Mon, 14/10/2019 - 11:52
By adding a global, technology-enabled layer of transparency to shipping agency operations, Inchcape Shipping Services continues to gain the trust of clients to manage their vessels and cargo the world over
Writer: Tom Wadlow | Project Manager: David Knott
Around 6,000 years ago Egyptians navigated 100-metre-long boats up and down the Nile.
Powered by oars and featuring sails, these wooden vessels carried enormous obelisks and were a serious feat of engineering for their time, so much so that very little evolution in boat mechanics occurred until the advent of steam propulsion.
The British East India Company took full advantage of this long-awaited breakthrough, initially using steamships to help manoeuvre large sailing ships into the narrow harbours of India before reducing travel time between Asia and Britain.
In 1856 the Company awarded a contract to carry mail between Calcutta and Rangoon to the Calcutta & Burmah Steam Navigation Company, which incorporated in London and became an agent for the new shipping line. This was the work of William Mackinnon, who, together with Robert Mackenzie, formed a general merchanting partnership named Mackinnon Mackenzie & Company (MMC).
It is the formation of this company in Calcutta in 1847 that the Inchcape Group proudly traces its origins.
Exponentially growing its influence between Europe, Africa, the Middle East, Asia and even Australia, MMC became a crucial enabler of British sea trade, the Inchcape name taking over in the 1950s and continuing to serve as agents for a tremendous array of clients to this very day.
But, much like the steamship’s oar- and sail-powered predecessor, the nature of shipping agency interactions remained relatively unevolved through this protracted period during and after colonial trade across the seas.
The formation of Inchcape Shipping Services in 1993, however, marked an important turning point.
“We’ve been in the industry for over 170 years, and the issues around shipping have always been that what happens in faraway lands has always been a faraway thing,” explains Frank Olsen, the company’s present-day CEO. “There has not always been enough information, communication, control or transparency, and therefore a lack of trust, in what is occurring in places which are hundreds, if not thousands of miles away.”
Inchcape Shipping Services was therefore formed to integrate what was then a loose federation of ship agents into a robust, transparent international network with defined and common service standards worldwide.
“Today we are driving both operational and financial transparency to the process, using technology to underpin the way we interact and manage relations with our customers,” Olsen continues.
“The idea is for the principal to feel in control and know exactly what is happening with their vessel during a port call.
“Historically, the criteria for selecting an agent has been localised knowledge of the port in question, and trust in this knowledge and subsequent track record. Trust is everything, and our mantra is that you can only establish genuine trust if you have transparency first – it is not enough anymore to simply say trust me.
“We will build that trust by providing the operational and financial transparency, enabled through new technology, across our unparalleled network.”
Inchcape Shipping Services thus delivers a service which combines the benefits of a local agent on the ground with a global layer of extra value powered in many different ways by technology and its unique global network.
The two facets are intrinsically linked (one cannot survive without the other) and this is shown by three core pillars which define the way Inchcape operates today – global, technology and people.
The first pillar centres around a huge global network, made up of 300 offices in 68 countries across 2,500 ports and built up over 172 years of history, a uniquely developed asset that is extremely difficult to replicate in what is still a very fragmented market. Indeed, it is the largest owned proprietary network of any shipping agency.
“This is something we’re extremely proud of, but more important for us is changing the relationships of our customers from a collection of local relationships to a global partnership,” Olsen adds. “These are transacted at a local level in lots of different locations, but there is commonality, and that is the global layer of value that means the whole is greater than the sum of the individual local parts.”
Olsen is not suggesting that the individual parts, which include the company’s huge supplier network, are in any way understated in their significance to Inchcape’s operations.
“The importance of our partners, of course, cannot be understated,” he says. “Fundamentally, our job is to coordinate suppliers on behalf of our principals, so we would be nothing without our huge supplier base.
“A key component of our value proposition to our principals is that we work with extremely professional and reputable partners, with whom we enjoy a long and stable relationship.
“A lot of time, effort and resource has gone into making sure we build up the best supplier network we can, and our strategic sourcing and procurement team reports directly into me. This team, managed centrally, has contacts in all of our countries and ensures that our supplier relations are built around value, not just cost.”
Through this network, Inchcape is able to provide a full suite of financial and physical services, from full port agency and husbandry services to crew logistics and bunker calls.
The second pillar, technology, powers Inchcape Shipping Services’ raison d’etre – to integrate the individual parts into a transparent, global ecosystem.
“Technology is the enabler of the global advantage Inchcape provides,” Olsen says. “While I wouldn’t say we are a technology company, I do believe it has a massive role to play in enhancing the value shipping agents can provide to their principals.”
Data is the lifeblood of this. Now widely dubbed the new oil, it is once more the sum of the individual pieces which combine to make a greater, transparent whole for Inchcape’s principals.
And there are millions of data points which are collected and analysed to make this work. As an agent, the company manages 70,000 port calls a year which equates to more than 100,000 individual jobs.
This means Inchcape is able to collect and analyse mountains of valuable information, data which Olsen splits into three broad categories.
“The first is performance benchmarking data that we can provide customers,” he explains.
“For example, your oil tanker calls into a certain terminal at a certain time of day, but the process is not as efficient as a similar vessel calling at a different time or at a different terminal. Why is that? We begin to ask these questions based on the data we have on ship types, terminal types and timings. Our operating system, Optic, enables this.”
