Effects of a Digital Platform Within Container Shipping

Abstract

Since the introduction of the shipping container as early as 1968, the shipping industry experienced great increase in trade and efficiency. The shipping container revolutionised the way goods are handled within the ports and enabled the growth of international supply chains. However, as this growth of trade continued into the late 1900s and early 2000s, both customs and the organisations within this chain experienced an increased administrative burden. This administrative burden was experienced within the different information streams to get the goods smoothly from the selling actor to the buying actor. Additionally, many actors within the supply chain perceive opportunities to greatly increase trade efficiency. Improving their business model through the addition of information based new services, expanding business through integrating other actors, and lowering costs through the development of cost-effective in-house capabilities. Early digitisation efforts have only produced limited results, as these mainly focused on automating internal business processes. These internal processes were often not able to automate communication with other actors. Processes still relied on a significant amount of paper communication.
The introduction of digital platforms has greatly affected different industries, for example enabling direct booking within the air travel business. Replacing paper documentation with an electronic equivalent can enable an increase in efficiency, through reduced administration costs and improved planning and operational capabilities. Efforts in introducing a digital platform within the shipping industry have been taking place using different governmental research efforts. However, as a possible additional effect, the digital platform may put reconfiguration of the network in motion. This reconfiguration enables certain actors to partake a bigger role, whereas other actors might lose control of the supply chain process.

The TradeLens platform launched in 2018, is such a digital platform. This platform allows sharing both documentation (e.g. the commercial invoice, packing list, bill-of-lading) and supply chain events (e.g. lodging ENS, the actual time of arrival) with the other actors. The platform uses a blockchain infrastructure. This structure is used to increase the trustworthiness of the data. Firstly, the auditability hinders documentation fraud as the actors within the network can trace the exact moment and actor that placed uploaded a document. The immutability of the blockchain infrastructure allows the automation of information processes. When the information is uploaded it cannot be changed. It was developed by a co-operation between a shipping carrier and a technology developer. The platform was tasked with alleviating the pressure on the administrative systems of the different actors within the supply chain. This research investigated possible scenarios due to the introduction of a digital platform using the TradeLens platform as the main research case.

Research Question and Objectives
This research aims to address the different possible future configurations of the network and roles within the container supply chain. To address this, the following main research question was developed: What is the possible supply chain configurations that come with a digital information infrastructure?.
In addressing this research question a number of research steps and clarifications have to be answered. Firstly, the research has to determine what is considered an actor within the supply chain ecosystem and what are the key activities performed in that ecosystem. Secondly, the research aims to perform an analysis of each actor and thus explain the different roles to be able to perform this analysis a theoretical model has to be developed. Thirdly, the research will evaluate the ecosystem using this model. Fourthly, the different scenarios will be developed using the developed model.
Research Method
The research employed three main methods of data collection. Firstly, a literature review is performed to identify the important information and innovation concepts to be used throughout the research. Secondly, through analysing many different public sources, the research gains company insights and information for constructing different roles, activities, and resources. Thirdly, through interviews with experts on the TradeLens platform where careful attention is given to the shifting activities, resources and control within the configuration of the network.

