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Beyond Rough Water: The Barriers to Digitalization in the Shipping Industry
26/03/2025
Inspired by the findings on DCSA's Industry Report, we turn our attention to the barriers each stakeholder may face on their journey to digitalization. Traditional processes, long reliant on paper, are increasingly being enhanced through digitalization. Whether it’s automation across vessels and ports, or the use of AI and Big Data Analytics, digitalization in shipping is ever present.
However, despite the significant advancements in technology that can be used within the industry, shipping’s digital transformation is being hindered by difficulties faced by all key stakeholders. From outdated infrastructures to lack of investment, the challenges faced mean that digital adoption is progressing at a slower rate.
One major challenge faced by all the different players in shipping, is the absence of common standards, which leads to fragmented processes and inconsistent technology adoption across the industry. Without widely adopted standards, stakeholders struggle to fully integrate advancements like automation, AI, and data analytics, slowing the pace of transformation and limiting the potential benefits of digitalization.
Yet, many industry stakeholders feel ready for the changes that digitalization will bring. This suggests that to enable digital advancements, we must first unpick and understand the barriers making this change difficult.
Why Cargo Owners Might Struggle with Digitalization in Shipping
Interestingly, when asked 90% of cargo owners stated that their organizations were ready for digitalization, however, a further 66% also said that they needed external support.
This highlights a key barrier cargo owners face when trying to introduce digitalization into their operations; the limitations posed by external factors.
One key challenge faced by cargo owners is limited supply chain visibility, which makes it difficult to ensure that digital solutions are being leveraged across all stages. While their organizations may be ready to change, other players such as freight forwarders, or ocean carriers may not have the same levels of investment to digitalize their operations in the same way. This limits the levels of digitalization across the supply chain and ultimately inhibits the progress of cargo owners.
Why Cargo Owners Might Struggle with Digitalization in Shipping
Interestingly, when asked 90% of cargo owners stated that their organizations were ready for digitalization, however, a further 66% also said that they needed external support.
This highlights a key barrier cargo owners face when trying to introduce digitalization into their operations; the limitations posed by external factors.
One key challenge faced by cargo owners is limited supply chain visibility, which makes it difficult to ensure that digital solutions are being leveraged across all stages. While their organizations may be ready to change, other players such as freight forwarders, or ocean carriers may not have the same levels of investment to digitalize their operations in the same way. This limits the levels of digitalization across the supply chain and ultimately inhibits the progress of cargo owners.
Another factor in this is technology. Older systems can make it difficult to integrate modern digital tools or leave cargo owners reliant on external support from IT companies. While this does not make digitalization in the shipping industry impossible, it can certainly hinder progress, particularly for smaller firms with lower budgets.
Barriers to Shipping Digitalization for Ocean Carriers
Likewise, ocean carriers’ legacy systems and infrastructure also make adopting digitalization more complicated, despite its benefits.
Many ocean carriers often rely on systems that are incompatible with modern technology, making integration difficult. Overhauling these systems can also be a daunting and expensive task, which some businesses may not have the time or finances to invest. This then causes potential problems for other stakeholders, like cargo owners who are limited in their ability to incorporate digital tools, due to their incompatibility with other systems in the supply chain.
Another challenge faced by ocean carriers when it comes to digitalization in the shipping industry is employee concerns and resistance to change. Some employees may fear digitalization due to potential threats to job security. This internal pushback makes encouraging the adoption of digitalization more difficult within the company, and as a result, limits its success. As some new technologies can be more complicated, employees need to be open to upskilling themselves and leveraging technology to make their work easier. Similarly, employers need to invest in proper training for their staff to ensure successful integration.
Roadblocks Keeping Banks from Adopting Digitalization in Shipping
The financing provided by banks makes them a crucial stakeholder in the shipping industry, however, as with other key stakeholders one key barrier is the heavy financial investment required. This can delay digitalization in the shipping industry while the funds and investor buy-in is raised.
Challenges Freight Forwarders Face When Integrating Digitalization in Shipping
Many freight forwarding companies face challenges when trying to integrate new technologies, such as real-time tracking with their legacy systems.
As freight forwarding requires managing vast amounts of data from various sources, ensuring data accuracy is vital, and therefore integrating systems that may not be compatible can be difficult. Upgrades to existing systems can be expensive thus some freight forwarding companies may be limited in the levels of integration they are able to achieve due to a lack of budget.
Digital Difficulties for Cargo Insurers
For cargo insurers, ensuring data cooperation and stakeholder collaboration is critical for digital success.
To achieve better risk modelling, critical data must be shared by key stakeholders, however, due to concerns around security, and resistance to change this can be difficult. This in turn can cause delays when it comes to digitalization in the shipping industry as not all data is readily available and able to be used.
Key Obstacles Ports Face in Going Digital
As central hubs in the overall shipping process, international shipping ports have been utilizing the same systems for decades. This familiarity with existing technologies and strategies can lead to resistance when it comes to integrating new processes or incorporating additional technologies, making digitalization harder.
Ports also have to overcome the challenges posed by a potentially unionized workforce when attempting to increase automation due to concerns over job security. Consequently, port managers may be less inclined to encourage digital progression due to fears about worker responses. This again delays the overall progression of digitalization in shipping and impacts other aspects of the supply chain.
Hurdles for Solution Providers in Shipping to Advance Digitalization
Much like the key stakeholders for cargo insurance, solution providers can also be resistant to change when it comes to digitalization due to potential security risks. As systems become more automated, they also become more vulnerable to cyber-attacks. This means that despite the data driven advancements, there is a hesitancy amongst solution providers to incorporate more digital solutions into their everyday processes.
Equally, there can be some technical challenges that come with integrating new systems with older models. As with other areas of the supply chain, upgrading legacy systems requires significant amounts of time and money, which may not be available in every business.
The Importance of Breaking Barriers to Digitalization in the Shipping Industry
When it comes to digitalization in shipping a lot of progress has been made. However, it’s important that all key stakeholders continue to work and breakdown the obstacles preventing digitalization in the shipping industry.
Whether it’s enhanced operational efficiency, cost-reduction, more sustainable shipping practices, or a positive brand reputation, there are numerous benefits that come with advanced shipping technology. The more that can be invested in shipping’s development, the greater the advantages will be for the industry.
The Importance of Breaking Barriers to Digitalization in the Shipping Industry
When it comes to digitalization in shipping a lot of progress has been made. However, it’s important that all key stakeholders continue to work and breakdown the obstacles preventing digitalization in the shipping industry.
Whether it’s enhanced operational efficiency, cost-reduction, more sustainable shipping practices, or a positive brand reputation, there are numerous benefits that come with advanced shipping technology. The more that can be invested in shipping’s development, the greater the advantages will be for the industry.
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