all industry stakeholders. To date, 84 companies including multinational corporations, banks, software providers, associations, and others, have signed to share their commitment towards eBLs. Early movers include MSC, Maersk, Hapag-Lloyd, DHL, Tata Steel, HSBC, ING, Lloyds Bank, Cargowise, Edox Online, Enigio, CargoX, Anglo American, and many of FIATA’s Association members. Sign-up today and find out more here!
Dr Graber continued, sharing the vision of FIATA and its industry collaborators which is to build awareness on a united, non-competitive front, with the mutual aim of optimising and making the global supply chain more resilient.
How do you see digitalisation driving efficiency in your respective activities?
Ms Lynn Ng was introduced first, a high-profile expert as Chair of the ICC Banking Commission, and current Global Lead on Sustainable Value Chains at ING Bank, having worked for 30 years in banking, finance and trade. When asked how speakers saw digitalisation driving efficiency in their respective activities, Ms Ng made the link between trade financing and logistics, sharing that without one, you cannot have the other: the entire logistics ecosystem is integrated with the bank. Goods are represented by documents for the banks, with all documents needing to be checked to ensure consistency with payment instructions from the client, and without the banks’ checks, the payment cannot be released. To digitalise this process would mean, as researched by McKinsey, $6.5 bn in savings by eBLs. Deforestation rates could also be reduced, considering that at present 2% of deforestation occurs in the name of paper production. Ms Ng emphasised that the move to digital efficiency is a multi-faceted gain, not only for improving trade and financial efficiency, but also for reaching sustainability goals.
Ms Naora Albraheem, Director of Bonded Zones for 5 years at ZATCA, spoke of how the Saudi Arabia Customs Authority aims to improve and automate logistics processes in the Kingdom. She shared of ZATCA using a single window system to automate customs processes, track operations, ensure alignment with, and the exchange of global data and standards and ensure trust in the supply chain. UN/CEFACT describes a single window as ‘“… a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single-entry point to fulfil all import, export, and transit-related regulatory requirements.’”
Mr Erwin Verstraelen, who is heavily involved in the digital progress of the Port of Antwerp-Bruges, with 6 years of experience in doing such, has a strategic willingness to drive digitalisation forward for the Port. He shared of how things have evolved in the last 6 years in his time in this role, stating that traditional nautical traffic planning has evolved into harbor planning with more stakeholders than ever, thus requiring a more accurate and intense exchange of data. For this reason, and having seen this change, he is positive that digitalisation brings only advance, and that companies need to be willing to go with the evolution towards digital trade, to ease the flow of goods in ports like Antwerp-Bruges which is an inland port, and facilitate a change that has been long awaited for decades.
Mike Bhaskaran, Group COO, Digital Technology, DP World leads digital functions at DP World, and highlighted the aim of DP World to lead verticals including terminal operating systems, platforms for automating customs and more. There were mentions of how during the digitalisation process the customer must always be in the centre. Customers, he said are in four segments, cargo owners and commodity traders, forwarders, NVOCCs (Non-Vessel Operating Common Carriers) and shipping liners. From his perspective, and the way that DP World approaches such advances, one should always start with the customer journey – ‘whatever is good for liners is good for us’. They must always think one step ahead regarding how as a provider they can make it easier for freight forwarders, creating trading platforms, and other useful digital resources.
Bram Vanschoenwinkel, Artificial Intelligence Expert at Customaite, who focuses on the automation of customs processes highlighted that there are too few people to do the jobs required in large scale processes such as customs procedures and tasks. ‘People are typing documents and looking through information, rather than doing what they are trained for’, which he shared is particularly true in customs work.
What is staggering progress?
Erwin Verstraelen commented as to how difficult it is to achieve much in the first stages of digitalisation, saying ‘you can’t eat an elephant in one go’, saying that all stakeholders need to come together, and transition will take time. He said that ‘people won’t be around much longer due to the advance of Artificial Intelligence, but that people should be used for more important things in which they have expertise’, and they will tell these systems how to work.
Both Ms Ng and Mr Verstraelen mentioned that the bottleneck is not the availability of data standards, but the lack of implementation of standards. Here, the importance of such initiatives as what FIATA is doing with the FIT Alliance, aligning with standards and initiatives, was raised. Ms Ng highlighted that being in agreement on the description of what goes into data fields is the first step, with a subsequent opportunity to exchange, and then to ease trade processes.
