The time for digitalization
The maritime industry cannot avoid digitalization for much longer. The recent global pandemic alongside the new sanctions advisories has led the shipping industry to a tipping point necessitating new ways of operation and management.
The need for digitalization in maritime is not a new topic; The International Union of Marine Insurance’s (IUMI) created the data and digitalization forum to bring to light the rising importance of digitalization in the shipping industry and A PWC study revealed that only 7% of energy companies are categorized as digital champions.
If, until now, digitalization was a conversation, now, it is an obligation.
The recent sanctions advisories have expanded the umbrella of responsibility, requiring thousands of private organizations to ensure sanctions compliance not only of their own vessels but also of their counterparties. As a result, everyone invested in the maritime ecosystem must now care about sanctions and have a solution that monitors compliance and assess risk; The only way to do that is through rapid digitalization.
The right way to digitalize an organization
Digitalization can help organizations gain clarity from data, enabling the optimization of operations while maximizing the use of available resources. Until recently, companies relied solely on human resources to perform risk screening, ensure sanctions compliance, perform inspections, manage crew changes, and more.
Digitalizing the Know Your Vessel (KYV) process and sanctions screening will yield immediate significant results in the shortest period of time, creating internal buy-ins – a crucial element in the success of any digitalization process. Since human resources alone cannot vet every vessel and ensure full compliance, having a digital KYV process can help businesses instantly determine a vessel’s risk level and compliance status. Digitizing KYV will reduce the likelihood of violating sanctions and improve response time to potential threats.
Companies in the shipping industry that had already integrated digitalization solutions in the past were able to adapt to current global trends with relative ease, giving them the ability to see more of the sea, even from land.
The risk of failing to digitalize
Digitalization is a known game-changer. Throughout history, companies and organizations that did not recognize the shift in technology failed to stand the test of time. For businesses and organizations in the maritime industry, now is the time to recognize the importance of digitalization or risk losing competitive edge, exposing their business and risking operations.
Almost every aspect of the maritime supply chain can and should be, digitalized to streamline business effectively and ensure there are no interruptions to operations. This includes the process of vetting vessels, performing due diligence, optimizing trade routes, and more.
Without digitalization solutions in place, businesses’ readiness is compromised, and the business future is at risk. Companies and organizations that want to ensure growth, conduct efficient operations, and ensure the safety of their vessels and crew, need to make sure that every key business decision routinely made is automated and digitalized. Vetting, chartering, inspecting, etc., are all routine maritime activities that take time, are costly, require manual processes, and, most importantly, can be digitalized.
Having digitalization solutions that optimize maritime decision-making ensures your business is always ready. Companies and organizations that fail to digitalize risk losing their competitive edge in their ecosystem, ultimately losing business and revenue.
Digitalization of sanctions screening
Screening for sanctions compliance is one of the most crucial aspects of maintaining operations. Because of the recent sanction’s advisories, sanctions screenings must be performed in a comprehensive way for all counterparties. Vetting all counterparties’ activities makes the task of sanctions screening one that can no longer be performed manually.
Traditionally, screening processes rely on peoples’ expertise, however, the screening process for each vessel is time-consuming and costly. The new OFAC advisory place more responsibility on ensuring compliance of counterparties. As a result, it requires organizations and businesses to perform comprehensive screening and compliance for each counterparty or risk being charged with sanction violation.
To comply with the new requirements and screen every counterparty adequately would require an army of human experts. Even then, it is unlikely that results could be given in a timely enough manner to avoid impacting operations. Manual sanctions compliance processes cannot bear the workload that companies will have to undertake to meet the new bar of standards set by the recent advisory. This will make manual compliance a bottleneck to decision-making and execution of actions.
Failing to integrate a digitalized solution for sanctions screening, particularly when competitors do have such solutions, will do more than increase the time it takes to make a decision – it will limit a company’s ability to grow, leaving them lagging behind. If an organization cannot screen the vessels of their counterparties and be assured that they are not violating sanctions quickly and accurately, they will have no choice but to forego the interaction or transaction, or, on the other hand, go through it without completing sanctions screening, thereby risking their operations.
The time to create a digital advantage
The recent global crisis, coupled with OFSI and OFAC advisories, is accelerating the adoption of digitalization across the maritime ecosystem; however, the need was a long time coming.
Companies with digital solutions in place to manage compliance and risk will be able to enhance their advantage, enabling them to continue operations without risking their business or reputation. Companies that do not take the time now to invest in digitalization, optimize their ability to meet new regulations, and ensure their organization is prepared for the future, will fall behind.
As more and more vessels roam the seas, and more and more regulatory responsibilities are placed on businesses and organizations alike, advanced technologies and innovative digital solutions are cornerstones in steering maritime into the next century, and the next evolution of maritime technology – Maritime 4.0.
Originally published by Global Maritime Forum – republished with permission.