Surviving the supply chain squeeze

With bulk shipping braced for a bumpy start to 2023 before an expected upswing in the latter half of the year, ship agents are embracing new ways of working to bring stability to an unstable situation.

DRY BULK SHIPPING IS NAVIGATING UNUSUALLY CHOPPY SEAS IN 2023.

Although traditionally weak in the first quarter, dry bulk is particularly vulnerable to activity in China, where Covid-related lockdowns have impacted local economic prospects. However, with projections looking much rosier from mid-year onwards, experts anticipate a surge in demand for dry bulk cargo, especially for China’s property market, which shrank in 2022, as a major driver for coal, steel and iron ore cargoes.

Global grain trade is also expected to rise in the first six months of 2023, but steel trade does not look likely to fully recover from an unusually slow 2022.

Subdued supply growth will have an impact on the sector. According to Simpson Spence Young’s 2023 Outlook Report, the dry bulk carrier order book is still historically low. Even with a modest uptick in scrapping activity due mainly to new IMO greenhouse gas regulations, dry bulk fleet utilization is expected to progress at a snail’s pace this year.

While there is no question of the traditional volatility of transporting dry bulk cargoes, that instability has been particularly noticeable since 2020 when the global effects of the pandemic took hold. Freight rates were hit, port congestion became rife, and supply chains have had to bear the brunt.

A Crucial Cog

At times like these, ship agents have never been more necessary. Maritime supply chain squeezes are set to continue this year due to a combination of geopolitical, inflationary and environmental factors. An effective ship agent, not a big-ticket cost in most cases, can help alleviate some of the pressure on global shippers.

“Dry bulk cargo owners want shipping and logistics partners that can provide visibility, reliability and adaptability to circumvent ongoing supply chain issues,” said Lars Hardeland, Group Operations Director – Shipping of GAC, one of the world’s leading providers of shipping, logistics and marine services.

“For shipowners, charterers and managers who are also facing increasing operating costs, working with a flexible and transparent ship agent is key to unlocking latent value to pass up the chain.”

With more than 60 years of experience handling dry cargo, and a global network of more than 300 offices in over 50 countries, GAC has the experience, expertise, resources and reputation needed to weather such storms. It leverages its worldwide reach and in-depth local market knowledge to offer customized, reliable and compliant services.

GAC tailors its services to support the specific needs of its customers to stay informed, minimize port turnaround times and provide a steady hand in uncertain times.

It combines port call volumes through a ship’s services node — a hub, enabling customers to maximize their margin by accessing a value chain that goes beyond traditional agency services. This includes primary day-to-day services and secondary services such as vendor management, cost management, rebates, digitalization and training.

Last year was a banner year for GAC. It opened new offices in Spain, Sweden, Taiwan and the United States and expanded its facilities worldwide, most noticeably in the Middle East, to better serve its customers from various sectors including dry cargo.

“We have worked hard over the past year to expand our global footprint and services while keeping our standards high. From monitoring port conditions and loading and unloading vessels, to staying updated on port authority requirements and optimizing our operations, GAC remains committed to supporting our customers and driving their success regardless of the challenge,” Hardeland noted.

Digitalization

The growing role of technology and digital platforms in global shipping is one area that stakeholders are looking at to provide stability and circumvent supply chain woes.

This drive to digitally transform ports, terminals, storage facilities, logistics players and more can help provide a more seamless movement of goods. And it comes at a time when international supply chains are all too aware of the need to avoid major disruption that has become more the rule than the exception in recent years. For a ship agent like GAC, embracing technology is not just beneficial, it’s a must.

That was partly why GAC decided to develop its Pegasus portal to provide large international customers with real-time information about port infrastructure, services, mishaps, accidents, delays and turnaround times.

With access to data on 220,000 vessels and ports around the world, customers can predict port congestion, pick the best routes and make informed voyage decisions based on efficiency, time and financial considerations even before booking shipping services.

Other efforts to embrace digitalization also included the introduction of a new supplier invoice management system to replace paper-based documentation and simplify data entry for all GAC offices; a new warehouse management system feature to optimize operations; a webbased customer relationship management system for offices worldwide to manage and share customer data; and a bespoke software to facilitate serialization and tracking of pharmaceutical goods to secure supply chains.

To ensure data quality, GAC has also turned towards digital documents, such as automated data scanning of passports for crew changes, to streamline processes, reduce manual entry errors, minimize delays and comply with regulations.

Trends like this can be seen across the supply chain. In Singapore, the Maritime Port Authority introduced the digitalOCEANSTM initiative to develop and promote open and common data standards and application programming interfaces with ports and shipping-related platforms. It is designed to reduce repetitive and manual completion of forms at ports along trade routes to boost port clearance efficiency.

GAC has taken a strategic approach to implementing its digital transformation.

“As a ship agent, we cannot just say ‘let’s go digital’ because we are just one part of a big system that involves government regulations, port regulations, insurance companies, and so on,” said Martin Wallgren, GAC’s Chief Information Officer.

“There are so many people involved in a ship or port call, and we have to take the digital transition step by step. Digitalization is just like any normal business change. We need to think about human and machine in tandem, considering change management and the psychology behind how to make people adapt. If you just provide a digital tool without considering the human element, there’s not much value.”

For dry bulk operations, GAC’s steadfast approach to improving its services by taking that human/machine approach to digitalization will lead to more efficient operations planning, keeping costs low and cargoes moving at a time of continuing volatility.