Mr Bhaskaran shared from the perspective of clients of his, who may be small truckers trying to move things to Saudi Arabia from a developing country with lack of road and rail infrastructure. From their perspective, they must always consider each stakeholder no matter their developmental status. Smaller clients in particular need to focus on their spending and the speed at which they receive payments. DP World try to work to support such situations in which delays might arise in payment for their clients, and help to work on the routes and customs procedures digitally, trying to ensure that the customer (their client) receives payment in a certain time frame. By building digital capabilities, says Bhaskaran, and container exchange platforms, DP World and the likes of such multinational corporations can find the appropriate solutions for their clients, in an efficient, and sustainable way. This defines digital efficiency for them.
How can customs authorities intervene and speed-up progress?
Noura Albraheem shared about the role of ZATCA as an authority in terms of digital advance. As well as their work on automating customs processes, they are working on improving engagement with stakeholders, offering training to brokers and freight forwarders to enable them to remain up to date and in-the-know about digital updates, as well as providing operative support.
Global collaboration with a united front
Dr Graber then highlighted the importance of the work of the ICC DSI (Digital Standards Initiative), the Industry Advisory Board of which FIATA is a member. Ms Ng added that data is the enabler, and does not mean anything unless stakeholders are all talking about the same thing. She rhetorically asked why eFBLs were lacking interoperability, and shared that it is because stakeholders including banks are often working in closed platforms, ‘in their own islands’, but emphasised that trade is not an island and is instead international, requiring ‘a language that we can all speak’, and only then can data become information useful to us all.
In response to Mr Bhaskaran’s point of being customer-focused, Ms Ng shared that many companies and enablers think that they are customer-focused, including banks, however the issue of interoperability arises when customers have more than one bank, and most probably have 20-30 because they are international traders, to serve their needs globally. This is why the change, she said, needs to be on a high level first. In the past, physical tokens were used in the bank, each with a physical account declaration, in many drawers. She concluded, ‘let’s make sure we work on the customer focus, but let’s keep it open, aiming for the most fast and efficient way to do business’.
Mr Vanschoenwinkel expanded on the topic of trust between different stakeholders. It has previously been raised that trust is a key obstacle for implementation of digital standards. Many leading digital stakeholders today speak of a ‘zero trust architecture’, which implies that trust is not needed if there is a secure transfer of data, as there is no need to entrust your data to a client due to the high security of documents such as eBLs, which have embedded protection from harm. ‘When you look at AI, algorithms are trained using human input data, which increases the quality of models, but is of benefit to all stakeholders’. He continued ‘there we see that companies are reluctant to share data to make these models, and no one wants to make the first step, despite wanting it to ‘make us a product that does what we want it to’.
Mr Verstraelen then shared of his experience of customers’ reluctancy to be ‘first movers’. ‘You drive change in four groups – sprinters, runners, walkers and those who don’t move at all. The traditional mistake of companies is to focus on their non-mover clients, with the sprinters and runners waiting for an opportunity to go’. So oftentimes, to get the ball rolling, companies who are ready, like the Port of Antwerp-Bruges, will use sprinters and runners.
He gave the example of the Port of Rotterdam, who initiated the use of ‘Routescanner’. Together with other ports, they aimed to get all ports united, and this was already a challenging step in itself. The Port of Antwerp-Bruges also joined, willing to be a first mover, as well as other big global ports such as Qingdao. Mr Verstraelen shared the view that scheduled data is not where you compete, and it is where the Port were willing to take a step towards accelerated digitalisation, which triggered a chain reaction of activity amongst other ports and operators.
In a closing poll, the panel delegates were asked how they rate the support of their authorities for paperless trade:
Significant support
21%
Moderate support
31%
Work in progress
37%
No Support
10%
Mr Verstraelen shared that he was not surprised, taking the digitalisation of CMRs as an example, which have been in progress for a long time, with promised results by 2025. He noted that eFTI (electronic freight transport information) will also be applying in Europe as of next year, a regulation which establishes ‘a legal framework that allows economic operators to share with enforcement authorities information in an electronic format concerning the transport of goods by road, rail, inland waterways and air in the European Union (EU)’. Given his to-date experience in port operations and management, Mr Verstraelen called on the sector to be more ambitious, and to avoid wasted capacity.
Other panelists were surprised that 10% of participants have no support, though in FIATA’s experience, disparity in access to such initiatives is large, largely due to governments which are restrictive for practical or financial reasons in less developed territories. On that note, Ms Ng called for freight forwarders in the room to bring up advancement delays with their authorities and their banks, because data can be used quite easily in comparison to the pile of paperwork which delays authorities in their work, and the advancement of trade in their countries.