BREAKBULK MIDDLE EAST DIGITAL SPECIAL
KNOWLEDGE HUB: TECHNOLOGY & INNOVATION
Time to Embrace Digitalization Pandemic Gives a Push, Industry Must Add Momentum BY GARY BURROWS
Nearly 36 years ago, then U.S. Customs Commissioner William von Robb delivered an ultimatum to the shipping industry: “Automate or perish.” Von Robb’s infamous pronouncement in 1985 was about customs brokers adopting U.S. Customs’ nascent steps to automate Customs filing processes. Pronouncements weren’t quite that dire during an executive roundtable on industry digitalization efforts. But the message was shared among the executives, with decades of industry experience, that companies that fail to embrace that future would be swept out of business by those companies that do. “Our industry is still in the stone age when it comes to digitalization,” said Dominik Stehle, chief commercial officer of United Heavy Lift. “We like to do our part and change that whenever we can. It remains a challenge to be honest.” Dennis Devlin, Maersk’s senior director – special project logistics, said the container line “has been very involved in digitizing logistics. However Maersk doesn’t cover the entire project supply chain, which still has not even been close to having been accomplished.” Cyril Varghese, global logistics director – strategy and commercial, Fluor, warned that “organizations will need to invest in digitalization and move forward to gain a competitive edge. It may sound extreme, but if you don’t embrace it, you’re out of business in a few years.”
COVID CURE?
A number of roundtable participants agreed that, like many digital functions that have grown in the past year, the Covid-19 pandemic is pushing the project cargo industry to embrace digitalization. 44 BREAKBULK MAGAZINE www.breakbulk.com
Covid-19 has “taken logistics and supply chain on an extremely accelerated growth that is forcing organizations to jump into digital transformation faster than ever,” said Carlos Hernandez, partner – global lead business and digital transformation, Avasant, a global IT consulting company. Mohammad Jaber, vice president for project logistics, Agility, and COO of Agility Abu Dhabi, said the pandemic “was a wakeup call,” though he said: “We are using and investing in technology to drive more efficient and effective customer and business processes.” Industry wide, Jaber said investment in blockchain in the industry was US$1 billion in 2018 and is expected to reach US$23 billion by 2023. Stehle doesn’t feel the pandemic initiated the digitalization push, but it “may have accelerated the whole process. What the pandemic taught us was a completely new way of communicating and discovering the benefits and also cost savings associated with that.” Regardless, the industry is awakened, and there’s no turning back. “We’ve been excited with the leaps and bounds in technology and innovation, affordable access to technology and innovation over the last few years. We’ve seen that the digitalization priority in global corporations and in smaller companies has jumped quite a bit,” Varghese said. Digitalization is happening at different paces and different times, with varying investment capabilities. The pandemic has pushed it to a “critical mass” culminating in a need to “create one universe and one family similar to SAP, Android or iOS tech platforms,” said Dharmendra Gangrade, head of logistics, L&T Hydrocarbon Engineering, the oil and gas arm of engineering, procurement and construction giant Larson and Toubro.
Hernandez said Avasant research found that 87 percent of people surveyed believe the acceleration towards digitalization is going to continue and force organizations to change their overall business models. Companies that accelerate and make investments in technological change are not only going to survive, but take a competitive advantage that will take them well into the future. “I don’t think this is going to stop, even after Covid,” Hernandez added.
SILO MENTALITY
While there is mounting enthusiasm, real progress faces daunting challenges towards true integration, roundtable participants pointed out. Regardless of participating companies’ intentions and technological advances, the major barrier remains silo mentalities. Varghese noted a LinkedIn post from a colleague who said, “Supply chain is a vision and supply silo is a reality.” “I found that simple statement extremely profound,” he added. He believes Fluor is at the cusp of reinventing the supply chain, building it through a range of “homegrown relationships.” “Now we are at the stage where we have the opportunity to amplify the effectiveness multiple times over through the proper use of technology,” he added. “The acceleration and adoption of industry-wide digitalization is the need of the hour.” Maersk’s Devlin noted many project cargo companies have moved towards digitalization by developing in-house tools and systems. While the tools are valuable, the broader issue is the project cargo industry needs “a tool to see an entire global project logistics and supply chain and have visibility to that,” he said. “Purchase order to packing, cargo weights and dimensions, where ISSUE 2 / 2021
