Largest ocean carriers confirm formation of industry association

NYK ship sailing in San Francisco bay

November 15, 2018 - In a joint announcement, A.P. Moller Maersk, CMA CGM, Hapag-Lloyd, MSC and Ocean Network Express (ONE) confirmed previously forecasted plans to form a global association of ocean shipping lines.

The players want to create free, open-source information technology to decrease friction in the industry and increase transparency, according to the announcement. The first step is to write common data standards to increase interoperability between carriers and customers.

"Such future common standards could be a lever to enable the use of new technologies and improve the way existing solutions from different stakeholders work," André Simha, CIO of MSC told Supply Chain Dive in an email. 

When initial reports of the industry collaboration circulated earlier this month, onlookers had more questions than answers. That is largely still the case since an organization with players this large is likely to move as slow as a container ship in harbor. 

But Simha offered some detail as to the direction the association is likely to take with a caveat: "the group is still in the planning and preparatory phase." 

One major area of uncertainty is how regulators will react to this much coordination the carriers, who together represent nearly 60% of container market share. The association itself is a non-profit organization and all ocean carriers will be invited to join once it is officially established, which may be early 2019 barring regulatory hurdles, according to the release. 

The neutrality of the organization is key since competitors will want to be on equal footing to feel comfortable joining and cooperating. So the initial members are making efforts to portray a united and equal front, but will regulators take issue with that very factor? 

"All necessary steps to gain required approvals from regulators are being prepared. The association will not discuss any commercial or operational matters, so we hope that all stakeholders in the industry, including regulators, see the benefit for the entire ecosystem," said Simha. 

In terms of what kind of technological solutions the association will pursue, Simha said common data standards, blockchain and cybersecurity would be on the list, with the central goal of streamlining information technology for the entire industry to relieve some operational burden for carriers and improve the customer experience. 

"For example, today, we have hundreds of different types of messages for different ports and terminals around the world, all with the same basic information. That’s an overhead that is ridiculous for everyone. That’s why we want to collaborate on standards and let CEOs and commercial do their part," Simha explained. 

He added that increasing interoperability between ocean carriers and third parties could increase efficiency for the entire supply chain. 

Noriaki Yamaga, managing director of corporate and innovation for ONE said in a statement, that the previous lack of coordination has been a barrier to technology adoption in the past. 

"We're a little bit cautious about adopting new technology by an individual company since there is no common standard in the market which may be ending up with re-integrating work among all stakeholders in the supply chain," he said. The new association will, therefore, make such investments worthwhile since interoperability will be baked in. 

Source: Supply Chain Dive