What Travel Agents Can Tell Us About Weather Routing in Maritime

David Levy
June 29, 2022

On the digital transformation of weather-optimized routing

This post is about using maritime analytics and business intelligence to digitally transform weather-optimized routing. But first, a question:

When was the last time you called a travel agent to book a vacation for you or your family? If you're like most people older than, say, 40 years old, the answer to that is probably “Gosh I can't remember. “And if you younger than 40, the answer to that question is probably “What's a travel agent?”

Once upon a time the only way to book a trip was to contact a travel agency, a business whose job it was to help you book cruises, airline travel, hotel stays and excursions for you and your families. These were generally local businesses who had storefronts in shopping malls with lots of pretty pictures of faraway places and stacks of brochures. They used the fax machine a lot (for those of you who are asking “What's a fax machine?" click here).

These days, however, most of us book our vacations directly online using sites such as Booking.com, Kayak or the largest online travel company Expedia Group - which owns CarRentals.com, Expedia.com, HomeAway, Hotels.com, Hotwire.com, Orbitz, Travelocity, trivago and Vrbo among many other brands. We can agree that the travel industry has been thoroughly transformed by digital technologies.

What does digital transformation mean

But what does “transformed” mean? Digital transformation happens not just when user behavior changes—in this case, we book our own vacations rather than using an agent—but when the entire business model of an industry changes. In the digitally transformed travel industry, the new business model drives revenue to platforms, not to agents.  The total revenue for travel agencies has been shrinking for decades (source: Ibis world research) while the global online travel industry generated $460.9 billion in revenue in 2020, projected to grow to $1.26 trillion in revenue by 2030 (source: Business Research Company). 


Weather conditions impact 80% of vessel performance 

We are seeing the beginnings of this kind of digital transformation in maritime, particularly in the area weather optimized routing.

In maritime, weather conditions account for 80% of the impact on vessel performance, fuel consumption and emissions, and safety. By factoring in the impact of weather on a voyage, ship owners and managers can make decisions that optimize their route and improve the efficiency and safety of a voyage. The availability and accuracy of weather forecast data has increased over the years but unfortunately, leveraging the data is a manual, high touch, and expensive process. The typical process is:

  • Requesting a route requires the master on board, the weather provider, and the ship’s operations team.
  • A shore-based consultant receives the request, generates a route, and emails a file or faxes the information to the captain. Any questions or changes are done via email or fax exchanges.
  • The route must be entered into the on-board voyage management system.
  • Any mid-voyage changes follow the same processes as above and triggers additional consultant fees.
  • The Post Voyage Warranted Performance Analysis is generated on paper.
  • Post voyage claims are handled manually.

Think of these shore-based consultants like the travel agents described above. You must use them.

Unlike travel agents who require no special training, shore-based weather providers are highly experienced professionals who have spent years in maritime, often as ship captains. There are simply not enough master mariners in the world to meet the demand for weather-optimized routing.

When demand out strips supply, prices remain high.

The cost of an individual route can be as high as $1000 each. To reduce the cost per route, you can purchase them in bulk--like mobile phone minutes-- but in a margin-compressed industry like maritime, buyers lean towards cost reduction. As a result of these constraints, ship owners and managers often only request weather routing for long voyages, voyages that are trans-ocean, or those that go around continents.

Unlimited weather-optimized routing

What if there was an Expedia-like software product for weather routing? One that would allow users to create their own weather-optimized routes from their computer screens? Furthermore, what if in this scenario, users paid for the software by the vessel, not by the individual route and were able to,

  • Conduct pre-fixture “what-if” scenarios to negotiate the best voyage terms?
  • Generate weather-optimized routes for your entire fleet that paid for themselves in fuel savings?
  • Select the best route based on parameters such as GHG, laycan, and EU fines and fees?
  • Reduce carbon emissions at a faster rate by consistently taking routes that require less fuel?
  • Proactively adjust and optimize routes mid-voyage due to unexpected inclement weather?
  • Automatically generate Performance Analyses that show the impact of weather on the voyage outcome?
  • Appoint weather-optimized routing for short-haul voyages?

This software product exists. It’s called Orbit Weather+.

Powered by DTN®, Orbit Weather+ is weather-optimized routing that offers a competitive differentiator for your fleet. It transforms weather-optimized routing from being a cost center to a profit center. Ship operators can simulate unlimited routes inside the Orbit interface for all voyages (before and during) and make strategic, not reactive, decisions and optimizations. Orbit Weather+ is a collaborative tool that informs yet allows the operator to make the final route selection.

Orbit Weather+ transforms the business model for weather routing.   With Orbit Weather+, you can still use a shore-based master mariner to appoint weather-optimized routing; but, because pricing for the, software solution is based on the vessel and not the voyage (average license for Orbit Weather+ is $375/month or $4500/year) you can create an unlimited number of weather-optimized routes, driving the cost per route to as low as dollars per route.    

Drive down your effective cost per route

Here’s a simple comparison.   

 Take a vessel with six sailings a year.  Using a shore-based service at $1000 per voyage to appoint weather-optimized routing your total cost would be $6000. That’s the “travel agency” model.   

 Instead, using Orbit Weather+ for that same vessel and the same number of sailings, let’s say you wanted to conduct five scenarios for each voyage, for a total of 30 routes.  Orbit Weather+ uses a per vessel pricing model so the number of routes you generate will not increase the price. In fact, your effective cost per route drops to $150. What about 50 scenarios?  Your effective cost per route drops $90.  With no constraints on quantity, you can appoint weather-optimized routes to all sailings, no matter their duration.  Over time, the more you use Orbit Weather+ the more you can reduce the effective cost per route across your entire fleet.    

 What’s more, for the same license fee you get the functionality of the Orbit platform (see all our solutions) that generates increased profits, improved productivity and reduce CO2 emissions.  This is the digitally transformed model. 

 

Current pay-per-route model 

Orbit Weather Plus+ 

Cost per route 

Cost per route 

$1000 

$150 

 

 

Number of routes requested/vessel 

Number of routes requested/vessel 

6 

30

 

 

Total annual cost 

Cost for annual license 

$6000 

$4500 

 

 

 

Why it matters  

Now that we’ve demonstrated the change in the business model, let’s ask the unspoken question about the digital transformation of weather-optimized routing:   

So what? 

Why does it matter that you can generate unlimited weather-optimized routes using Orbit Weather+?  It matters for several reasons, but the most salient one has to do with decarbonization.  Without the cost and process constraints, you can optimize every voyage.  By using Orbit Weather+ your chartering and operations teams can identify opportunities to minimize bunker consumption, even on voyages of only a few days or weeks.  A metric tonne savings here, a metric tonne savings there…pretty soon you will see significant savings.    

In the scenario below a fleet with 1000 annual voyages uses Orbit Weather+ to appoint weather-optimized routing for both long haul and short haul voyages. The estimated increases in bunker savings and additional reduction in CO2 emissions due to short haul voyages--shown in the right hand column--are significant:  $2.52 million in savings and 9.765MT reduction. MicrosoftTeams-image (2)-1

You’ll find more context in the white paper “The Digital Transformation of Weather-Optimized Routing,” which you can download by clicking here.

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