Breakbulk: Digitalisation, blockchain and IoT

What are the upcoming biggest trends expected to take the market by storm in the breakbulk industry, and how does technology play a large part?

Breakbulk cargo has been defined as ‘whatever is left over’ after the bulk and container ships are full. While the shift of commodities such as cotton and coffee from breakbulk into containers has largely run its course, other breakbulk and project cargo continue to move on MPV/HL vessels. Not every shipment of breakbulk cargo involves a complex mega-project or thousands of freight tons that require full charters and heavy-lift capacity. Many of these movements are very complex, and require additional planning, expertise and equipment. Project cargo shippers often work closely with carriers’ engineering teams to create transport plans.

Simple breakbulk cargoes can often shift shipping modes fairly seamlessly. Steel, for example, flows from breakbulk to bulk carriers to, for some forms of steel, roll-on/roll-off (ro-ro) and container transport. The preferred mode will depend on volumes, prices, schedules and demand. Container and ro-ro services offer shippers fixed schedules, predictable routes and prices, and more commoditised handling, simplifying the equation – but only when it makes sense for the cargo. So what are the upcoming trends that are expected to become precedent in the breakbulk market?

AntwerpXL, the event dedicated to breakbulk, heavy lift and project cargo, recently released its first Trends Report ahead of its return to Antwerp Expo in December this year.

The report, which surveyed the opinions of senior decision makers from a range of business types across the breakbulk supply chain, includes a deep dive into the perceptions around challenges including market volatility, competition and declining profitability, as well as opportunities including investments in renewables, green shipping and offshore oil and gas. 

It finds that COVID has had a significant but measurable impact on the industry’s priorities, noting that digitalisation was only on the agenda of 26% of the industry’s senior players before the pandemic but, since COVID, that figure has risen to 37%. 

COVID has also accelerated the adoption of innovative technologies including drones, AI, and IoT enabled devices according to the report, but the drastic increase in sustainability efforts across the industry has been driven not by the pandemic but by earnest and growing concern among industry professionals about their companies’ impact on the environment. 

Sophie McKimm, Event Manager for AntwerpXL, says: “2020 was a challenging year for everyone in the breakbulk, heavy lift and project cargo industries so we saw an opportunity to provide the community with some extra value this year.

“Running the event AntwerpXL puts us at the heart of the industry; being able to connect the global supply chain, leveraging and embracing conversations throughout these last 12 months, we quickly realised that undertaking in-depth research could provide objective reports to the community that we serve. Our Trends Report surveyed the full market and we have presented insightful future trends and analysis that can benefit the sector. We’re really looking forward to seeing you all again, in person, at AntwerpXL from 7-9 December 2021.”

Combatting Covid:

Back in the heady days of January 2020, we set out our forecasts for the year ahead without a clue of what was to come.

The biggest practical priorities at the time were collaboration and efficiency (51%), boosting cargo capacity (42.5%) and reducing costs (42%). Lower on the agenda was digitalisation (26%), improving safety (23%) and process automation (16%).

While COVID-19 hasn’t quite flipped these priorities on their head, there has been an increased degree of urgency when it comes to things like cost reduction, according to 45% of respondents, and the likes of digitalisation, safety and process automation are now a far higher priority according to 37%, 33% and 17% respectively. Likewise, 35% of respondents agreed that boosting cargo is more important now, 34% have increased their focus on understanding and predicting demand, and 32% want to up their collaboration and improve their efficiency in order to weather the COVID-19 storm. 

You may be wondering why digitalisation only saw a jump in priority of 26% when it is the one thing that can dramatically impact the other priorities (safety, efficiency, capacity, process automation etc.). Could it be because digitalisation is one of the biggest single trends of the last few years and many organisations are already embracing it, or are we all missing a trick? 

Digitalisation

The digitalisation of the breakbulk industry is already well underway. The vast majority of respondents score themselves a 7 out of 10 in terms of how advanced their organisation’s digitalisation is.

But does that mean all the benefits to be gained from digitalisation have been realised? Well, 7 out of 10 is not 10 out of 10, and our respondents are in resounding agreement that there is far more to be gained in terms of finding efficiencies in processes (73%), reducing operating costs (58%) and eliminating human error (57%) among other things. 57% 22% 73% 29% 30%

What benefits can your company gain from further digitalisation? Eliminating human error, improving health and safety, finding efficiencies in processes and logistics, participating in online marketplaces and improving margins are just some of the benefits listed in the report. 

In fact, digitalisation is still one of the single biggest growth areas for the breakbulk industry, and will no doubt play a critical role in the industry’s post-COVID-19 recovery. But despite the fact the majority of the breakbulk industry sees itself as a 7 out of 10 in terms of digitalisation, there are still two key related opportunities that remain almost completely untapped.

Big data

Less than a third (32%) of the industry is making use of big data, but of those who are, 48% are using it to great effect in helping to identify trends, to predict demand (45%), to reduce costs (33%) and to improve supply chain efficiency (30%). The report looks at which ways companies make use of big data, focussing on identifying trends, predicting demand, managing transactions more effectively, managing inventory more effectively, improving supply chain efficiency, managing cash flow more effectively and reducing costs.