Second, and equally significant, is the information gathered through a system called World of Ports.
Inchcape has operated this for a number of years as a static dataset covering berthing and terminal data for dry and wet berths around the world, a very useful tool for companies looking to charter ships into ports to make sure vessels are compatible with terminals and berths.
“What we’ve done now, in order to make the dataset more dynamic, is geofenced every single berth within that dataset, meaning we can now see when a ship that falls outside of the stated parameters makes a call,” Olsen adds.
“In these cases, the most likely scenario is that the data for that berth has not been updated since it has been upgraded or expanded by the port. This means we can continuously update the dataset, making it a unique offering that nobody else offers.”
Such data is also being linked to other data heralding from outside of the port, what Olsen classifies as market intelligence, the third category, and another way of adding dynamism to Inchcape’s vast pool of information.
The result is that principals are able to ask and find answers to questions that need answering in order to make well-informed judgements.
“For instance, what ships are in the line up?” Olsen asks. “What are those ships carrying? How much cargo are they carrying? Where are they coming from? Who are the actors involved? We’re not a data company, but we have unique access to public domain data which we can verify at course thanks to our network of ‘eyes and ears’ at the ports.
“Ultimately, we are enabling our customers to make better decisions more quickly.”
Central to Inchcape Shipping Services’ ability to use technology as vehicle for transparency is our application, Optic as mentioned earlier.
The company is in the early stages of rolling out the solution, the basis of it being a system that provides operational transparency at port level based on a vessel programme, an expected series of events that should happen to a ship as it makes a port call.
“As a customer, you can see what is happening and when something requires your attention, the system will inform you that an event has occurred outside of the parameters that you set,” says Olsen. “You are not waiting at the end of the phone to hear if everything is ok… or not.”
Rather, our principals are able to monitor progress through a range of devices such as smartphones, laptops and tablets, via an app or integrated into an ERP system. Optic can also be applied to a single vessel or entire fleet sailing around the world, offering unrivalled visibility at virtually any scale.
Payments are another important element of shipping agency, and Inchcape is working on a digital payment platform to ensure all money exchanges are transparent, traceable and accountable.
This highlights the importance of global, consistent levels of corporate governance.
Be it the payments process or handling of principals’ data, Inchcape Shipping Services has developed a company-wide compliance programme which is widely recognised as pioneering in the industry.
Local agents who are part of the Inchcape network are well-versed in these standards, combining this with their local knowledge to represent the safest possible bet for clients, a key differentiator for the company over its competitors.
Compliance has historically been something of a taboo subject in the industry, but Inchcape is ensuring the dynamics of the conversation are changing.
Olsen adds: “There are lots of large enterprises still choosing smaller, local agents who perhaps do not have the level of global governance that Inchcape carries, simply because they don’t have the scale to justify the investment. We believe it has to be taken more seriously and can offer both the advantages as a local operator with global governance.”
This naturally leads the conversation onto the topic of cybersecurity, another critical element to the governance piece. Inchcape Shipping Services relies on an advanced IT security setup and a rigorous training programme to ensure all employees operate within safe parameters.
Once more, the integrated nature of the company’s network delivers another point of difference.
“The biggest risk here is having multiple entry points into your system,” explains Olsen, “so if you have agents spread all over the world, you are giving access to your systems to people you may not have vetted. Our advantage is a single point of entry, and one which principals know and can trust.”
While technology has been proven to provide a digital differentiator, its value would be severely diminished without skilled employees to harness it.
Indeed, people make up the third Inchcape Shipping Services pillar, be they local agent partners on the ground or the company’s own staff spread around the world.
“We are an asset-light business, so having the best people is paramount to our success,” Olsen says. “Key to this is our in-house training programme, something we are very proud of. It is predominantly digitally based, providing extensive learning opportunities for all staff, be it mandatory programmes in compliance to more vocational and career-based modules.”
Named the Inchcape Marine Academy and in operation for around 10 years, it has been created by a combination of in-house experts and knowledge contributions from outside of the company. Currently the academy houses around 170 courses, with each employee on average undertaking one learning course per month.
Although described as asset-light by Olsen, the advanced technology and skilled people combine to make a formidable resource for Inchcape, a setup which leaves the CEO optimistic as the company moves into the next chapter of its story.
“We are witnessing change in the industry,” he observes. “The global nature of what we have been discussing is becoming more prominent and is being valued more by different industries.
“For example, oil and gas majors have for quite some time been interested in risk mitigation from a governance point of view – they have been the first ones to adopt this hub methodology that has been introduced by global agents in the past couple of decades. That same motivation is permeating other client bases in the shipping industry.
“We therefore believe the need for working with a global agent who can provide safety and security will increase. The transparency related to this on an operational level will also need to increase. However, the requirement for a good quality local agent who you can contact is still crucial – for us it is about the global and local balance, something we believe we are achieving through technology.”
And it is this dynamic which Olsen believes will help the company to acquire a greater market share in years to come. Albeit a congested industry with a huge array of participating organisations, the potential to expand Inchcape’s business is sizable.
Concluding optimistically, Olsen says: “This is a highly fragmented market and we believe we can significantly increase our market share. To do this we need to increasingly differentiate our products and provide a transparency-based offering built around advanced technology, backing up an experienced and unique network of people at the ports.”