Splash247: Why shipping still struggles to price technology

Published by Splash247

The maritime industry does not lack money for digitalisation. What it lacks is an accepted way to value technology whose benefits arrive as faster decisions, avoided mistakes and operational capacity rather than something that can be sold at the end of its useful life.

Shipping has a well-developed language for buying ships and a surprisingly primitive one for buying software.

That contradiction runs through an ongoing survey carried by SplashTech on digital funding. Owners routinely evaluate assets worth tens or hundreds of millions of dollars using established assumptions around earnings, residual value, finance and market risk. Technology expenditure is tiny by comparison, yet can provoke far greater uncertainty.

Matthew Talbot, co-CEO of Complexio, identifies the fundamental difference. A ship has comparable sales, a secondhand market and an asset value that financiers understand. Software has none of those things.

“There is no resale value, no comparable, and the benefit turns up as things that stopped happening rather than as an asset on the balance sheet,” he says.

Digital technology frequently creates value through absence: an error that was caught, a claim that was not lost, a breakdown that did not occur, a decision that took 10 minutes instead of two days.

Shipping’s accounting systems are considerably better at recording what happened than valuing what did not.

The tyranny of the licence fee

When the value is unclear, attention naturally falls onto the one number everybody can see: price.

Manish Singh of Maris Investments argues that uncertainty over return remains the principal blocker because “most business cases are built on savings very few consistently measure afterwards”.

The problem therefore begins long before procurement negotiates a licence fee. If buyer and vendor cannot agree what success looks like, price becomes the only concrete figure in the discussion.

Christoffer Svard, chief commercial officer at Sea, says investment starts with genuine need and a clear line of sight to ROI. The weakness is often not the technology itself but product-market fit: suppliers struggle to articulate precisely which problem they solve, while customers have not always decided which operational outcome they are buying.

That helps explain why so many digital discussions become procurement exercises instead of investment decisions.

A $100,000 annual software bill is visible. The superintendent hours it could release, fixtures it might help win or claims it could prevent are scattered across the business.

Several respondents effectively argue that maritime technology has made its own funding problem worse by selling ambition instead of economics.

Nikhil Mathew, chairman and co-founder of Admaren Tech, says vague promises around efficiency, visibility and digitalisation do little to unlock management budgets. His preferred approach begins with one defined operational problem and measures something tangible: cargo intake, planning time, errors, port stays or fleet utilisation. Prove that on a limited number of ships, then expand.

Jacques Goudchaux, chief executive of AXSMarine, highlights another peculiarity of shipping. When markets are booming, companies have the money but little appetite to interrupt operations. When markets weaken, management suddenly has time to consider transformation but becomes more cautious about spending.

The technology vendor therefore has to make investment easier to reverse.

Subscriptions, phased deployments and outcome-linked models all answer the same concern: do not ask the owner to believe the whole story on day one.

Put finance in the room

Talbot suggests perhaps the most radical change is also the least technological: agree how value will be measured before installation.

That means observing the baseline in live operations, agreeing financial values with the customer’s own finance team, locking assumptions and reviewing results periodically. His examples are revealing. Digital ROI can be measured through cycle time, rework, recovered leakage and retained organisational capability. A demurrage claim filed within the time bar is value. So is a duplicate invoice stopped before payment. So is an operation that still functions when its most experienced employee leaves. None fits neatly into the traditional fuel-saving calculation.

The funding problem, then, may not be solved by cheaper software. It may be solved when shipping becomes as sophisticated at valuing digital capability as it already is at valuing steel.

Until then, the smallest investments on the balance sheet will continue to trigger some of the longest discussions in the boardroom.