Transforming the Shipping Industry: Zim's Journey Towards Innovation and Digital Transformation
By Eyal Ben Amram
Zim is part of what makes the world go round – literally. Roughly 90% of world trade is carried out by the international maritime shipping industry and there are over 50,000 merchant ships trading internationally, transporting every kind of cargo.
As an industry, Zim is not known for its technological advancement or commitment to innovation. However, Chief Innovation Information Officer, Eyal Ben Amram says there is an understanding that the industry, which has hit hard times in the past few years, needs to embrace the new vision.
Zim are now taking a few cues from the aviation industry, exploring revenue management and dynamic pricing. They are also exploring working with bots, digitizing, and expanding their e-commerce presence in order to reach smaller Small/Medium Enterprise (SME) customers.
The main challenge facing Zim is a price decline, which affects the entire industry. Its only chance to recover is to become more profitable. One of the main ways of doing that is reaching the end customers directly and cutting out the middle man, as well as enlarging the customer pool.
Doing that is not that straightforward. Shipping is considered a low-tech industry that is behind on technology, and needs to “skip a generation” and move directly to current technology without necessarily adopting the previous generation yet.
The good news is that they have taken up the challenge and are carrying out different complementary processes. Their present focus is on digitization (easy-to-do business) and smart systems.
The moving parts of innovation
Innovation is a company-wide effort. Zim has adopted the design thinking method and is now in the process of implementing Agile management techniques in the different departments. There are a number of different departments and processes, both internal and external, put in place in order to insure the best results.
While they don’t have an incubator per se, working with Startups plays a big part in what they do. Eyal says they usually try to be the companies’ first big partner. They don’t have a specific focus but work with a variety of startups dealing with AI, predictive analytics, cyber and more. One area they are excited to take part in is blockchain and they will soon be the first carrier to implement a bill of lading
At the same time, Zim have set up a new CTO department within the IT to define the technology, vision and to help select and implement external innovation tools. This department has proven to be very dominant in the innovation processes Zim is performing.
Zim are also ramping up their e-commerce activity and creating a new website. This will provide more digital services and will be accessible to private and smaller end customers. Recently Zim recruited a Chief Digital Officer, whose role will focus on plotting a digital roadmap for the company.
For innovation to be successful, it has to be business savvy. So, apart from working with startups and the technology vision department, an important part of the innovation mechanism in Zim is the BI unit. This is a strong unit, which is able to provide business tools – analyze a customer’s profitability and create accurate analysis. Eyal says its importance cannot be stressed enough. No matter how innovative the technology, it is likely that implementation will fail if it is not strictly aligned with the business goals and the business units.
How to measure success
It is a challenge to quantify the direct contribution of innovation to the company’s revenue, but Zim work hard to define KPIs in advance. They also choose projects based on ROI estimations and make sure to establish standards and measure implementation.
Eyal mentions that Zim has several objectives when it comes to innovation. Part of their goal is to create an innovative brand. Another component is to improve productivity and increase their revenue profitability. Their projects usually provide a combined objective, for example, their work with block chain stems both from the future profit potential and also from their desire to be industry leaders in that field.
For Eyal, Innovation is not just about technology: it is largely about business, and business-oriented thinking. Even with the most exciting technology, if the business partner is not there it’s not going to work.
Eyal Ben Amram, CIO of ZIM.