Global shipping ushered in the modern economy but in 2019, it still has a 19th-century problem: too much paperwork.
“It is a very paper-intensive industry. Extremely paper-intensive,” according to Karen Oldfield, President and CEO of the Halifax Port Authority.
Every year, CAD 4 trillion of goods are transported by sea. About 20 percent of the cost of moving a container from its origin to destination is administrative. If a ship arrives at port missing paperwork, its cargo is not going anywhere.
“When it gets lost, business stops,” says Todd Scott, VP Blockchain Global Trade at IBM.
The digital transformation of the shipping industry is not an IT project. It is a business imperative. With growth in global trade contracting, there is tremendous pressure to find efficiencies. Canada’s competitiveness depends on it.
At our latest RBC Disruptors, we took our show on the road to Halifax to talk about the future of shipping with Oldfield, who is tasked with making Halifax the most tech-savvy port on the Eastern seaboard, and Scott, who is at the forefront of simplifying global trade with blockchain technology.
The Wake-Up Call
Shipping is a very traditional industry, but it is waking up to the fact that it needs to harness the power of technology to stay relevant.
The World Trade Organization estimates reducing barriers in the international supply chain could increase global GDP by five percent and boost total trade volume by 15 percent.
In ports around the world, blockchain is replacing complicated paperwork, allowing parties to undertake real-time exchanges of documents and make payments. Automated cranes are loading and unloading cargo, moving containers quickly and efficiently to automated guided vehicles on the ground. Drones and sensors are being integrated into everyday port activities, assisting with vessel navigation, security and traffic control—and helping to solve the costly problem of congestion. Approximately 50 percent of container ships arrive 12 hours late, according to a recent McKinsey report. This creates downstream costs as trucks wait to be loaded and retailers stock up on inventory, or risk running out.
For Halifax, eliminating delays is essential to staying one step ahead of New York. Oldfield says Nova Scotia offers ships a time advantage. Cargo that unloads in Halifax makes it to Chicago more quickly than it would if the ship went straight to New York. But that is only true if the port is fast and efficient.
“Technology is what helps us maximize the opportunity presented by the time advantage,” she said.
Canada’s Challenge
In this hyper-competitive industry, the challenge for Canada is to seize a larger share of the global shipping market. We may have three ocean coasts, but even our largest port—Vancouver’s—does not make the World Shipping Council’s Top 50 list.
So far, Europe and Asia are leading the shipping revolution. In China, the fully automated Port of Qingdao operates 24/7, even in complete darkness. In Norway, the world’s first autonomous vessel is preparing to launch in 2022.
The pressure for Canada kicks up another notch when you consider that 80 percent of containerized goods are moved by only 10 carriers. If a tech giant such as Amazon were to enter the market—which Scott thinks is a real possibility—those 10 customers might suddenly become five.
The more Canada invests in new technologies, and the more risks we take, the more efficient we will get—and the more able to stay competitive and win over those powerful, and discerning, customers.
But the policy recipe goes beyond technology. It is about education and information-sharing, too.
Oldfield emphasized that as shipping enters the digital age, Canada needs to have a plan for the workforce. Over 12,000 direct and indirect jobs in Halifax are tied to the port. The challenge is to reskill and upskill the workforce, so there is a place for today’s workers in tomorrow’s port.
Oldfield also talked about combatting our Canadian tendency to be too regional, and gaining a better understanding of the resources that are available—like linking the oceans supercluster in Halifax with the artificial intelligence supercluster in Montreal. Working cooperatively—the way the ports of Halifax and Vancouver do—would allow the nation to advance more quickly.
Ports connect us to the world. As a new era of globalization dawns, our future prosperity requires us to be leaders in shipping’s transformation.