The Big Problem of Naval Logistics
How overcapacity is killing the shipping industry.
The shipping industry is MASSIVE: it has driven the global economy for the past 25 years, and without container shipping, and the globalization of supply chains that it enables, worldwide GDP would be reduced by $15 trillion. And yet, even if container shipping has enabled trade that has lifted hundreds of millions out of poverty, the industry continues to produce low rates of return, which destroys value for owners.
There is a big, big problem that no one seems to be able to solve: we’re talking about overcapacity. The current supply of container capacity afloat is about 20 percent greater than demand. The main culprit of this problem is an extreme disorganization in the distribution of cargo, caused by big shipping companies buying larger ships, trying to get more cargo on each ship for a lower cost and undercutting the competition, effectively shutting them out of the market.
The problem with this situation is that everyone who owns cargo wants to move it at the lowest possible cost, and thus only makes deals with the big companies, which in turn get overbooked and aren’t able to manage the workload. Over time, this market trend created an oligarchy within the industry. The industry only saw a 3% increase in capacity, but the top six carriers now control 68.1% of the industry’s market share. At the start of 2016, this same top-six group controlled only 49.9%.
Fortunately some companies are trying to come up with a solution. One of these is BitNautic, a company based in Switzerland that is trying to open up the shipping market by creating an online platform, an Uber of naval logistics, that allows ship owners to list their ships, proposing prices and routes, and cargo owners to choose for themselves the best carrier for their merchandise, instead of having to rely on phone calls or friends of friends, often leading to unfavourable deals and unpredictable turns.
The experience is thus extremely simple: a direct agreement between supply and demand, with no middlemen, using the BitNautic Token (BTNT), a dedicated cryptocurrency, as the only means of payment on the platform. The goal of this is to get rid of currency differences between different countries, making the process leaner, offering, at the same time, all-round legal support from sector experts, thus freeing clients from burdens like the writing down the “Bill of Lading”, the essential document that regulates every transport deal. The platform also includes and advanced AI algorithm to fight the problem of overcapacity: it maximises the efficiency of transport by computing the best combinations of cargo in shipments and suggesting them to the users. This way, besides allowing low-volume cargo to be transported alongside high-volume, the number of segments needed in a route is greatly reduced, and so are the costs for every interested party.
The journey BitNautic is now at a crucial step. At less than two months from the release of the first version of the platform, the expectations are high and the Team’s enthusiasm is through the roof: the shipping industry revolution is coming.
To know more visit: BitNautic
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