URSABLOG: Tracking Change

 

I attended a reception yesterday evening held byMarine Traffic, the vessel tracking platform well known and beloved by my brother and sister brokers. The red wine and food were both good, as was chatting with new and old friends. The most instructive conversation for me however was with the charming head of marketing when we were both outside having a cigarette (as is usually the case).

 

For the uninitiated, Marine Traffic is a website where you can search for the location of any vessel in the world with an IMO number and who has their Automatic Indentification System (AIS) switched on. Apart from the location they can tell you where the vessel is going, and when she is likely to arrive. This information is free for those who register. I asked Nicola how the company made money, and he told me that their revenue streams come from both advertising and the sale of advanced services. I was intrigued to find out who would want to know more than what was already available for free. It turns out a lot of people would like to know the actual arrival time of a vessel (rather than the estimated time of arrival, the ETA), including ships chandlers and suppliers, who want the identity of the managers as well as the name of the vessel, and will pay for the knowledge.

 

Maybe a working life in sale and purchase shipbroking has made me slightly arrogant – an occupational hazard – but I viewed this idea as quite quaint, charming and naïve. As brokers it is our duty to know who the owners are, and more than that, who does their business for them, and how many ships they have, their investment profile and so on. Our broking lives are spent gathering and absorbing this stuff, it is nothing new. In the past maybe we kept notes, or hoped our heads would hold it, now we have databases to store the information in, and websites to replace the books we used to leaf through. That ship suppliers and other port based service providers are paying for this service makes me think “How did they manage before?” It is perhaps a reflection of the times that people are using apps to find out information that they didn’t feel the need to have before. I also wonder how much new business they will get through it. Cold calling the purchasing departments of ship managers around the world must be fairly soul-destroying work.

 

Of course, this is about horizons as well. If your horizon has traditionally been the outer port limits of the port you work in, then a new platform that helps you access worldwide business is a welcome development. But what other uses are there? Nicola told me of shippers who were tracking the ports of call of a particular ship, and when the rotation changed (or the port call was cancelled altogether) they were able to make alternative arrangements, often before their own transport departments had been told about the changes by the carrier.

 

He also told me of employees of a famous large liner company based in Denmark who use Marine Traffic to keep themselves better informed of the arrival of vessels in ports than their own company is providing. I find this troubling for a couple of reasons. One is legal: the law of agency says that an agent must use the best duty of care to ensure that they protect the interests of their principals, and always act within the limits of their authority, otherwise they are in risk being in breach of warranty, with or without negligence, which can prove costly. If the information they provide is incorrect, and it comes from a source other than from their principal then they are liable for damages. The second is more esoteric: if agents are using different sources of information, it does not say much for accuracy and timeliness of the liner operators themselves.

 

This may seem like nit picking, but AP Moller-Maersk this week cut its profit guidance after the line’s performance and share price were hit by the effects of a massive cyber attack, which they said had cost them between US$ 250-300 million. Their insistence on making sure that position updates come only from the ships themselves seems wise in this context, notwithstanding the legal issues. If the IT systems of the world’s largest container shipping line can be attacked, who says vessel tracking platforms, and even the AIS network itself cannot be manipulated. Maybe Maersk should sign up Marine Traffic to help them.

 

It seems to me that these systems are good for only one thing: the vessel’s movements. For liner shipping, which seems to be the most natural home for these paid services, I understand, but the measure for real analysis (and perhaps what I would pay for) is something that would measure the quantity and type of cargo as the raw material: tonne-miles, the real measure of output for shipping. If this could be more accurately measured then we would have a great tool, not just for chartering but for sale and purchase of ships and the ordering of newbuildings. The dimensions of a ship (in particular the draft), combined with the actual amount of cargo carried on a particular route over time would give real insight into current and future demand of tonnage. This would give a shipowner a much better idea of what design to use for his next order. It would not necessarily bring better freight rates, but would help make sure they were first in the chartering queue. Maybe there are shipowners already collecting and analysing this data; if that is the case I’m sorry to have destroyed your competitive edge by sharing the idea more widely. If not, you know where to find me.

 

This leads us to a larger conclusion, one that I have mentioned before. The best people to develop new technology are those that understand the intended market place, rather than those who create the technology. Too many ‘innovations’ come from those people who are trying to use new technology to sell it in new packaging without understanding whether it is actually needed or not. True innovation is when something already produced is improved upon to give a competitive edge (until the competition copies it or creates something better).

 

At the end of my chat with Nicola he asked whether I would like to join a meetingthat his Marketing team organizes one a month to get to know the market better.I said I would be happy to, and with that we parted company. On my way home on the metro I was happy that this amiable and able man had learnt one of the most important lessons: that shipping is all about relationships.The role of brokers is not just about matching ships and employment, or buyers with sellers, but involves expertise, knowledge and insights in the negotiation and delivery of ships. More than that however, brokers have the proven ability to initiate and facilitate change. I am glad that some in the hi-tech industry have come to realise this. I’m looking forward to that meeting already.

 

Simon Ward