Stronger data standards would go a long way for the shipping industry

Connected digital technologies are propelling the shipping industry through an age-defining period of change. The levelling up potential is exciting, but the adjustment phase is predictably bumpy. Digital tools and data exchange offer valuable opportunities for the maritime sector to solve common problems, drive new value streams and improve efficiency by reducing trade friction. 

But to capitalise on the benefits of data-driven trade, it will first be necessary to agree to common standards that govern the collection, use, and exchange of this data in our chartering workflows. This will be critical to the future of charter parties and the broader industry if we are to succeed in an era of digital transformation.

Data and Standardisation in Shipping

Digitisation empowers the maritime sector to meet rising demand for real-time market access and data visibility. It also equips the sector with a means of working collectively on reducing the environmental impact from ocean freight. Two key pillars which can support these outcomes are contract incentives and using the right digital tools. 

Some self-regulation can be achieved on smaller scales by using contract clauses to set data sharing rules and requirements between parties, for example, service agreements between a ship owner and an equipment manufacturer. This has the benefit of side-stepping political friction and conflicts of interest, thus building consensus faster. 

However, this approach will almost always be bi-lateral and not easy to scale. While it may be possible to agree on data standards locally or make provisions for working with non-standard data in small quantities, harnessing the potential of digitisation throughout the supply chain is ultimately about data which can be understood by many different people, organisations, and digital technologies.

There are existing standards and others which are still under development that are making steps towards achieving this. The International Standards Organization (ISO) provides a data quality management standard called ISO 8000, which outlines guidelines for the exchanging, integration, and quality control of data used in business processes and transactions. While it isn’t a sector-specific standard and has its limitations, other maritime focussed organisations are already working on more specialised areas for standardisation. For example, in February 2023, the Smart Maritime Council, in collaboration with ship operators and Lloyd’s Register, announced a new voluntary standard for noon reporting data. Elsewhere, the Digital Container Shipping Association (DCSA) continues to work on digital data standards for the containerised freight sector.

What does data standardisation look like in freight chartering workflows?

Achieving a common data language that is agreed on by all key players is therefore the fundamental first step on our workflow digitisation journey. Naming conventions are vital, as they place meaning and value on data. Imagine, for example, if ‘one kilogram’ represented different quantities between a buyer and seller. Or, if vessel speed referred to either speed over the ground or speed through the water. Our industry involves transporting a wide range of commodities, each with their own unique properties, so agreeing on common data standards for how we collect, use, and share data will enable us to reduce the volume of costly mistakes and create seamless workflows.

This is not only about avoiding contractual confusion and mistakes around terms. As well as improving day-to-day processes, this common data language will enable us to unlock the capabilities of digitisation to drive efficiencies and tackle collective industry problems across the pre, at, and post fixture stages. Whether it’s the length of a berth, defining waiting times at major anchorages, or when port calls start, digitisation enables us to use this information to make data-driven decisions in chartering workflows. At present, without common data standards, much of this data is invalidated.

Standardisation is key for meeting our environmental goals

There’s ultimately still much work to be done industry-wide to drive this standardisation in our workflows. 94% of respondents to this year’s global Sea Survey agreed that having standard lists and data formats would drive simplicity and reduce friction across workflows. Conversely, only about 1 in 4 respondents thought that the industry is doing enough to strengthen data standards. 

It's in our collective interest to accelerate efforts. Shipping must act decisively to find new operational efficiencies across the ocean freight sector and ultimately to decarbonise. Making data-driven decisions will be key if we’re to find these efficiencies – particularly in light of the IMO’s newly revised emissions targets, which has set a near-term checkpoint goal of 20 – 30% emissions reduction by 2030.

Take for example the paradigm of “sail fast, then wait”, which is so entrenched in standard charter party contracts but completely incompatible with operating a leaner and more efficient global supply chain. Measures like the Carbon Intensity Indicator (CII) and EU Emissions Trading Scheme (ETS) may soon pose a significant challenge to such practices and place them under more intense scrutiny. Overcrowded anchorages and congested ports are the stark symptom of this problem, generating thousands of tonnes of emissions that could have been avoided.

The cost of inefficiency isn’t just environmental. Every metric ton of fuel saved is also a reduction in cost and an improvement in margin for the operator. If every vessel heading to a particular port knew that it could reduce speed and save fuel, without sacrificing its position in the queue or forfeiting its right to fair demurrage, the choice would be an easy one to make.

If we’re to continue trading competitively while also tackling the growing industry-wide challenges around matters such as sustainability, we need digitisation in our chartering workflows – and for that, we need data standardisation. Many are already realising the power of having vast amounts of centralised data positioned alongside the tools that can help them use it. Agreeing on a set of common standards for digital maritime data is a critical phase in this era of digital transformation, and we must work together as an industry to succeed.