In my last blog, I discussed how consolidation and major industry pain points like overcapacity and pricing errors are forcing the industry to move away from old ways of thinking and begin forging new modes of operation that generate profitable growth.
To capture that growth, ocean freight companies need to invest in predictive analytics and data-driven insights. Luckily, the timing is just right. This industry-wide disruption is taking place at the same time as a digital revolution.
Thanks to digitalization, more data is being created every day that can be leveraged in the shipping industry. From tracking containers to monitoring changes in demand and competitive pricing, an ever-increasing amount of insight is available at the click of a mouse. For an industry that hasn’t always been data-rich, this is a big deal.
There is also a push to move the shipping container industry into the world of e-commerce. For example, the New York Shipping Exchange (NYSHEX) offers the first digital exchange of forward-looking freight contracts. Using the digital platform, carriers provide shippers, non-vessel operator, and forwarders with a range of offers and relevant details of their service - including space availability, pricing, and service performance. After reviewing that information, potential customers can immediately accept a carrier’s offer and begin contracting.
Commercial technology platforms like NYSHEX and others within the industry are pushing the ocean freight sector into the modern era. Demand/Market share and pricing data are all being made available via new digital platforms, and as it happens, more data will continue to be created. This new data allows ocean freight companies to automate the analysis of this market insight, driving incrementally better pricing and asset utilization decisions. And, by using these digital tools, more data is generated in the process. That’s a win-win for everyone.
However, this new data and visibility is available to everyone. And when you have this level of transparency in a fiercely competitive market, you must do something more advanced than the next guy to win. The hospitality industry has historically been one of the most aggressively transparent marketplaces when it comes to market pricing, demand, and occupancy information. In many cases, the hyper-informed consumer of hospitality services has better information than the hospitality company when it comes to product information, availability and price. This same shift in information and pricing power is being observed in the ocean freight industry as well.
Leveraging this data is essential for ocean freight companies to remain competitive. But, there are two major points to keep in mind when approaching this wealth of information:
You cannot leverage it all manually. Rather, you must rely on powerful computing. There is no easy way to use this data. The volume alone, not to mention that it's coming from so many different sources, creates the need for an application that houses all your data in one place and automates the necessary analysis. Eyeball analysis alone won’t cut it.
And, don’t forget the importance of analyzing your own proprietary internal data. Everyone knows to look at external competitive data, but many forget the value of internal data. If you only focus on your competition rather than your own needs, you allow other companies to make your decisions for you. You don’t necessarily have to match the competitor to be competitive. You just need to know when and where to compete. And that can only be determined by looking at both internal and external data.
In my final blog, we’ll discuss how one of the largest global freight companies is using predictive analytics to eliminate the unknowns and spur profitable growth by leveraging this new data and insight.