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Executive Summary
Digital platforms, applications and processes are rapidly changing how
shipping and transportation companies operate. In addition to the
effect on their internal operations, there is the impact on customers
and partners. Evolving regulatory standards, as well as geopolitical
implications, must also be considered in an increasingly complex,
digitally-driven world.
Digital technologies and operating models are already pushing shipping
companies to collaborate with digital data providers (e.g., cloud services)
and the business community at large to broaden their capabilities
and knowledge beyond the traditional, insular four-walls view of the
marketplace. New digital tools can extend and enhance shipping services
by affording direct, near-instant access to end customers, all with
negligible transaction costs that can be passed on to shippers as well as
their customers.
In late 2015, we conducted primary research to explore the priorities and
challenges of shipping-industry professionals shippers, carriers and
freight forwarders and deepen insight into how shipping companies
view e-commerce. The study involved in-depth interviews with 30 global
CXOs at shipping liners, shipping agents and global freight forwarders
across geographies; technology providers (those that serve shipping
companies); and industry analysts. (See methodology, page 15).
Our research reveals that most companies recognize the significance
of connected shipping (e.g., end-to-end visibility across the value
chain of ocean transport) and have already started to explore
and adopt e-commerce with the goal of fully automating shipping
processes such as shipment booking, vessel schedules, rate shopping,
documentation and freight payments. While acknowledging the
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2
KEEP
CHALLENGINGDecember
September
KEEP
CHALLENGING
20162016
BEYOND QA:
BUSINESSSHIPPING:
PROCESS RIDING
ASSURANCE
FOR THE
DIGITAL AGE
CONNECTED
THE WAVE
OF E-COMMERCE
3
3
Key Findings
Our study revealed some key considerations that companies should keep in mind
when planning, developing and implementing initiatives for digital transformation:
Digital is the buzzword: Almost every shipping company is facing the pressure
to become digitally enabled and improve how they interact and transact with
customers, competitors and shareholders. Turning a potential threat into an
opportunity to achieve true digital transformation will require shipping businesses
to develop a strategy that aligns with their value proposition and the promise of
their brand, and creates sustainable value.
Staying
Its
all about collaboration: While there is no one size fits all solution in
shipping, the industry can reap many benefits from an automated, collaborative
e-commerce platform that allows businesses to access and share accessible, highquality and timely information.
and making sure they can access information on-the-go (48%) are key market
differentiators. This is precisely what most companies in the fast-paced digital
world are working toward.
Automate every stage of the value chain: Currently, most aspects of the orderto-cash cycle are semi-automated. This is an opportunity for shipping businesses
to leverage existing technology platforms, and adopt applications that plug gaps
and enable more seamless processes.
Nearly all of our study respondents indicated they plan to adopt e-commerce to
stay ahead of the competition and meet ever-changing consumer demands for
end-to-end visibility across the value chain. (More than 65% revealed they have
already embarked on this journey). Approximately 25% of respondents revealed
they were still gathering information; only 10% are still at the research stage.
Interestingly, among those that remained in the information-gathering stage,
some had actually begun implementation in select areas. (See Figure 1).
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Build or Buy?
3%
24%
38%
Live/Functional
10%
In-house Development
40%
Implementation
Customized Product
57%
Others
Information Gathering
28%
Figure 2
Response base: 30
Figure 1
Response base: 30
Two Years
7%
37%
23%
17%
4%
13%
23%
Very Important
Important
23%
40%
Business Critical
40%
Not So Important
73%
Unimportant
Figure 3
Response base: 30
CONNECTED SHIPPING: RIDING THE WAVE OF E-COMMERCE
40%
20%
17%
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December 2016
13%
7%
The shipping network in some countries is still executed by local agents and
hence adoption of a standard e-commerce platform is quite challenging. CIO,
leading shipping company, Germany
Operational Barriers
What operational challenges has your organization
faced when adopting an e-commerce platform?
13%
37%
23%
10%
17%
Figure 5
Response base: 30
E-Commerce Accelerants
What platforms are accelerating service innovation and development?
17%
In-house Innovation
Intrra
16%
GT Nexus
Others
7%
6%
Figure 6
Response base: 25
3% 3%
14%
20%
>15%
10%15%
5%10%
1%5%
0%
60%
Figure 7
Response base: 18
Getting Social
How important is social media for
understanding customer expectations?
4% 3%
33%
23%
A Great Deal
Somewhat
Not Very Much
Not At All
37%
Figure 8
Response base: 26
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December 2016
Dont Know
Many respondents told us that the immediate adoption of e-commerce will significantly benefit their customers by increasing visibility and shortening response
times. (See Figure 9, below). Some said they are working to ensure that customers
can access information from virtually anywhere, at any time, which they believe is
a key competitive differentiator. This kind of agility allows supply chains to respond
faster to volatile conditions, with the ability to:
100%
91%
28%
80%
80%
25%
20
59%
15
60%
19%
40%
10
31%
10%
5
0
100%
Visibility
On-the-Go
Access
Faster
Response Time
User
Friendliness
8%
Competitive
Rates
20%
0%
Figure 9
Response base: 30
The need to automate our operations is underway at most of our offices except
those in Africa due to the lack of IT infrastructure. Trade Lane Head, global
freight forwarder, Singapore
Automating Processes
What is the level of automation for your critical functions?
100%
9%
11%
80%
5%
12%
Fully Automated
5%
16%
60%
19%
20%
6%
18%
11%
40%
20%
5%
0%
Figure 10
10
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December 2016
Rate
Shopping
Semi-Automated
7%
6%
Vessel
Schedules
Freight
Payment
Semi-Automated
Manual Process
Documentation
(Bill of Lading (BOL),
Notice of Arrival (NOA),
etc.)
