NEWS

12 Dec 2018

SHIPNEXT Supply Chain: The Future of Transportation

Alex Varvarenko

Alexander Varavrenko,
Founder and CEO SHIPNEXT SUPPLY CHAIN

Passenger transportation has already seen anything from Uber and Lyft, to car-sharing. All this has not only reduced car emission, but also made passenger transportation more cost- and time-efficient.

Did the taxi drivers like the change? Mostly not. Is there a way back? No there isn’t.

Because taxi, as such, is a part of the passenger transport infrastructure. And if you try to find a way from point A to point B in Google Maps, with our “tracker” in hand, you have a pretty good range of options, all based on real-time data.

What happens in Cargo transportation today? Total chaos if you look at it in global scale. And yet such sectors of the transportation industry as shipping responsible for over 80% of world’s international trade, it has not experienced much digital transformation until now.

With shipping being the slowest mode of transport, as well as the least transparent one, due to its international coverage, it is very hard to talk of a cost- and time- efficient, seamless door-to-door transport. Inefficient manual paper-based documentation flow, truck delays and time spent in search for an efficient shipping solution, let alone corruption of the conservative and non-transparent industry, all effect the final price of goods the end consumer has to pay for.

It is, however, true, that today’s transportation industry has to compete against the growing swing towards local production and 3D printing. Competition between companies has grown into competition against ecosystems. And the continuous race for cost- and time-efficient product delivery forces the transportation industry to transform, helping the future ecosystem remain competitive. And the society we live in - attractive. And this is, in fact, is why block-chain for Supply chain is so important.

Who could revolutionize the Shipping sector, than the “Shipping man” himself. A founder of an international, “non-asset based” shipping and transport group with offices in Hamburg, Genoa, Dubai, Odessa and Limassol, as well as a software developer in his university times - Alexander Varvarenko - decided to change shipping in particular, and transportation in general once and for all.

SHIPNEXT - as an automated digital shipping Marketplace - was the first and important step towards this aim. Many companies from almost every country in the world made an attempt to “uberize”-shipping, but no one was as successful as SHIPNEXT. Today SHIPNEXT has patented the solution of processing e-mails and matching Cargo-to-Ship on a Digital Shipping Marketplace, and receives over 2000 freight requests each day.

“We succeeded due to 4 important factors.” - says Alexander Varvarenko in an interview to Forbes. “First and foremost is a unique algorithm of instant and efficient Cargo-to-Ship matching, based on linear programming (https://en.wikipedia.org/wiki/Linear_programming) - a method of using mathematics to generate the best economic result through big-data analysis.

As commerce in international shipping and transport is done by e-mail, we also had to develop a state-of-the-art natural language processing algorithm to process any incoming data and emails, regardless of errors and typing mistakes, based on machine learning.

We were the first to cover all sectors of shipping, including conventional, heavy and oversized cargo and steel, as well as dry-bulk, wet-bulk and containers.

Last but not least, we used our internal e-mail flow, our commercial data, to start generating instant and efficient shipping solutions to our clients from day one. This helped generate a critical mass of data, so much needed for efficient match-making on global scale.”

The algorithm structure is indeed one of the key factors. Not only does it bring that long-awaited transparency in shipping, but it also allows scalability. Alexander Varvarenko is also confident that it is a key to bringing efficient to container transportation, and, eventually, courier services.

Alexander goes on saying: “SHIPNEXT started building its algorithm from sole cargo shipments, where one cargo is shipped on a ship from one port of loading to one port of discharge. The same algorithm by now became more advanced to match multiple cargo on one ship from multiple ports of loading to multiple ports of discharge. Eventually we will enter container transportation to help bring real-time solutions to container transportation, where one ship carries thousands of cargo between multiple ports. An approach aimed at best utilization of space, as well as transparent real time comparison between various shipping options, enabling two or more carriers rely on a transparent real-time algorithm rather than human factor”.

On the other hand it also helps solve some of the important and word-known problems, which have been haunting the transportation and financial industries, as well as the international community for years:

- CO2 and Sulphur emission - the IMO (International Maritime Organization) has come up with new regulations (http://www.imo.org/en/mediacentre/hottopics/ghg/documents/faq_2020_english.pdf), which look damaging to the international shipping sector, while still being controversial as to their environmental impact.(1) The residue (sulphuric acid) from scrubbers, which sea-going vessels are forced to buy at a price-tag of 1.000.000 and more each, has no ways of being utilized in majority of the ports, and LNG-operated vessels are still far from being massively used, let alone requiring extra manning an safety. Seems the main solution for many will remain in the option of reducing speed to “economic” thus increasing delivery time and cost. Using SHIPNEXT, on the other hand, will allow further reduction in ballast-runs, thus delivering an easier and less damaging solution to ecological problems.

- Transparency and reliability of shipping sector - the banking sector, in the recent years, has been experiencing devastating impact of the fall in shipping-market, thus leading many banks to bankruptcies across Germany, Greece and other countries. (https://www.reuters.com/article/ us-europe-banks-shipping/european-banks-struggle-to-solve-toxic-shipping-debt-problemidUSKBN1A90GG). This came as a result of numerous problems that piled up in the old and non-transparent sector, along with its inefficiencies. This is reflected in the fact that freight index, so far, is only available for a small share of large (panamax-, supramax- and cape-size) fleet. A Digital online market, however, like it has been in all other industries, creates transparency and makes ship a “tradable” commodity, making it a more reliable and predictable investment.

- Secure and reliable Freight Payment based on Smart Contracts.

However the most key solution SHIPNEXT aims to bring is SHIPNEXT Supply Chain - an costand time-efficient, secure, seamless and traceably supply chain of goods through the Ecosystem. This is why Alexander Varvarenko brings blockchain technology into shipping and transportation. First by launching a first ever shipping related Smart Contract based on a well structured and efficient approach to Electronic Bills of Lading, and later in building a decentralized transportation network.

“I am glad we hear more of the need and important for interconnectivity and interoperability” - Alexander says. “The transport industry finally understands, that building an isolated solution to solve a small task or a fraction of the whole transportation process is not going to work on the global scale. That is why all digital (complementary and competing) solution providers, trading and freight-trading platforms, transport infrastructure and service providers must interconnect. Not only will this allow traceability and build a reliable data-source related to transport, but it will allow to build a more reliable, real-time based, secure, cost- and price-efficient supply chain”.

SHIPNEXT began interconnecting and stepping into strategic alliance with other solution providers, since a SEARATES - a leading marketplace for container logistics, AIRRATES, SPIRE - satellite and terrestrial data provider, AGROXY - an agricultural commodity marketplace, and many more, including insurance companies and banking platforms. All this should help launch a unique solution for world-wide cargo delivery regardless of its size and geographical location, based on bulk or containerized delivery, along with real-time pricing and multimodal logistics solutions, by late 2019.

“As such this will be a perfect ecosystem to connect any factory, shop or online store to a constand time-efficient global Supply Chain ecosystem. A perfect solution, or competition, to companies like Amazon or AliBaba” - says Alexander Varvarenko about the company plans.

In the meantime SHIPNEXT received the Best Shipping and Transportation Solution for Commodity Trade award at Global Grain Conference in Geneva last week, and is on its way to a breath-taking success. This shows that yet another industry is on its way to digital future, and will soon change once and for all.