Drewry is urging the shipping industry to pay more attention to "inefficiencies" in payment processes that it estimates incurs US$31 billion in transaction costs annually.
The maritime consultant estimates that the global container shipping industry earned revenues of $166 billion in 2017, generated from the movement of 207 million TEU across 400 container shipping services, producing 1.26 billion freight invoices, reported UK's The Loadstar.
"We conclude that the prevailing inefficiencies pose a significant market opportunity for technological disrupters," said Drewry.
It added: "In particular, we believe that tremendous efficiency gains can be achieved through technological solutions."
It cited the "simplification and/or automation of invoicing and payment practices, especially for small and medium-sized shippers and forwarders" as a prime target to boost invoicing efficiency and thus cut back administration costs.
Drewry noted that for shipping lines invoicing was still "largely a manual activity" apart from for a few large BCOs where self-billing and EDI solutions are in use.
According to the white paper survey, smaller shippers that use the spot market experience an error rate of up to 30 per cent, whereas for larger shippers that work on annual contracts the error rate comes down to between two and five per cent.
"Additionally, invoices from forwarders tend to be much more accurate (95-98 per cent) than from shipping lines, because of more standardised pricing structures and lower freight rate volatility," said Drewry.
A key "pain point" for carriers, says the white paper, is the manual reconciliation of invoices when they are disputed by customers. It lists the most frequent causes of invoice disputes as: B/L fees, demurrage and detention, freight rates and surcharges such as BAF and CAF.
The subject of credit extended by carriers is also tackled by the white paper. This ranges from zero for small shippers to 45 days or more for the large freight forwarders.
Sources:HKSG Group
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