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Enterprise intelligence in modern shipping Leveraging commercial and cost performance with data analytics 7th Capital Link Greek Shipping Forum 16 February 2016

Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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Page 1: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

Enterprise intelligence in modern shippingLeveraging commercial and cost performance with data analytics

7th Capital Link Greek Shipping Forum16 February 2016

Page 2: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help buildtrust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team todeliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for ourpeople, for our clients and for our communities.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each ofwhich is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services toclients. For more information about our organization, please visit

www.ey.com

© 2016 EYGM Limited.All Rights Reserved.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting,tax, or other professional advice. Please refer to your advisors for specific advice.

Agenda

I. What is Enterprise Intelligence? 3

II. How data analytics transform shipping 4

III. How do we see the future? 7

IV. What should you do? 9

Page 3: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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What is Enterprise Intelligence?Turning data into actionable insights

To drive better decisions we first ask the right business questions and then seek answers in the data.Therefore, our work moves left to right, but our thinking moves right to left.

Page 4: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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How data analytics transform shippingIs shipping too small for “big data”?

ExternalInternal

YourCompany

►Market data

►Fixtures

►AIS data

►Weather data

►OPEX

►Voyage data

►Operations data

►Technical data

Big data is a relatively new buzzword. But the “data” in “big data” is not new. Although data is everywherein shipping, for most players in the industry, data remains an underused and underappreciated asset.

Shipping data landscape

Page 5: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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How data analytics transform shippingDo data matter in shipping?

Shipping businesses have always wanted to derive insights from information to better the competition.It is this demand for depth of knowledge that fuels the growth of EI and big data tools in shipping.

Indicative areas Data analytics examples Benefits

Chartering &commercialstrategy

• Analysis of cargo movements and vesselpositions using AIS data (in conjunctionwith fixtures & owners list)

• Improve negotiation tactics and the timing of chartering decisions• Measure regional imbalances & port congestion to aid positional

decisions• Calculate world fleet metrics to detect global trends• Track competitor movements, speed profiles and trading patterns

Technicaloperation &maintenance

• Analysis of historical maintenance &repair records

• Analysis of real-time condition datacollected from sensors in the engineroom

• Create a proactive environment for condition-based maintenance• Extend equipment life cycle and reduce replacement costs• Reduce downtime, off-hires and repair costs• Improve environmental compliance

Portfolio &riskmanagement

• Construction of fair-value TCE curvesusing freight & bunker forward prices

• Simulation of future price scenariosusing market volatilities & correlations

• Benchmark vessels against market indices• Improve budgeting & cash flow management• Quantify freight market & credit exposures• Make investment or chartering decisions on a risk-adjusted basis

Voyagemanagement &energyefficiency

• Estimation of port turnaround timesand berth availability from AIS data

• Analysis of fuel onboard &consumption patterns

• Analysis of routing parameters(weather, shallows, distance to theshore, currents, ECA zones, etc.)

• Improve voyage estimation techniques• Optimize scheduling• Optimize bunkering strategy• Estimate optimal speed• Reduce fuel consumption and emissions

Costmanagement

• Analysis of historical opex data (perspend category)

• Identify and quantify the effect of key cost drivers• Benchmark against peers and industry averages• Verify common pre-conceptions• Identify cost improvement opportunities• Validate the effectiveness of cost initiatives

Page 6: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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How data analytics transform shippingIt’s happening already!

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How do we see the future?“Smart ships”, smarter decisions

Tomorrow►Optimal charter mix►Optimal deployment►Competition intelligence►Preventive maintenance►Weather routing

Today►AIS positions►Port congestion►Optimal speed►Forward P&L

Yesterday►Vessel ETAs►Estimated vs. actual TCE►Avg P&L across routes

Sophistication of intelligence

Standard reportCurrent positionof capesizevessels

Ad-hoc QueryHow many capes areballasting to Brazilwith ETA < 15 days?

Statistical AnalysisWhat is the correlation betweenthe number of ballasters andcape rates in the Atlantic?

Forecasting/ExtrapolationWhat will happen to theAtlantic/Pacific spread overthe next two weeks?

OptimizationHow do I bestposition my capesto maximize freight?

Descriptive analytics Predictive analytics Prescriptive analytics

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How do we see the future?Opportunities and threats

Opportunities

►Transparencyq Forensics (accidents, claims)q Commercial benchmarking

►Innovationq “Smart ships”q Insurance optimization

►Safety & sustainability

Threats

►Transparencyq Proactive vettingq Proactive surveysq Commercial visibility

►Cybersecurity

Page 9: Leveraging commercial and cost performance with data ... · EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver

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What should you do?From “so what?” to “now what?”

People

Process

Limited analyticalskills

Analytics processdoes not exist.Ad-hoc analysisperformedsporadically

Analysts exist inisolated areas(maybe in Finance,Commercial orTechnical)

Analytics processexists, but isnarrowly focusedand disconnectedfrom core functions

Basic Developing

Analysts exist inmany areas, butwith limitedinteraction andcoordination

Analyticsprocesses runseparately withvarying degrees ofintegration

Established

Skills exist, but notaligned to the samelevel across thebusiness

Analytics process isfully developed withsome analyticsembedded to corebusiness functions

Advanced

Fully integratedanalytics processdriving keybusiness decisions

Leading

Technology Missing or poorquality data.Non-integratedsystems

Data exist but keyinformation is stillmissing.Isolated BI/analytics efforts

Proliferation ofdedicated BI toolsand datawarehousesolutions

High quality data.BI plan, datastrategy and ITprocesses in place

Enterprise-wide BIarchitecture fullyimplemented

Self-diagnostic of Analytical Maturity

High analytical skillsacross the businesswith additionaloutsourcedcapabilities

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What should you do?Getting your data strategy right

ANALYSIS• Insufficient scope• No benchmarks• Lack of visualization• Antiquated tools

DATA• Unstructured• Duplicate• Inconsistent• Incomplete

Challenges to beaddressed

1 First, companies must be able to identify,combine, and manage multiple sources of data

2Secondly, they need the capability to buildadvanced-analytics models for predicting andoptimizing outcomes

3Third, and most critical, management mustpossess the muscle to transform theorganization so that the data and modelsactually yield better decisions

Exploiting data and analytics requiresthree mutually supportive capabilities:

Critical Success Factor: The deployment of the right technology architecture and capabilities

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What should you do?Embracing the change

► Formalize EI initiative► Obtain top management support► Learn from best practices across

shipping and other industries► Articulate and socialize EI benefits

within your organization► Perform extensive training► Focus on quick wins

• Redesign decision making processes• Place emphasis on communicating /

visualizing insights more effectively• Recruit an enterprise solution

architect• Hire outside consultants / vendors

• Upgrade IT systems• Improve data collection process• Educate management on the use

of data in decision making• Recruit and provide training for

analysts / data scientists

Steps to consider

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Thank You!

Q& A