Melf Brünn: “Human interaction cannot be replaced by technology”
In the next few episodes of our blog, shipping professionals offer unique insights into the ongoing process of digital transformation in the shipping industry, from seafarers sailing global waters to shore-based employees. Today: Melf Brünn from Peter Döhle Schiffahrts-KG.
Melf Brünn has been working for Peter Döhle Schiffahrts-KG for more than 25 years. The family-owned company provides services related to the shipping industry — from chartering, buying, and selling ships to financial, commercial and technical support, insurance and crew management. Brünn started out as a shipbroker, placing vessels and crews between shipowners and charterers. Since 2009, he has been pulling the strings as Head of Container Market Research. His responsibilities include analyzing and visualizing both supply, such as new vessels or the need for chartering, and demand, such as how much container capacity will be needed in the coming months or which trade lanes will change. He is also responsible for documenting the markets to monitor the development of charter rates for different ship sizes. Melf Brünn works for the Hamburg-based company from the Isle of Man.
Mr. Brünn, how has digitalization changed the profession of shipbroker over the past two decades?
As a shipbroker, you need experience and good contacts. It’s a very international business. You need a lot of knowledge about ships and the flow of goods, but also about countries and their cultures. You must be able to communicate, convince and build trust. After all, you want to make attractive offers to both the shipowner and the charterer — and in my opinion, this human interaction cannot be replaced by technology. In recent years, there have been attempts to digitize the shipbroking profession, for example through various platforms. But it turned out that the market players were not ready to take this step, despite the cost savings.
What were the reasons for this?
The “give and take” that goes on every day can only be fought out verbally. To illustrate: a shipbroker receives a commission of 1.25% on the time charter of a chartered vessel. Around the turn of the millennium, a lot of money was invested in digital platforms that would be used to negotiate the chartering of ships in the future. The idea was to provide a transparent online marketplace for ship suppliers (shipowners) and ship hirers (liner shipping companies) to charter ships via a negotiation tool without the need for a broker in the middle. However, this idea was met with resistance and not enough market participants could be convinced of this digital solution. Why not? The international business was not completely transparent because not every shipping company had its cargo ships mapped in the system. Then came the dot.com bubble and it became clear to market participants that the 1.25% broker’s commission was money well spent to negotiate and conclude charter contracts through friendly and experienced ship brokers. A machine or platform is not able to respond creatively and flexibly to the people who negotiate on the shipowner’s and charterer’s side. Question for clarification: Would you want to buy a house through an online platform or a chatbot?
It’s hard to imagine now. But what impact has digitalization had on the shipping industry?
Of course, digitalization has helped to make the market more transparent and accessible, both from the shipowner’s and the charterer’s point of view. Contract documentation and reporting has become easier. However, the greater the transparency brought about by digitalization, the greater the risk that competitors will gain insight into the business and have a better offer up their sleeve. About three years ago, a major shipping company invested in a joint venture to promote the development of blockchain technology. Despite an investment of several million dollars, it was recently scrapped, but I don’t know the exact reasons.
From your experience, would you say that the shipping industry is rather critical of the possibilities of digital transformation?
I am ambivalent about this: I think the younger generation is far too uncritical of new technologies. Shipping is a very traditional industry. It’s all about human interaction and trust in business relationships, which also gives a certain sense of security. Digitalization has found its way into the industry and made some things easier: we can use various communication tools — WeChat, WhatsApp, etc. — to maintain our customer relationships internationally. However, there is a lack of harmonization of standards, data management and interfaces in some places. Cybersecurity is a big issue. Many interfaces are still far too complicated and not very intuitive. In addition, recent years have shown us that there can be many disruptive factors, such as pandemics and wars, that require rethinking, for example in routing or charter demand. No AI can predict that! And I also fear that the geopolitical power games will not get any better. They always have an impact on business.
You mentioned harmonization of standards, expansion of interfaces and data management as challenges for the digitalization of the shipping industry. How have you overcome these hurdles in your company?
We currently have several projects “in progress” internally. These projects are designed to modernize data flows, increase transparency, and connect previously siloed data pools. The increase in data quality and data points is intended to improve workflows around the ship: Between sea (ship) and shore (office), but also between different departments. This concerns all commercial departments as well as controlling and insurance.
In our CARRIERS OF TOMORROW blog, we have coined the term “Shipping Company 4.0”. What does Shipping 4.0 mean to you?
Shipping 4.0 ensures improved data exchange between all market participants, i.e. charterers and shipping companies, whether at sea or on land, whether between government agencies or private companies. There are clearly defined formats and interfaces that enable easy, standardized data exchange between all participants. Overall, Shipping 4.0 is characterized by less bureaucracy and paper documents than we know today.
