ERP Software and its utilisation in the Ports & Shipping Industry

ERP softwareDear readers, as you all know, Shipping and Freight Resource is a niche educational resource created, developed and maintained for the purpose of learning and for the sharing of information related to Shipping, Freight, Maritime, Logistics and Trade..

Apart from providing quality content and news relating to shipping and freight industry, this site is also about assisting those in need within the industry with their queries, questions and doubts..

I received a request from a Masters student asking for some general assistance to answer two industry related questions..

Well, who better to ask for assistance than my readers and therefore, I am reproducing the questions below for your assistance which will be most helpful to the student in completing her thesis..

Quote


I am writing my thesis on the utilization of ERP Software in the Ports & Shipping Industry.

I found your page as I was trying to contact people that could help me understand better the industry (how bureaucratic it is, among others).

With this said, I was wondering if you could give me some insights on the industry, since finding information about market reports can be extremely expensive.

It would be amazing if you could assist me with some points on 2 questions below.

1) How do shippers choose agents/forwarders and what are the main KPIs for freight forwarders and shipping agent to measure their success, in your opinion.

2) The second one has to do with ERP software implemented on these shipping agencies/freight forwarders/3PL. From your experience, do you agree that this industry is indeed very bureaucratic and that ERP is necessary to ease out their processes?

I thank you in advance for your help!

Unquote

I look forward to assistance in the comments below..

*** End of Article ***

20 thoughts on “ERP Software and its utilisation in the Ports & Shipping Industry”

  1. Hi,
    My name is Andria Malcom and I am working as a Logistics Faculty at Cochin
    Answer to Q1:
    Why Shippers were depending freight forwarders or selecting a freight forwarder is because of different services offered by them than Shipping Lines. Shippers get best freight rate from market through forwarders, they get extra credit period against freight payment, they were updated with vessel schedule and transhipment details on time from forwarders. Due to high volume of traffic handled by Shipping Lines, they can’t attend each customers within due course, same time forwarder giving extra ordinary services to their clients by giving personal attention to each clients. Shippers choose freight forwarder based on their services, best rates, credit period they are offering etc.

    Answer to Q2
    ERP system is necessary in today’s business. It helps to keep track on every job .As fast communication and prompt response is very important to achieve business in this field, definitely ERP system helps them a lot for obtaining business and retain a customer in their business.

    Reply
  2. Hi!

    My name is Sri and I work for National Food Logistic in Indonesia which very much related with shipping matters.

    Here are my answer to questions, as follows:

    1) Answer for Q1

    As our company is a State-Owned Enterprise, we are very much prudent in choosing agents/forwarders. As an audited government institution, in the process of procuring goods and services must go through a tender process. Of course the selected companies must meet the KPIs that have been determined, including: 1. Costs must be in the estimated price range that has been budgeted, 2. The company’s reputation and experience in its field 3. Companies comply with the principles of GCG, and audited.

    2) The second one has to do with ERP software implemented on these shipping agencies/freight forwarders/3PL. From your experience, do you agree that this industry is indeed very bureaucratic and that ERP is necessary to ease out their processes?

    Regarding the second question, Indonesia itself has experienced very bad dwelling time problems because it is too bureaucratic, from one cargo inspection process to another. The Indonesian Logistics and Forwarders Association (ALFI) welcomes the idea of ​​a joint inspection conveyed by the Directorate General of Customs and Excise in order to reduce dwelling time at Indonesian ports. Deputy Chairman for Logistics and Warehousing of ALFI DKI Jaya, Harry Sutanto, is of the opinion that time efficiency will be created if the inspection by the Quarantine Agency and DJBC is carried out in an integrated manner. This process is then carried out through a single window, implementing ERP is certainly good for overcoming these problems.

    Hope my answers will help.
    Regards,

    Reply
  3. Hi
    Iam big shipper from asia
    Q1.
    I have 26 things to consider to choose FF. Too many explain 🙂

    Basicly : Cost (still number 1), consignee priority, lanes, ff past performance, contractual obligation, view consideration from company, ff side, documentation, personal judge, and other..

    Q2
    I would like to read your answer first

    Reply
  4. 1. I’ll try to order them with decreasing importance according to how I choose, however the overall result is decisive at the end:
    cost, time in transit, amount of services available from this one provider (one-contact solution), reliability (can only be determined by experience). Reliability measured in percentage of shipments with problems resulting in delay.
    2. Not sure if you refer to ERP inside of agencies or over the whole chain. Speaking for myself (small shipper in Europe for transatlantic Sea and Air): any ERP stops with the contact to a shipping agent, then everything becomes manual via e-mail. Both sea and air freight, not even a digital tracking option given, no automated document sending (e.g. BL, AWB). Still, even if it was available, I wouldn’t like to have my system connected with the agent’s one if it comes at any switching cost. Coming back to 1., if the performance drops, I want to be able to switch from one shipment to the next, to e.g. a more costly agent, with hopefully a better performance.

