The shipping industry has long been criticized for being slow to adapt to new technologies and taking a reactive approach to market trends. But after several years of stagnant growth, the shipping industry is waking up to the potential of the Internet, according to Thomas Falck, managing director, Visma Marine. Today, the scene is crowded with competing e-commerce initiatives and, some argue, more cash than sense.
With the rapid development of new information technologies, the shipping industry has been scrambling to adjust to the new economy. For Visma Marine, the holding company for SpecTec Group, a supplier of fleet management software, the transition is a natural extension of their core business. "We are seeing a remarkable transformation in how shipping companies interact with suppliers," said Falck. "Information technology has created enormous opportunities for everyone".
Today, more than 70 maritime procurement business-to-business portals are currently under construction throughout the world. By some estimates, more than $250 million has been invested in these e-commerce ventures. For shipping companies eager to trade for products and services on the Internet, the savings are going to be significant - up to 50-70 percent on transaction costs and as much as 20-35 percent on the goods supplied. For this reason, many believe that maritime-related e-commerce could develop into a multi-billion per year industry. With stakes so high, it is no wonder that the battle for dominance in this untapped market is fierce.
Survival Of The Fittest
Like many new niche industries, Falck believes the Internet marine procurement market will soon be dominated by fewer, larger players. Indeed, for e-commerce to provide savings there must be a lot fewer initiatives; parallel investments in infrastructure and marketing do not provide value to the ship operator. "Ship operators don't want to search 56 web sites to place an order", he says, "and no supplier wants to search the same 56 web sites to offer a bid".
"We predict that of the 70 Internet portals operating today perhaps five will survive", Falck says. "Today's marine procurement e-commerce ventures are in a sudden-death, winner-take-all game of Darwinian evolution".
SpecTec Group has been quick to capitalize on this niche industry. The company has already reached an agreement to integrate its AMOS purchasing and maintenance software into Arena's Internet portal, portsnportals.com. Recently, SpecTec Group announced that they will open the software platform for e4marine.com, an Internet venture created in alliance with marine distributor Unitor and offshore services partner, Umoe. While Falck refuses to discuss details, he has indicated that Visma Marine is currently negotiating partnerships with other e-commerce ventures to enhance and use AMOS.
The New Economy
But will the shipping industry adapt to the new economy? Falck believes that for shipping companies to embrace and capitalize on the new economy, they must be willing to take a collaborative approach to developing the business. "The size of the community is ultimately a determining factor in assessing the value of the network in the global economy".
Falck also believes that the winners in the e-commerce and portal game must be capable of combining unique strengths (in technology, distribution, cash management, risk management), maintain a clear vision, have deep pockets, an ability to execute, and maintain an open mind.
"We feel our customers, partners and many of today's e-commerce ventures look to us to help lead the market", says Falck. "We are determined to work hard to make all the benefits of cutting edge technology and the latest management practices available to the shipping industry".
While it is still too early to say how quickly the shipping industry will adapt to the new economy, one point remains clear: the Information Age will radically transform the shipping industry. For shipping companies recently battered by poor annual earnings, embracing information and communication technology may not be a matter of choice, but a matter of survival. "We believe that as the shipping industry is operating in a time of tight operating margins," says Falck. "This trend will help take out costs associated with the supply chain and ultimately, drive a serious shakeout in the supplier base as well."