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How technology is transforming Nigeria’s Shipping Sector

Staff Writer's picture

The era of digitalisation continues to create opportunities for businesses in the African market, with data and information at the core of most industries. Nigeria is one of Africa’s main economic hubs, and its shipping sector continues to benefit from advantages that come from digital transformation.

“Shipping has becoming more globalised and interlinked thanks to the introduction of new and innovative technologies within the space, such as cloud and satellite technology for example,” says Eric Piquet, Head of Business Development and Strategic projects in Satellite at Orange Business Services.

According to the World Bank’s Annual Ease of Doing Business Report (2016), Nigeria’s maritime shipping ranks 169 among 189 countries with Mauritius ranking 32, placing it the best in Africa. “As an oil producing and exporting country Nigeria’s shipping and maritime sector is especially important in terms of economic development for the region,” adds Piquet

Transparency and visibility throughout the shipping process

Digital transformation in Nigeria’s shipping industry is largely due to the rise of the Internet of Things (IoT). Tracking and tracing cargo in real-time is vital in maritime shipping, allowing businesses within the sector to operate more effectively and transparently. “With IoT the main challenges are often not necessarily about the technology, but rather making the IoT business case and trying to bridge the gap between communications and connectivity providers,” explains Olivier Ondet, SVP IoT & Analytics, Orange Business Services.

Digital technologies in IoT are improving transparency and visibility between connectivity providers. For instance, the traceability of cargo, down to individual container level could be automated. Remote container management (RCM) is a relatively simple new technology that uses a modem, GPS, wireless SIM card and satellite connectivity to create “smart” containers that can be monitored for faults or defects in real time. RCM is changing the concept of supply chain visibility in shipping, and offers great potential cost reductions.

IoT sensors can assist in improving fuel consumption on ships – and much more. “Sensors can be used to monitor everything from a ship’s speed to the temperature of the cargo it is carrying. That data can then be analysed, optimized and sent to captains, crew, other ships or the shipping company’s communications headquarters on land, all in real-time,” explains Ondet. This assists in reducing running costs, increasing operational efficiency and, ultimately, can enable an optimised shipping ecosystem.

Digital transformation bringing new-economy thinking to shipping

Digital transformation means the shipping sector is experiencing a technological revolution that will change traditional working practices forever. Digital tools and solutions in Nigeria’s maritime shipping are delivering a range of benefits, which include increased efficiencies and vital cost savings, lower emissions, increased visibility of cargo, and enhanced crew welfare.

About 41% of the cost to import is attributable to inefficiencies, whilst on the export side, costs are lower than import costs, but distributed similarly, according to LCCI Maritime Port, (2016). Thus the major driver of extra costs on the export side is also transport between Lagos warehouses and the ports, due to congestion, freight forwarding and yard handling costs.

Whilst technology brings numerous benefits it also brings challenges and potential threats

Nigeria’s ports have increasingly seen a rise in gross tonnage (GT) by 3.3% CAGR – to 144.2 million tons within the past five years and an annual growth of 1.8% is expected until 2021, in-spite of the country’s challenges, according to LCCI Maritime Port (2016). This growth could be largely attributed to the mobilization of shipping processes.

However, with the introduction of more innovative and connected technology, cyber security emerges as a crucial challenge, especially in Nigeria’s uneasy cyber security economy. “It is absolutely crucial that cyber security is seen as a central part of the digital transformation strategy of any business operating in the sector,” says Ton Ebbenhorst, business development manager of Satellite at Orange Business Services. “The potential impact of a successful attack is huge and could even result in the total loss of a ship and its cargo,” he/she says.  According to IBM’s Cyber Security Intelligence Index, transportation was the 5th most cyber-attacked industry in 2016. However, only 43% of crewmembers are aware of cyber safe policies and guidelines provided by their company, whilst only 12% of crew received a form of cyber security training, according to research from Futurenatics, (2016).

Digitising shipping operations as well as the land-user experience

With technology changing the way people and goods are moved around, digital tools can enable more automated processes and performance monitoring, condition-based maintenance and shore-based assistance that make ships safer and more efficient. “Furthermore, the benefits of an increase in locally owned vessels would help reduce the influence of foreign companies, excessive charges and price fixing of freight rates,” says Ebbenhorst.

“Reliable connectivity makes ships more effective and more enjoyable workplaces,” adds Piquet. Crewmembers can often be at sea for several months, meaning long periods away from family and friends. In the digital era, the ship operator’s responsibility to crew has changed: crew members now take an average of three personal devices on board a vessel, and they want to be able to stay connected. “Improving the lives of crew members is an area shipping companies have always tried to make a priority – and crew welfare is one of the key drivers behind digital transformation in the sector,” says  Ebbenhorst.

 “It is essential to create a more competitive shipping sector through leveraging digital technologies and working on innovative digital strategies. This will contribute significantly to improving the overall efficiency of the sector, for the benefit and viability of the Nigerian economy,” concludes Piquet.

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