    Reply
  5. Q1: pointers for choosing the right FF
    1. Ensure FF has all the relevant registrations and licences to operate and handle cargo through all relevant or all modes of transport.
    2. If FF owns the Conveyance, check the validations.
    3. Look out for his network connectivity in other countries or regions and the arrangements and understanding between him and his counterparts.
    4. Depending on which country the FF is being appointed, ensure he has all the security compliances in place so as to avoid shipment delays.
    5. Depending on the nature of cargo ensure the FF has the authorizations to handle. For eg HAZ, Perishables, etc
    6. Check for shipmet routings that is being offered and also if intermodal, multimodal, etc.
    7. Knowledge of documentation compliant with your banking needs.
    8. Cargo Track and trace systems in place.
    9. Delivery timelines and cost effectiveness.
    10. Ensure a proper service agreement or contract is in place defining role, responsibilities, duties and liabilities.
    11. If you are also looking for custom broking services from him, ensure he has the valid authorizations from Customs authorities.
    12. Market reputation and past records of performance can help you in deciding rightly.
    However, given all the above, there will always be a certain amount of risk involved being third party involvement.

    Q2. FF, beauracracy & ERP
    FF business has always been a close knit business restricted to certain communities or families.
    Hierarchy and beauracracy exists. As it has been since years now.
    However with digitization and globalization there is an immense change that is observed as customers now have varied options to choose from for their requirements.
    Also now with awareness of this industry amongst the young generation and various institutions offering skill based training, the industry is undergoing a great change in approach, customer coordination, compliances, ethics, social responsibility, etc.

    Hope this helps your thesis. Best wishes.

    Reply
  6. Dear Mam
    1) Shipper needs the assitance of the freight forwarder when he enters ento sales contract where delivery terms specified one of the below
    CPT/CIP/DAP/DPU/DDP/CFR/CIF
    Becasue rest of the 04 delivery terms does not require a service of international freight forwarder assitance.

    According to my study it can be devided into 04 main areas under which one must keep focusing on selecting freight forwardr.

    Geagraphical
    Shipper must understand the gegraphical location between shipper & importer.Shipper must have idea as to what are the vaialble routes. Shipper must understand the best sutable route. Accordingly shipper must study the no of diffferent mode of trasnportation and other logistics facilities to be crossed in order to reach importer.

    Based on above finding shipper must scrutinize the available forwarders capabilities in carrying the shipment to
    destintion.

    Economical

    Shipper must focus on the freight forwarder financial capability of handling entires carrige he is entrusted.
    The forwarder must have correct fiancial performance otherwise the shipment will be on hold for several reasons not for shipper fault.
    The freight forwarders network of subagents in other countires and their performances must also be lokked into.

    For example the local agent may be sound and maintaining good balance sheet. but his agent in the other country may be on debt and any bankruptacy on the way of shipment will lead to unnecessary liens of cargo by debtors.
    In the event that the shipment is to cross through a county which is financialy not sound the ahents arrnagement to move the shipment without any risk must also be analyzed.

    Forwarder financial strength to assit if any insurance claim comes up. Forwardr capability of assisting when cargo dispute arise.

    Political
    According to latest trend in the world political decisions hinder the trade heavily..

    If the freight forwarder is belonged to country which political will is towards left or right political motivated orders may hidner the movement of shipment.

    There can be instacne where politically motivated ideologoies put restrcition on forwarder movement

    Political disputes between intermediate country and importing country or exporting country or political dispute among two nations through which cargo to be moved will lead to problem for delviery of cargo.Hecne forwarders capability of avoid any such difficulties must be assessed

    There are war zones /war like zones /international cnflict zones. When selecting forwarder the capability of avoiding such areas must be looked in.
    Social

    Whatever said it is the acceptable fact that if the forwarder is belonged to importing country it has better reconiztion at destiantion and may be preferred by importers as wel.

    Further there are freight forwarder and some logistics arms whom importing country may not prefer owing to several ethnic and other reason. Therefroe it is better to pay attention on that when selecting freight forwarder.

    Forwarders records for not carrying prohibitted cargo must also be looked into.

    Answer for 2nd part of 1st question
    It is the idea of business to earn money as much as possible
    Hecne in order to do that Shiping agent or forwarder must move cargoa smucha s possible
    Volumes moved- will generate revenue
    Customer satisfaction-satsifafied customer will place more and moren order
    Quality of work -The quality of customer service will make your
    Shippers performances-If shipper perform well volume will be increased thus generating the revenue as this is a derived demand.
    Logistics providers performance.Uninterrupted logistics service will give you and edge over other forwarders agents
    Shippers fiancial status.
    These key areas for measuring performace aprt from conventional on time delviery .

