Digital Container Shipping Association chief executive Thomas Bagge explains how the association is aiming to digitalise box shipping
Digital Container Shipping Association (DCSA) is a first-of-its-kind for the container shipping industry.
It was established this year after being announced in November 2018, to drive digitalisation in the container ship sector through creating standardisation and interoperability throughout the industry. The aim is to create common information technology standards to make the industry more efficient for both customers and shipping lines.
Its members are Maersk, Hapag-Lloyd, MSC, ONE, CMA CGM, Evergreen Line, Hyundai Merchant Marine, Yang Ming and Zim.
Former Maersk executive Thomas Bagge heads up the neutral, non-profit organisation as chief executive and statutory director.
Mr Bagge explains to Container Shipping & Trade “I always look at comparable industries and journeys they have been through. So if you look at evidence of digitalisation in the banking and telecoms industries and compare these to the container sector, you can see the container industry assets are not very digital, the labour is not very digitalised, and processes are not very digitalised.”
These leave a gap that needs to be filled. Mr Bagge says “So when we look outside-in at container shipping, there is a lot of potential for digitalising the industry. That is the background we are looking at.”
Comparing other industries also highlights the importance of creating an industry organisation to set up standards, rather than an individual approach from separate companies. Mr Bagge explains that industry telecom network standards for 3,4 and 5G have allowed individual operators’ mobiles to work all over world.
He comments that the reason why the telecom industry has this is because companies came together rather than dealing with it individually.
While digitalising processes, labour and assets are needed, underpinned by improving customer experience. Mr Bagge underlines “First and foremost, this is about the customer experience. The container shipping industry is not a great at customer experience when compared to other industries.”
He says that while container liner companies have moved “significantly from where they were and are offering a better experience than previously, it is still lagging behind other sectors.”
He sums up, “It is about creating a better customer experience and then enabling cost savings and better product innovation.”
Since the DCSA was established, it has focused on creating strong foundations, such as having a legal entity, office representation and hiring people. It has established its headquarters in Amsterdam.
DCSA is also creating an industry blueprint. Explaining the need, Mr Bagge says this is based on analogies from other industries, such as the hotel sector. “If you look at how many cloud providers for hotels are able to provide key services such as check in and managing basic services like laundry and cleaning, then compare that to a handful of vendors for the container sector.”
DCSA has already made a start on creating industry standards. Mr Bagge explains “Collectively, the members DCSA represents spend billions on IT. Most of what they spend is on maintaining and running existing infrastructure and organisation, just to keep the wheels turning. They spend a relatively smaller amount on innovation and creating new products and solutions”.
He says a major reason for so much focus on existing infrastructure is that several different standards are used.
Mr Bagge points out it is much more difficult to maintain thousands of standards rather than one. He says “Instead of having many different types of notifications of arrival from shipping lines to their clients, we have now created one message agreed by carriers that this is the way they would like to communicate arrival notifications to clients.
“While implementation may take a while, it is a step in the right direction. It will help reduce the cost of maintenance and they can take the money and reinvest it elsewhere, such as in innovation.”
There are challenges to overcome to set up common standards. Mr Bagge explains “There are lots of players and this is also an old industry, so of course members have their own ways of working. Part of the challenge is to make sure they sit down and debate differences and come up with a syndicated version of how to do things going forward.”
He says it is a practical challenge: “Are you willing to give up some of the ways you work for the greater good of the industry?”
Mr Bagge comments “That is a practical challenge and then there is implementation. We can develop many standards but developing standards itself is not what drives value, what drives value is implementing the standards.”
This is beyond the control of the DCSA. “I cannot tell carriers what standards they have in their organisations. I can say this is what industry came together to create, but whether they choose to implement it is not up to me.”
But the signs are positive for the uptake of common standards in the industry. Mr Bagge says “When we have our workshops the level of collaboration is great, and that is positive.”
While DCSA represents 70% of global trade, there are major ocean carriers missing: “We would really like COSCO to join (together with OOCL). These are the two missing but they are welcome to join us and then we would represent more than 80% of global trade.”
Snapshot CV: Thomas Bagge (DCSA)
In April 2019, Thomas Bagge was appointed statutory director and chief executive of Digital Container Shipping Association, a neutral and non-profit association founded by AP Moller-Maersk, CMA CGM, Hapag-Lloyd, MSC and ONE.
Prior to joining DCSA, Mr Bagge was involved in various transformation activities covering people, process and technology over the past 12 years at Maersk. In addition to his transformational work, Mr Bagge worked with the executive board of AP Moller-Maersk on strategy and strategic change. Most recently, Mr Bagge was adviser to the CIO on strategy and digital transformation.
Mr Bagge holds a degree in applied finance from Copenhagen Business School and an executive MBA. Aside from the role as chief executive of DCSA, Mr Bagge holds board positions in other organisations.
NileDutch adopts digitalisation for global expansion
Nile Dutch Africa Line (NileDutch) has undergone a digital transformation ahead of its drive to expand its container line operations globally.
The Dutch shipping group has implemented a digital program for automated data capture and analysis to gain a better insight into container-based supply chains and operations, deploying CyberLogitec Global’s integrated container carrier operations solution Allegro.
Headquartered in Rotterdam, NileDutch has provided containerised links between West Africa and the rest of the world for more than 30 years. It built up a network of 85 offices and agencies around the world to generate and manage trade links.
It planned to expand operations further to produce a global network. To instigate this strategy, NileDutch wanted to ensure its operations would remain at the forefront of the industry by accelerating operational efficiency, harnessing real-time data for critical decisions and effective resource deployment.
CyberLogitec’s solution was identified as a key tool to achieve these goals.
“Allegro is ground-breaking in many ways, including its capability to convert real-time data into instant, actionable insights,” says NileDutch chief executive Wim J van Aalst.
“We see it as the cornerstone of NileDutch’s strategy for a future-forward operating model. We have already begun using the system to unlock potential, including exploring cutting-edge services.”
NileDutch ICT director Mark Kraaijenbrink says the program “creates strategic and innovative responses quickly” to improve group efficiency.
“It is imperative for us to have maximum system uptime to continue providing service quality to our customers,” he says.
“Allegro was launched seamlessly and implemented within just nine months between project launch and go-live.”
Allegro is an end-to-end, integrated solution tailored for containerised shipping line operations that not only accommodates containerised cargo but also breakbulk and project cargo.
It uses algorithms to digitalise, integrate and automate all business processes required for maximising operational efficiency worldwide.
It reduces human error and boosts productivity, says CyberLogitec managing director Jason Hyeon.
Mr Hyeon explains how Allegro has simulation and management capabilities that “enable users to optimally control costs, manage yields and effectively deploy resources and assets, giving them a competitive edge and improved business insights”.