The report from JOC magazine.
The Exclusive Project Network (EPN), a global association of project-cargo logistics service providers, has signed a one-year agreement with shipping technology platform Shipnext to digitize much of its member’s project cargo logistics.
Juergen Weyhausen is CEO of EPN, as well as CEO of 7 Worldwide Logistics, a German project forwarder that specializes in moving dismantled industrial projects – paper mills, glass factories, and petrochemical and power plants – to developing countries for reinstallation.
Weyhausen told JOC.com that, prior to signing with Shipnext, he spoke with his own team, EPN members, and others in the project industry about digitalizing project logistics, but always received the typical industry answer: project logistics, unlike container logistics, is just too different, too individual, and too idiosyncratic for digitalization.
Algorithms and artificial intelligence are proving that assumption wrong.
The daily shipping market consists of millions of emails and messages, Alexander Varvarenko, CEO and founder of Shipnext, told JOC.com. Varvarenko, formerly a founder and managing partner with multipurpose/heavy-lift (MPV/HL) shipping company Varamar, is quite familiar with project cargo logistics.
In the typical shipping office, “every time you need to ship or find freight, you send out open vessel positions to brokers, carriers, and so on, “Varvanenko said. “Millions” of emails must be managed daily, and “there is just too much data,” creating inefficiencies that lead to data losses and, sometimes, fraud, he said. “Sixty-five percent of all managers’time is spent reading emails… and 20 percent of their time is spent looking for information in old emails” he said.
At the project forwarder’s office, potential cargo shippers will send in a tender (an invitation to bid) that includes a cargo packing list, shipping dates, load port, discharge port, and other details, Weyhausen told JOC.com. These details will be transferred to an email and sent out to 10 or so heavy-lift operators requesting pricing and a proposal. “That’s a time-consuming process,” he said. “And we give a deadline, but only 50 percent reply, so then we send reminders. And( meanwhile ) the customer is on your neck and needs a price.”
The Shipnext platform is able to streamline these processes dramatically, Weyhausen said. “You fill in the cargo details, the load and discharge ports, the other parameters and then literally within a second it gives you three,four,five ships available in the region needed within the time needed,”he said. The ship may not be going to the exact discharge port needed, but it will be in the region or might pass by it on the way to a further destination, he added.
Within another second, Weyhausen said, the system reports a price indication. “It’s just an indication, but at least you are in a position to give first feedback to the customer. You can say’we can offer a ship in that range with a laycan between such and such dates, and the rough freight indication would be this much.”
These capabilities can save two full working days or more per employee, he said.
Shipnext is now creating an ability to quickly compare breakbulk versus container shipping costs.
“People talk about big and heavy with projects, but this is only about 30 percent of (a given) project,” Weyhausen told JOC.com. “The other 70 percent is moving in containers, not OOG (out-of-gauge). “He said he expects Shipnext to be able to discover more competitive pricing for project-related containers than he is able to find now using available platforms.
The algorithmic backbone
The “backbone” of Shipnext is natural language processing, big data analysis, and machine learning using artificial intelligence, Varvarenko said. “It’s an algorithm… We collect information daily and use it to process emails, find vessels, make calculations, communicate internally and externally, and handle documentation. First, we are a platform, but our strategy is to build an ecosystem,” he said.
Clients can match freight instantly using internal and external data sources. “You can connect whatever you want to connect, (including) operational data and historic records,” Varvarenko said.
Large companies – such as global freight forwarders, ship agencies, and oil majors – spend millions building their internal digital capacity, Varvarenko said, whereas small to medium-sized companies struggle with the costs of digitalization. These relatively smaller firms often band together in logistics networks such as EPN,and it makes sense for theme to digitalize some business processes with a platform such as Shipnext, Weyhausen said.
While projects will always be a relationship business, Weyhausen is a bit bemused by how well and quickly EPN’s digitization project has unfolded. “I’m 67,” he told JOC.com. “I should not be the pioneer of project logistics.”