    02 question
    When compared to other industries freight forwarding 3pl industriy is bureaucratic.
    There are ERP and and other computer softwares in place but they are there to keep industires hassle free and very limited rooms avail for shippers to go out from bureaucratic behaviors. However these ERP solutions has helped lot to industires track shipment and to gether cargo for consolidation on time.

    Tks & Brdgs
    nalaka

    Reply
  7. We look for the forwarder’s financial stability, industry history and ethical reputation as a start. The licensed personnel they have in place for dangerous goods handling, customs brokerage, etc. how often they adhere to recertification and the education process for their staff. We also look to their office locations globally (whether they are wholly owned or agent based–and if agent based how that relationship works). The back up structure of their teams is just as important. Although not mandatory, being an OTI/NVOCC is a plus. What their membership in various organizations like Chambers of Commerce and professional groups looks like and whether they are active in them. If they are CTPAT registered–are requirement as my organization is. Another important factor is their digital connectivity and ability to quickly integrate on to the TMS platform we use.
    Their responsiveness to major global events–like the Pandemic or Weather events and their ability to keep us informed and adaptability to support rerouting is key these days–whether their teams are remote or in a physical office.
    We look for a forwarder to be a partner and solution provider for our needs, not a party who will throw their hands up when the tough gets going. There is always a way to accomplish a move albeit more expensive or a longer transit.
    With these questions address in an RFI or request for information we would move to a potential RFP or request for proposal/rates. We would look for an all servicing forwarder/customs broker to handle all aspects of the transportation, documentation and expertise base that we hire them for. We would also expect KPIs such as turn around of documents, delivery times, etc. to be kept in accordance to SLE or service level expectations that we make part of our contract with them. We also require them to complete NDAs or non disclosure agreements to protect our proprietary information. Rates are a deciding factory but so are all of the other parts of the equation.
    Freight forwarding is a service industry and all too often they forget to service their customers.

    Reply
  8. Q1 first half – How do shippers choose agents/forwarders
    Experience/ Network/ Services/ Certifications and credentials
    Q1 second half – With current trend of digitalization can achieve the goals of both industry where main criteria is service

    Q2 – Shipping Industry some areas still works manual procedures hence need technology implementation

    Reply
  9. Hi all,

    Read all answer before mine I do agree with most of all posted by colleagues regarding Q1.
    In my experience I dealt with shipper on EXW basis, or few of them on FOB.
    That’s why in most cases the FF is a choice of consignee and shipper do agree with.
    Anyway personalized service is very helpful to get a succesful shipment arrangement.
    Sometimes we as FF become so close to regular customers to create a particular relationship in which both take the emotional support in need to exchange valuable information.
    Obviously that’s my point of view.
    Have a nice day

    Reply
  10. Question 1 – Choose the FF that the client is satisfied with! The shipper can’t have the understanding (country specific rules, culture, etc) that a client at the other end has.

    KPI – responsiveness is a must, both in the pre ship (quotes, requotes, docs info) and in the delivery line (delays, costs, docs)

    Question 2 – ERP putting everything needed under the same umbrella would be fantastic

    Reply
  11. Hi,
    Answer to Q1 :
    1. Sense of urgency by the freight forwarder is the most important.
    2. Rates are important too, but they become less important if post-shipment documents are not produced correctly or in time, with the result that the receiver might have extra charges at destination, easily USD100-200 per day.
    3. Shipping rates and good contact with several shipping lines so that possible hiccups can be dealt with swiftly. For small volume shippers the freight forwarder should consolidate volumes in order to negotiate better rates with the lines than the (small volume) shipper would get on his own.
    4. The FF must have the flexibility and knowledge to work with a number of lines, so as to give the shipper the best service and/or transit time. Especially for perishables the transit time is crucial. But for dry goods as well, as market conditions can change during transit, and in case of delays this might result in loss of market price.
    5. The FF should be a 1-stop solution for the shipper, including good contracts with transporters. This allows the shipper to focus on their business, instead of being bogged down by logistics (unless the shipper has their own transport in place)
    6. The FF must have knowledge of the shipper’s industry. Thus providing references and becoming an important business partner for the shipper

    Good luck !

    Reply
  12. Q1: if your company is not strict on the budget. Go to the one-stop company. Else use the NVOCC and they will source your solution. You should dictate the KPI for them to commit and don’t compromise.

    Q2: Yes, ERP may minimize bureaucracy provided a stable infrastructure to avoid delay. In other instances, a slow network creates delay.

    Reply
  13. Regrading the 1st Question :

    There is no bench mark to Measure by shippers choose agents/forwarders and focus of KPIs for freight forwarders and shipping agent.

