The Baltic Exchange looks at the impact of AIS on the shipbroking market and how it is the latest technology to have transformed a fast-moving industry
The business of ensuring that ships trade profitably has long been in the hands of the shipbroker. Knowing where the ships and cargoes are, facilitating price discovery and negotiating on behalf of the principal underpin any chartering broker’s activities.
The realisation that a ship safety tool, AIS, originally designed to allow the maritime authorities to track and monitor vessel movements, could also be used for commercial purposes was quickly understood by the chartering market. Over the past ten years AIS has transformed the way in which the commercial shipping community does business.
Today, AIS services such as MarineTraffic are used in shipbroking offices around the world. The network of terrestrial receivers run by MarineTraffic, combined with deep sea monitoring via satellites provides visibility of shipping movements to all and when combined with other datasets such as trade and commodity flows; news and intelligence, is an extremely powerful tool for the shipping professional.
Big-data driven freight market
The possibilities of a big-data driven freight market are just beginning to be understood. Algorithms and pattern recognising technologies are being developed to crunch data sources to anticipate where and when ships should be to be best positioned to capture a cargo. AIS derived vessel movement data is able to shed light on cargo movements and ensure a more efficient use of shipping assets than ever before.
AIS is however, just one of many technology and operational changes which are reshaping the shipbroking industry. There are many challenges facing the maritime sector. Poor freight markets and expensive regulatory change have put a focus on operational savings. A combination of affordable, proven technology – from AIS to cheap data storage – has set the scene for a fundamental examination of the commercial business model of shipping. Data and technology companies have mushroomed and shipping companies are investing more heavily than ever before in understanding the data that their vessels generate.
Perhaps the most valuable asset of the shipping company of the future will not be its ships, but the data they produce. But in a world increasingly built on data, questions around ownership and transfer of vessel related data will need to be resolved.
The Baltic Exchange has been adapting to market changes and trading practices for over 270 years. From its origins as a London coffee shop providing a venue for price discovery to today’s benchmark creation and market information service, the Baltic Exchange has been on a long voyage of change. Along the way it has ensured that what it does is relevant to the maritime industry.
This doesn’t happen by accident it is a combination of being proactive and reactive. It means reacting to the shift in geographical importance as seaborne trade becomes more and more Asian centric. It is about being proactive about the way the marketplace conducts its business.
The speed of communication has been the key driver of change. From the first undersea cables, to the telephone, telex, fax, Comtex and then email, communication has sped up. The cost of communication has dropped, reducing the hurdle for entering the shipbroking business and increasing competition in a global industry. Before the introduction of AIS, shipbrokers were the best source of information about vessel positions. Just as the speed of communication changed the shipbroking business, so has AIS. Shipbrokers have had to adapt and provide more services than just communication and vessel positions.
Trust is ultimately what enables the complex shipping business to function. Trust that your shipbroker is acting in your best interests; trust that the indices provided by the Baltic Exchange are a fair and accurate assessment of the freight market; and trust that the data provided by AIS is accurate. The role that MarineTraffic and other AIS providers have to play in the development of an information led global trading system is key. It is vital that the network built continues to supply accurate, reliable and verifiable data. The technology platform on which AIS is built needs to continue to evolve and rise to any security challenges.
We look forward to an exciting era of change.