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Quantship uses AI to accelerate digitalisation of 'old-school' shipping industry

SINGAPORE (July 3): Digitalisation has undoubtedly emerged as a key priority for businesses around the world. However, certain industries have taken to the use of technology better than others. For example, the manufacturing and transport industries have generally been successful at going digital. But it seems the shipping line is a step behind: On a normal day, a commercial manager of a shipping company has to make a slew of decisions in the daily running of the cargo ships under his charge. These include where to send a ship to, the duration of a voyage and when to grant a ship access to a particular dock.

These decisions are typically either made based on previous experience or on instinct. With no tools to confirm their predictions, results may also vary. In fact, research has shown that only 60% of the judgements, at best, are accurate. Identifying this issue and the urgent need to find a way for shipping companies to make more accurate decisions, Kaushik Reddy and Sudeept Sinha founded Quantship — a start-up which uses algorithms similar to those in quant hedge funds to predict freight rates and help companies optimise the timing of their bookings. 

Having spent a good portion of his career sailing on ships as well as working on the commercial side of a shipping company, Reddy tells The Edge Singapore that freight rates are “extremely volatile” and a 20% change over a fortnight is nothing out of the ordinary. For instance, he explains how a company could potentially miss out on an additional $100,000 in revenue if they picked a wrong day to move a cargo ship. “In an industry which has extremely high fixed costs and margins as low as 1%, it’s actually catastrophic if you don’t make the bookings at the right time,” says Reddy