HIGH E-XPECTATIONS

At ITIC’s Forum 2000 the talk was of how “dotcoms” would be replacing the marine intermediary.  Almost twelve months later the situation has changed considerably.

Just a few years ago conducting shipping transactions online was a little known phenomenon. Today no maritime publication, conference, exhibition or seminar is complete without a look at shipping’s e-business sector. We take a brief look at who’s who among the plethora of maritime websites today and what threats they pose to the marine intermediary.

This time last year, chartering and procurement websites were enjoying countless column inches in the maritime press as a new start-up announced its arrival seemingly every week. But the last 12 months have seen a dramatic reduction in the number of players in shipping’s e-business sector. Among the highest profile departures were ShipDesk and MaritimeDirect, both of which shut up shop earlier this year. Meanwhile, commercially enforced mergers and consolidations began in earnest with LevelSeas joining forces with SeaLogistics on the chartering front and OneSea teaming up with PrimeSupplier to form SeaSupplier in the procurement market.

Despite shedding some dead wood, the maritime industry remains overburdened with e-commerce websites. Today there are approximately 32 chartering sites, 28 liner sites, 13 procurement sites and countless others offering market intelligence and information. LevelSeas, founded in April 2000, has established itself as one of the leading names in chartering. Backed by over 30 investors including shipowners, shipbrokers and oil companies, it finally launched its online ocean freight trading system, LevelSeas Exchange (LSX), in July this year. Among the other players vying for a share of the chartering pie are ShipIQ, AxsMarine and Chinsay.

But they are not alone as August 2001 marked the official launch of both TankerIMX and Balticexchange.com. The new exchanges, aimed at brokers, owners, charterers and their agents, enables users to search for and match available vessels and cargoes, access relevant shipping information, and trade freight derivatives online. “Our fundamental objective is to ensure that Balticexchange.com is broker friendly, especially for the smaller broker” stated Peter Kitching, Chairman of the Baltic.

According to Forrester Research, a substantial percentage of all shipping transactions will be conducted online by 2005.  It probably won’t happen but if it does where would this leave the shipbroker?  “Both the physical and virtual worlds of shipping will go through many transformations and adaptations as changes in perception, developments in technology, and internet acceptability grow. But the fundamental cornerstones that form the foundations of the shipbroking business, experience, in-depth market knowledge and fully bespoke client service, are not going to disappear,” said John M Kulukundis of Charles R Weber Company Inc at ITIC’s Forum 2000 last year. And he appears to be right.

Despite fears among brokers that the new chartering sites would prompt the disintermediation of the broker, this does not appear to have been the case. TankerIMX has been created with the participation of three leading tanker brokerage houses – Dietze & Associates, McQuilling Brokerage & Charles R Weber Co Inc.  In fact, the majority of the new sites claim to want to enhance the role of the broker by making him even more valuable to his clients. After all, with all the market information on offer through the sites today, principals need their broker more than ever to interpret and analyse the information and advise them accordingly. As David Cherrett of Clarksons points out, the modern broker performs a wide variety of functions for his clients including acting as a consultant, an agent, a contract manager and, if necessary, a resolver of disputes. The reality is that very few of these functions can be replicated online.

What happened in the procurement market?  Following the closure of MaritimeDirect, OneSea seemed to have cornered the procurement market. But even this was short-lived when in May this year OneSea merged with PrimeSupplier. Just weeks later, the newly merged company announced the launch of SeaSupplier, an e-procurement site designed to automate and streamline the buying and selling of maritime supplies and services. Among its biggest rivals today are Setfair, launched in March 2000, and London-based ShipServ. 

Bunker broker Members would be interested to know that OceanConnect and BunkerWorld are the only two main players left from the seven or eight who first started out.  Most companies in the industry accept that on-line trading in bunkers will grow but few believe volume and revenue growth will be as quick as is needed.  This was re-confirmed with the collapse of Smartbunkers in early August 2001.  The question, as with the chartering and procurement sites, remains whether they are actually able to add value to the end user.

Market information and intelligence sites are also springing up left, right and centre. Shipping Intelligence Network (SIN) from Clarksons is probably the highest profiled site in this area offering ship databases and sale and purchase information along with analyses of market trends.  Offerings from ship brokers, Poten & Partners Inc and traditional shipping journals such as Tradewinds, Lloyds List & Fairplay round up the on-line shipping news delivery sector.

So what of the future? It would appear that the long-term survival of shipping’s e-business websites depends upon who’s behind them. Those sites backed by established names, such as Balticexchange, Shipserv, Setfair, SIN, TankerIMX and LevelSeas  look set to be the market leaders. Those that have merged their businesses to capture a greater share of the client base, such as SeaSupplier, also seem to be strong contenders. But it remains anyone’s guess as to which ones will still be here this time next year.