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Case Study

Predictive Empty Container Management for NileDutch

Project Background

Headquartered in Rotterdam, NileDutch is a major shipping company, specializing in container and break bulk shipping between West Africa and the rest of the world. The company has 30+ years of experience working in Africa and has built a large network of offices and agents, supporting companies as they discover the opportunities of the African continent. In just a few decades, NileDutch has grown from a new market entrant to one of the world’s leading shipping companies focused on the Africa region, with a fleet of over 30 chartered container vessels and a capacity of 80,000 TEU. In the second half of 2021, NileDutch was successfully acquired by the German shipping and transportation company Hapag-Lloyd.

Predictive Empty Container Management for NileDutch

Problem

According to the Boston Consulting Group (BCG), repositioning empty containers in the shipping industry costs €13-17 billion per year – up to 8% of a shipping line’s operating costs. Furthermore, there are additional costs for storage of empty containers and their maintenance, so the total cost of empty logistics assets is estimated by Transmetrics to be more than 12% of operating costs.

This is a huge, industry-wide, problem with many aspects to it, such as trade imbalances, long relocation time, high costs related to safety stock, as well as unreliable commercial forecasts, which are mainly based on the gut feeling of employees. In addition, there are two other important aspects that are applicable to many shipping lines

Using Excel for planning - Even nowadays, complex decisions for planning empty container movements are typically handled manually with Excel and are based on the experience of logistics teams. In this way, the process gets overwhelming and inefficient, however, by using modern-day technologies, it could be easily optimized and automated.

No clear visibility on the costs - In many cases, the logistics team manages empty repositioning globally, while a procurement team controls vendor costs. With different types of costs in place, that can lead to situations in which container shipping lines know the total amount they paid to a certain vendor in a certain location, but the drivers behind these costs are not clear.

Even in these increasingly challenging market conditions, NileDutch was managing its operations very well with the help of good manual tools in place, but it required significant time and efforts from the Global Empty Repositioning team to keep these up to date. As an ambitious company, NileDutch continuously seeks to improve its operational processes. That is why they decided to empower their Empty Repositioning team by introducing a global, end-to-end and data-driven planning system. One of the main objectives of NileDutch was to reduce the logistics costs related to empty container handling and relocation. The second objective was focused on reducing the current fleet of containers that they operate. Both had to happen while maintaining high level of customer service.

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Assignment

NileDutch sees data management, data analytics, and making sophisticated business decisions based on data as
a critical enabler for success. That is the reason NileDutch has partnered with Transmetrics, the leading provider of predictive optimization and AI tools for logistics, to revolutionize empty container handling and relocation by utilizing AI, machine learning, and intelligent algorithms.

The goal for our team was to implement its predictive asset management software called Container Management to further streamline empty container flows of NileDutch. The software would provide daily rolling AI-driven forecasts for the next 10-12 weeks based on the historical data and the external factors influencing the demand.

Predictive Empty Container Management for NileDutch

Approach

The Transmetrics Container Management implementation process included the following stages:

Setting up Secure Data Transfer

Transmetrics offers an enterprise-grade VPN integration, which guarantees a high level of security for all daily automated data transfers. After Transmetrics completed the integration process, NileDutch could easily upload its data. As a result, the historical shipping data for the period of 2011-2018 was available for cleansing and analysis, containing tens of millions of records, including booking routing and containers information, container scans, ship schedules, as well as ship and container reference data.

Predictive Empty Container Management for NileDutch

Data Cleansing and Enriching

A major focus of the data transformations for NileDutch was to determine which containers travel on which ship between every two ports. This information, however, was not easy to extract from the historical data, because there was some redundancy in different tables (e.g. bookings, booking containers, booking routing, container scans, ship schedules, etc.), and parts of the data in them was in conflict.

