Thursday, September 18, 2014 CI Lloyds News Article on SVM

Carriers turn to IT in the battle to cut costs

lloyds

Container firms look to new technology to get a grip on their outgoings

Damian Brett
Thursday 18 September 2014, 11:19

Having better visibility when it comes to charges can improve the way carriers manage their cash-flow.

CONTAINER shipping lines’ increasing focus on costs is resulting in the wider use of IT solutions to improve their control over outgoings.

Solverminds Solutions & Technologies vice-president business and strategy Gaurav Sharma says that over the last few years carriers are focusing less on revenues, because overcapacity means that freight rates are largely out of their control.

Instead, they have started to focus on cost.

“We are trying to say that shipping lines  can’t do much about revenues.” Mr Sharma said. “It is the cost factor you need to focus in on in order to maximize the value addition.”

That new focus means finding ways to monitor supplier costs; the fees charged by ports, terminals, feeder operators and hauliers. “We are saying by having a better IT system you will know how many containers you have loaded and how many you have discharged,” Mr Sharma said.

“So once you have those volumes, you check against what the ports have charged you and if there are any differences you can raise a dispute.” Having better visibility when it comes to charges can improve the way carriers manage their cash-flow.

Using IT solutions to manage vendor contracts, monitor volumes, manage expenses, handle invoices and manage the process with accounts could generate savings of 5%-10% of the cost of those processes, he said.

IT solutions that monitor bunker costs and usage could create fuel-cost savings of 2%, solutions covering empty repositioning could generate savings of 2% of these costs while container stowage auto-planning could reduce the cost of this element of shipping by 5%.

Mr Sharma said: “Because of the economic situation over the last four years, they are the ones driving it and they are the ones asking for it.”

“They are saying we need to manage our costs better, we need to magnify and examine our cost control and ask if the way we are doing it is it the best way.”