Rate Shopping
Vessel Schedules
Utilizes schedule
consolidation engine to plan
efficiently and accurately.
Manual planning of
electronically received
schedules from multiple
carriers.
Freight Payment
EDI Booking
Figure 11
For most respondents, shopping for rates is a highly manual process that typically
depends on chosen carriers service levels and their ability to provide real-time
freight rates around the clock. Most respondents emphasized that they manage
freight rates internally, and would not share terms across a platform given the
potential to ignite a price war among shipping lines. Freight rates are also dynamic,
and fluctuate due in part to changing fuel costs, over capacity and demand.
One area of concern highlighted by respondents was the need to build an IT infrastructure with the support of external technology companies. (See Figure 12, next
page). Most companies we studied are putting infrastructure and applications in
place to enhance collaboration among various stakeholders.
11
44%
26%
Seminars/Industry Forums
19%
11%
7%
Figure 12
12
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Quick Take
Managed
Optimized
Transformed
Capacity
Planning &
Forecasting
Organization does
not perform any
systematic planning and
forecasting activity.
Capability to analyze
historical trends but
does not possess any
capability to perform
effective assets
forecasting.
Capability to perform
assets forecasting based
on historical trends,
but no scenario-based
planning.
Capability to run
simulated fullstream supply/demand
balancing for what-if
scenarios.
Order
Management
Completely manual
documentation, quote
generation and review;
e-mail based RFQ
response.
RFQ response
generation, quote
generation supported
by internal knowledge
portals and extensive,
ready-to use templates;
limited review and quick
turnaround.
Shipment
Planning &
Scheduling
Stand-alone planning
software.
Automated planning
tool provides optimal
cost and service
solution when
dynamically processing
all shipments.
Supply Chain
Visibility
No event management
mechanism in place;
carrier informs the base
location only in cases of
exceptions.
Maintains a portal
where carrier can enter
delivery details that can
also be used to track
carrier performance.
Freight
Invoicing
Management
No direct capability
for electronically
generating invoices;
however, templates are
used to aid in estimating
and generating invoices.
Capability for
electronically
generating invoices
exists; however, this
is not extensively
used due to lack of
verification features.
Analytics
Only ready-made
reports from various
systems are available.
Capability to configure
reports based on
business requirements.
13
Looking Forward
Our interactions with CXOs confirmed our hypothesis that connected shipping
an approach made possible via new digital technologies embedded in e-commerce
transformation projects is a priority for many shipping companies. These
encounters also confirmed that emerging technology trends proactive maintenance and risk management, digital twins, big data-driven decision making and
a focus on assets and the supply chain are key investments that supply chain
managers should consider to ensure they stay connected.
Given these findings, we recommend the following:
Assess current capabilities and business priorities: Establish basic capabilities in process standardization, data integrity and visibility before expanding further. Fully leverage technologies to automate all operations and critical business
processes.
framework can act as a guideline for charting a meaningful and contextual roadmap. Respondents experiences and feedback provide valuable insights on the
level of importance shipping companies assign to staying connected and becoming digital in the coming years.
Develop
Gain
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OBJECTIVES
of Cognizants
Connected Shipping
Study
Develop a framework to
assess and gauge
e-commerce transformation
in shipping
1.
2.
3.
15
Interviews by Revenue
6%
20%
50%
7%
17%
17%
46%
11%
$500 $1 Billion
$1 $10 Billion
More than $10 Billion
3%
9%
17%
10%
60%
27%
Finance
Salesthan
& 1,000
Less
Marketing
1000 5000
Commerce
Management
5,000
10,000
Information
10,000
100,000
Technology
Shipping &
Logistics
Operations
Respondent Profile
Finance
17%17%
10%
46%11%
3%
9%
27%
60%
Sales1,000
&
Less than
Marketing
1000 5000
Commerce
5,000Management
10,000
Information
10,000
100,000
Technology
Shipping &
Logistics
Operations
Global Freight
Forwarder
23%
Ro-Ro Shipping
16
7%
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7%
10%
53%
December 2016
Terminal Operator
3PL
Liner Shipping
Global Freight
Forwarder
23%
Ro-Ro Shipping
7%
7%
10%
53%
Terminal Operator
3PL
Liner Shipping
Footnotes
1
Delivering large-scale IT projects on time, on budget, and on value. McKinsey & Co., October
2012. http://www.mckinsey.com/business-functions/business-technology/our-insights/
delivering-large-scale-it-projects-on-time-on-budget-and-on-value.
Acknowledgments
The authors would like to thank and acknowledge the support and guidance of the
following Cognizant leaders in helping shape this report. Rajaram Radhakrishnan,
Business Unit Head, Manufacturing, Logistics, Energy and Utilities (MLEU); Vikash
Gaur, Vice President, Manufacturing & Logistics; Sathishkumar Soundararajan,
Senior Director, Manufacturing & Logistics; Ramesh Krishnamurthy, Director,
Manufacturing & Logistics; and Alan Alper, Assistant Vice President, Corporate
Marketing.
17
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Phone: +1 201 801 0233
Fax: +1 201 801 0243
Toll Free: +1 888 937 3277
inquiry@cognizant.com
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Paddington Central
London W2 6BD
Phone: +44 (0) 207 297 7600
Fax: +44 (0) 207 121 0102
infouk@cognizant.com
About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information
technology, consulting, and business process services, dedicated
to helping the worlds leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant
combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global,
collaborative workforce that embodies the future of work. With
over 100 development and delivery centers worldwide and
approximately 255,800 employees as of September 30, 2016,
Cognizant is a member of the NASDAQ-100, the S&P 500, the
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