This is particularly interesting when you consider that, despite the wide-ranging and seemingly universal benefits big data has to offer, of the respondents who are not using it, an astonishing 40% believe big data is not relevant to them and an additional 15% don’t see the value. 

The reality therefore must be a lack of understanding because, among those who have been properly exposed to big data and are already making use of it, almost all are convinced of its benefits and feel like they could be doing more with it.

Blockchain

Blockchain is another relatively new digital technology that represents a significant opportunity for businesses in the breakbulk industry but, like big data, is thus far being underutilised. Surprisingly, 71% of companies said that their company was not already utilising blockchain, emphasising the lack of digital innovation currently in the market. Unlike big data however, the utilisation of blockchain technology is very much in its infancy even among early adopters. 

Amongst those who have not started using blockchain technology yet, the biggest barrier is once again perception of irrelevance (38%) and an honest lack of understanding (32%), but obstacles also include resourcing issues in terms of time (21%) and money (19%). Finally, as one respondent that checked “other” commented, for some organisations “there is just too much other stuff going on right now to consider it.”

So perhaps what we’re seeing here are trends of the future, opportunities that are still ahead of their time. While for early adopters they represent an easy win in terms of getting an edge on the competition, the industry at large hasn’t yet caught up with big data and blockchain technology. That said, it will no doubt be featured as a fully-fledged trend in the future.

You can view the full report and upcoming chapters on the Antwerp XL website to gain a further insight into the breakdown of numbers across these trends. 

Multi purpose

A major capacity crunch in the wake of Covid lockdowns drove a trend for container lines to charter multipurpose vessels last year, providing a short-term boost for some multipurpose vessel charters. But indicators suggest that operators are returning to traditional business areas this year, with breakbulk firms seeing upside into the first quarter.

“We certainly hope for and expect a positive uplift. Part of this is due to lessening competition from container carriers for multipurpose cargoes, as they move away from multipurpose and smaller project cargo and back to their traditional stronghold … at least for the short term,”  said Kyriacos Panayides, Managing Director of AAL.

Growth in container traffic on Asia routes has more recently helped rebalance capacity but is still driving record containerized freight rates, which in turn is supporting the rebound in multipurpose rates.

“It should be noted that the market is at a point where the SCFI is, in some cases, significantly underestimating the actual rates paid, as there are additional fees related to equipment and space availability,” said Lars Jensen of SeaIntelligence.

The current environment has already impacted the technological and digital side of the breakbulk industry, and we are sure to see further advancement and innovation in this area throughout the rest of this year and the next. 

Commentary: Ben Blamire, Event Director of Breakbulk Middle East 

The industry is currently witnessing a paradigm shift, due to the global pandemic. At such a time, technology is helping companies maintain a healthy supply chain. The industry has to adapt to the changing times and adopt digitalisation. Implementation of new technologies will not only help companies become pioneers in the field, but it is also beneficial in terms of cost-efficiency. Focusing on technologies that deliver tangible benefits in terms of speed, efficiency and the quality of service, rather than those involving complex processes, is essential.

The UAE has maintained its top position in the Middle East among 115 countries in terms of helping digital companies thrive and traditional businesses harness the digital dividend. Through a series of quality initiatives, the country has continually worked hard to create a thriving maritime market that attracts leading businesses from around the world, promoting the UAE’s status as a global shipping centre. Our initiatives are in line with the country’s vision and goals, adding a distinctive value to the overall event experience. With our 2021 event, we are hoping to stir up a digital revolution that will transform businesses in the breakbulk sector.

Commentary: Peter Bouwhuis, CEO & President, XELLZ

Transparency is a subject EPC’s, manufacturers and project owners are talking about lately and not without good reason. Withholding information from customers, not disclosing price and rate structures and poor communication is all too common within logistics service companies. But now with technology and project logistic management companies, transparency can become best practice with the help of a new model and smart technology.

The concept of shippers and project logistics service providers working together to manage costs and openly share information and data was almost unheard of a few years ago. We believe that increased transparency between these parties could be the catalyst for change that project logistics needs to transition into a “smart” sector.

Transparency is not just about the project plans or how project cargo freight is transported. Transparency is about the whole chain of events and the entire pricing and rate structure.

XELLZ has a policy that is conducive to complete open communication before, during, and after the project. Starting with the pre-planning where all technical and possible solutions are shared, all pricing and cost options and models are communicated, and negotiations with (sub)-contractors are carried out in the open with the customer to ensure the best and optimum cost solution is chosen.

 

To stay up to date on the latest, trends, innovations, people news and company updates within the global trade and logistics market please register to receive our newsletter here.

Media contact

Rebecca Morpeth Spayne,
Editor, International Trade Magazine

Tel: +44 (0) 1622 823 922
Email: editor@intrademagazine.com

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