The used approach can be defined in four steps. First, the researchers developed an initial meta-framework using the findings from the literature review. Secondly, the different concepts within the meta-framework were combined into constructing a model for the assessment of the ecosystem. Thirdly, a generic container shipping case is construed from the information gained from the different public and academic sources. Lastly, a comparison is performed between the construed case and a test case of a Dutch tyre importer. The main findings within these steps will be discussed in the following paragraph.
Main Findings
The research identified five key theories to be of importance within the model. These are 1. Ecosystem theory, 2. Stakeholder theory, 3. Diffusion theory, 4. Control Point theory and lastly, 5. Barriers and Stimulating Factors. Firstly, the concept of the business ecosystem. An ecosystem describes how different actors within a business domain influence and interact with the other actors outside and within the direct business network. This research investigates the effect of digital platforms on ecosystem reconfiguration. The chosen system of analysis for this ecosystem reconfiguration is the blockchain-enabled platform, TradeLens. This platform enables information sharing between the different actors using a trusted blockchain structure. The TradeLens ecosystem can be considered a service ecosystem, as the main value creation is intangible and the many different actors within the ecosystem co-produce the final value within the system. Secondly, stakeholder theory describes when someone can be considered a stakeholder and how to evaluate motivations and incentives. Thirdly, diffusion theory described how an innovation such as TradeLens goes through different phases before mass-market adoption. Fourth, the control points theory explain how different actors within a business process are able to exercise control on that process. Control points were used to describe how different actors are able to perform certain roles within the ecosystem. Lastly, barriers and stimulating factors describe how certain factors can enable or disable a certain development to progress further. In the case of TradeLens this was used to investigate further growth barriers and stimulating factors.
This meta-framework was converted into a six-point assessment model. This model uses a comparison between different states of an ecosystem, to evaluate possible scenarios. The first case is that of the generic constructed benchmark. This benchmark has been developed from cross-referencing a selection of public and academic sources. The main task of the constructed case was to show a generic and common supply chain structure. To assess the enhanced version of the supply chain, a case study of a Dutch tyre importer was selected. This case was selected due to the extensive documentation around this case. Additionally, this case has ships of non-hazardous and non-perishable goods that do not require additional certificates and documentation that might be applicable for other goods. The constructed benchmark case and the tyre importer case were both evaluated using the six-point assessment. With regards to key activities, the main difference found was that the tyre importer self-organises its land transport as the organisation owns its own transportation vehicles. Secondly, the tyre importer case performed the import declaration itself. This in contrast with the benchmark case, where this task was delegated to a freight forwarder who organises both the land transport and the lodging of the import declaration. This main difference becomes more visible when assessing the second point, the key actors. Here it was observed that the freight forwarder was missing on the importing side within the tyre case. This was possible as the buyer/tyre importer performed the activities of the freight forwarder. Within the value exchanges and the key information, it was observed that the buyer was able to directly lodge the required data for the import declaration. This automated the customs lodging process and increased cost-effectiveness. Secondly, within the TI case, the buyer had its own land transport capabilities and did not rely on an intermodal operator to collect the goods from the port. This allowed the buyer to redevelop its strategy with regard to the supply chain. The effects of the digital platform allowed the process of lodging the customs declaration to be more efficient as the commercial invoice and HS codes could be directly gathered from this platform. This was made possible due to the API and blockchain data pipeline architecture of the digital platform. The API-structure allowed the data to be automatically collected, whereas the blockchain structure enhanced the trustworthiness of the submitted data. Regarding, intermodal transport. The digital platform allowed the buyer to have an accurate and actual time of release and arrival of the container. This allowed the buyer to improve the planning of the collection of the container. When observing the control points it was identified that the main control points of the freight forwarder are two-fold. First, it has the expertise and capabilities to be able to perform the customs lodging. Secondly, it has the capability of gathering and forwarding logistics data within the network. Within the tyre case, both of these control points were absorbed by the buyer.

Using the control point evaluation a set of four different scenarios were identified. These developed scenarios are not comprehensive, but a combination of these scenarios are likely to be observed in the near future. For every scenario, it is evaluated how the actor could use its current control points and the digital infrastructure to increase its control on the process and thus enable reconfiguration. Firstly, the status-quo scenario. In this scenario, there is not a clear actor who absorbs the activities of other actors. The main benefits of the digital infrastructure are experienced throughout the chain as the different actors increase their efficiency using automation and digitisation of the communication processes. In this case, no reconfiguration is thus observed. The second scenario is the development of capabilities to perform more logistical tasks within the supply chain by either the buyer, the seller or both. As observed within the tyre case, the buyer is able to more efficiently perform the customs lodging and the arrangement of land transport due to having access to the commercial invoice and the actual time of arrival and release of the container. An identified stimulating factor within the capability development of the buyer/seller is the standardisation of the data and the development of a market solution to booking and tracking logistical transport. The third scenario is where the carrier becomes a one-stop shop for logistics. Using their central position within the supply chain, they are able to redevelop their value offering. This offering is expanded with the logistical support of lodging customs data and providing intermodal transport. The fourth scenario is that of the freight forwarder expanding its value offering. Here the freight forwarder expands into managing the customer’s warehouse and perform a larger set of logistic services towards the customers.