Predictive Empty Container Management for NileDutch

Integration of Forecasting Module

Before implementing the Container Management software, the planning process of global repositioning of empty containers relied on the commercial forecasts from the agents around the world, which were mainly based on the bookings and personal business experience, and later were combined into one master forecast. This approach produced satisfactory results, but for the long-term it was not optimal because of its dependency on the manual inputs and human factor. For that reason, NileDutch wanted to introduce an accurate statistical forecast, which would require the commercial people to justify their inputs in case of different results between the two forecasting methods.

Predictive Empty Container Management for NileDutch

Integration of Optimization Module

Before partnering with Transmetrics, NileDutch already had good processes in place for the planning of container repositioning, but they were time-consuming since many tasks had to be executed manually with tools such as Microsoft Excel. Complex decisions for loading and unloading empty containers to ships, repositioning them to other ports, storing them in other depots or repairing containers were taken based on the extensive experience of the Global Empty Repositioning team of NileDutch.

Predictive Empty Container Management for NileDutch

Client: NileDutch

Digital Breakthrough in Container Logistics: NileDutch Implements Transmetrics Predictive Optimization Software

Results

A new automated planning system from Transmetrics allows NileDutch to make more thorough and data-driven decisions about the management of empty containers on all levels (station/depot, regional, global) and to have better visibility on the data and business processes.

The Container Management software is set up in a way that every day, in just a few clicks an optimized empty containers plan is re-calculated for the entire company, 10-12 weeks ahead of time. To achieve that, a new incremental historical data set from NileDutch’s transport management system is extracted, transformed and added to the Transmetrics model. It is then used to build highly accurate rolling demand forecasts for the next 10-12 weeks. The forecast results, along with the corrected costs, are used in the optimization module to build the global plan for empty repositioning, storage, repair, and maintenance for the whole network for the next 12 weeks at the lowest possible cost. Now, to make the most optimal decisions, NileDutch can plan its empty equipment flows with Container Management based on all cost inputs and other relevant business variables.

After the implementation project, NileDutch tested the system during a three-month period of extended (business) support from the experts at Transmetrics and benchmarked software suggestions to the results from dispatchers. NileDutch confirmed that the benefits from using the Container Management software have been better than initially expected, the product is user-friendly, and that its entire team was comfortable using it daily as a guidance in decision making, so the project proved to be a success.

The Container Management solution has demonstrated significant operational improvements for NileDutch. Namely, the total costs for managing empty containers were reduced by a double-digit percentage. In particular, storage costs have been impacted very positively alongside the improvements for other logistics costs. The Container Management system has also helped to reduce its container fleet size by several thousand TEUs (a double-digit percentage decrease), which were disposed either by off-hire of a leased fleet or by selling own containers at high profitability.

There were several additional benefits from using Container Management software:
1. It allowed NileDutch to get rid of manual planning of multi-million cost items in Microsoft Excel (Excel still remains one of the most widely used supply chain management tools).
2. Container Management also enabled the company to have “one version of truth” since now all the relevant data from different logistics and financial systems is shown in one place.
3. NileDutch employees from all over the world could begin collaborating through the system, making them feel more connected than ever before.

Testimonials

We had been looking for a partner who could help us streamline our empty container flows for a long time. There are different IT solutions on the market, but we chose Transmetrics over other providers because they proved their technical expertise and also demonstrated a deep knowledge of the logistics industry and container shipping in particular, which is very difficult to find.

I can say that we made the right choice and NileDutch is a satisfied customer. Transmetrics is a very professional and reliable partner that has throughout the project delivered very good results. They have great project management skills, and also a very dedicated customer approach, which have been perceived very positively by NileDutch. After implementation, Transmetrics is still giving us very good customer service, being open for discussions on product enhancements and being always available for questions and corrections on the data or on the logic where it is needed.

Altogether, we are very happy with the nomination of Transmetrics as our partner in empty equipment flow management and we can recommend their services to any other logistics provider in the network.

Predictive Empty Container Management for NileDutch

Carlo Zaalberg

Former Global Director Logistics at NileDutch