    Now after online bidding Process, no more ethicks and only Price. To get the LOI , forwarders/Agents try to quote low and later they face difficultis to covert the rate into action and result is “”Blacklisted”” by shipper.

    Shipper to chosse the forwarders/Agents based on their mertits such as organaisation, what is their service level and commitments, what options he suggested and shipper should know the trends situations. Simply, closing their eyes, select a forwarder on Price basis is a dangerous option. He needs to analysis and forecast that the selected Forwarder/Agents will perform or Not? T

    The technical option now d days became very weak. Foir Namesack, the shipper asked Technical details,but the same is verified or not is unknown.

    The selection of Forwaders/Agent totally depend on Shipper,s commitment to their customers. He should analysis, if the selected fails, what is next to meet his delivery schedules to customers. Same time, the forwarders/agents also come up with options and each operation benifit to customer. If A is failed due to Forcemajuture, then B and the cost escalation is this much %.

    Reply
  14. 1) How do shippers choose agents/forwarders and what are the main KPIs for freight forwarders and shipping agent to measure their success :
    >> The reasons to choose a particular freight forwarder could be a combination of factors :
    a. Shippers not wanting to take on the additional job of spending time to contact various shipping lines and NVOCCs,m and search for the best offer/proposal – the freight forwarder can scout around, and give the shipper the best deal

    b. Low volume shippers not being able to take the advantage of special rates when they approach the shipping line directly. Freight forwarders can take advantage of the special rates that they can get from the lines, by virtue of them being able to commit larger volumes to the lines, and thus offer the shipper a better rate than what they may get from the lines directly.

    c. Shippers may want additional services that the shipping lines may not be able to offer – trucking, warehousing, CHB, documentation assistance, credit.. etc.. which the freight forwarder would be able to offer in addition to Ocean Passage – thus comprehensive end to end logistics, from one logistics services provider.

    d. Shippers may also want a bit of personalised service, and want to speak to / meet with someone, rather than have to speak to an IVR and keep pressing the options to access information. The high level of automation, and drive to reduce costs, means that shipping lines require the customers to handle a lot of the shipping related activities and tasks, and thus shippers would need to set up a small work force to take care of these activities and tasks. They could easily offload all this to the freight forwarder, thus enabling them to focus on their core activity.

    So basically its comprehensive logistics services, convenience and comfort, costs, extended payment options, one point contact…

    On your second query – well, to an extent I agree, but then again, with different rules and regulations in force, when it comes to the numerous government agencies – customs, ports, shipping lines do want to ensure that they are covered from all angles, as far as possible. Thus the exuberance to be over-careful – a case of better safe than sorry !

    Reply
  15. 1. Most common factor is price, most of customers ask for quotations to at least 3 options and goes for the cheapest. Between FFWs existing resources with information related to finance confidence.
    KPIs, transit time, information “on time”, customer service, financial accuracy (data, invoice), operative support.

    2. CargoWise is the leader software on this sector. Digitalization arrives late into logistics. It’s necessary due to volume of information and operations.

    Reply
  16. Greetings!

    Response to Qn.01
    a) Responsiveness to their queries
    b) Rate Competitiveness
    c) Service levels
    d) Flexibility ( credit terms for instance )
    e) Being a One Stop Shop for all their Logistics requirements.
    f) Being a Consultant

    Response to Qn02
    ERP softwares customised as to meet the exact business goals of the Organization is essential in current times.

    If.used effectively ( maximum Utilization of the modules romita optimum ) , is sure to enhance to Efficiency and Productivity of its work force.

    Reply
  17. I’m from SCM, but below are the some key KPI in terms of operation I could think in forwarding.

    – On Time Delivery
    – Origin Dwell Time

    Reply
  18. Answers
    1) small and middle size companies choose forwarders on the basis of references and choose those forwarders who are already working in their products. Big size companies choose by either bidding or on the basis of quotation.
    Performance measures for forwarders is
    a) rates
    b) delivery of post shipment documents
    c) relationship of forwarders with shipping line

    2) In this Industry still there are lot of manual procedures and this industry need technology implementation in the procedures.

    Reply
  19. Hi,

    I will answer question number 1 only

    I and the organization i worked for, choose agent based on:
    1)- Recommendation from clients since i worked for a specific industry and also the ones we met in specific exhibition and/or conferences. Since it helped me/us to be more focus in assessing the ” look like” right agents.
    2)- How agent’s/companies’ values, ethics and culture suits the organization, to see if agents can collaborate in harmony with organization. We used to conduct a due diligence on them. Also what value added agents can offer.
    3)- How the pricing look like. If it will be competitive or else.

    On KPI, we see how agents deliver their promises, if they fulfilled or even fulfilled beyond it, quantitatively as well as qualitatively.

    Hope these help and all the best with your thesis.

    Reply

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