What’s in store for contract management?

Key takeaways following our Lighthouse Webinar: The Future of Contract Management

In today’s dynamic and rapidly evolving industries of shipping and commodity trading, effective contract management is central to a smooth, streamlined workflow. Our recent Lighthouse Webinar on the Future of Contract Management brought together two of our industry experts to discuss the evolving landscape of contract management, particularly within the shipping and commodity trading sectors.

The discussion featured valuable insights from Christoffer Svärd, Chief Commercial Officer at Sea, and Mads Donkin Sea’s Chief Product Officer at Sea and was moderated by Richard Watts, Director of HR Maritime. This webinar shed light on the current challenges, opportunities, and how digital solutions can shape the future of contract management.

Current Challenges and Missed Opportunities

Contracts are the backbone of the shipping and commodity trading industries, yet they often do not receive the attention they deserve despite such a critical role within the sector, leading to inefficiencies and disputes. There is a need for companies to improve day-to-day contract management practices to ensure reduced costs, enhanced compliance, mitigated risks, and boosted freight-fixing efficiency.

One primary challenge is the heavy reliance on past contracts, with the common practice of “fixing as per last.” This can perpetuate outdated terms and create new risks. The absence of standardised processes and this fragmented contract information across departments only serve to exacerbate these issues. Improved integration and communication are crucial for effectively addressing these challenges.

The current state of contract management reveals significant room for improvement. Many companies still rely on traditional, paper-based methods, missing out on the efficiencies that modern digital platforms can offer. In an audience poll taken during the webinar, it was found that over 70% of respondents submitted that 40% or less of their contract management happens on a streamlined digital platform. This means that there is substantial opportunity to digitise and standardise contracts, easing complexity and boosting the accuracy and visibility of contractual obligations.

Digital Transformation is Key

Digitisation and standardisation emerged as central themes and were discussed in detail throughout our webinar. Transitioning to digital platforms can streamline workflows and simplify processes with clear, verified records, and drive the necessary standardisation of contract terms and data across the industry. These advancements are key to creating a seamless ecosystem where information can flow effortlessly between different stakeholders, from charterers and owners to operators and brokers.

Effective contract management requires robust cross-departmental communication. Digital tools can play a pivotal role in facilitating this sharing of information and ensuring that all departments are well-aligned. By centralising contract data and providing easier management and retrieval of past deals, digital platforms can help bridge communication gaps and foster collaboration, and whilst some have indeed made strides in this area, there is still a need for industry-wide adoption of best practices and technological solutions to drive further improvements within the sector.

Digital platforms are essential in this way enabling collaboration and standardisation. These platforms provide a consolidated repository for contracts, facilitate cooperative workflows, and ensure more comprehensive compliance with industry standards. By enabling greater auditability and governance, these technologies are enhancing transparency and accountability in charterparty management.

“There’s a great opportunity here to drive greater standardisation and harmonisation across the board because we are creating a lot of complexity for ourselves and the industry coming together and agreeing on more of a harmonised approach will benefit us as a whole.” – Christoffer Svärd

Technology as a Game-Changer

Technology is reshaping the landscape of contract management, and with the arrival of Artificial Intelligence (AI), this trend is only set to become more influential. Data-driven solutions can streamline repetitive, routine tasks, offer key actionable insights, and accelerate decision-making processes. We are entering a phase where contracts are not merely administered but smartly managed ensuring compliance and timely execution of every detail.  The ability to standardise, centralise, and augment the process of contract management is crucial for reducing errors, heightened transparency, and increasing overall operational efficiency.

“One of the key opportunities we have from a technology point of view is that we have the ability to actually create a very transparent view into what has been done earlier and make sure that the decisions that you make are taken on a transparent and well-informed foundation.” – Mads Donkin

Financial Advantages and Strategic Benefits

Effective contract management can unlock significant financial advantages. Mismanagement of contract clauses can lead to costly disputes and inefficiencies putting a strain on resources and profitability. Innovative digital solutions like Sea enable better visibility into contractual obligations, allowing companies to proactively mitigate risks and optimise decision-making based on past performance insights and steadfast data analytics. By transforming potential pitfalls into opportunities for optimisation via technologies like Sea, modern contract management practices help organisations achieve greater financial stability and strategic resilience.

Data Utilisation and Decision-Making

Leveraging contract data and past performance insights is increasingly recognised as an invaluable practice for optimal decision-making. The ability to analyse historical contract data provides insights into trends, risks, and opportunities, supporting more strategic decisions for maximising efficiency, and seizing growth opportunities in future contracts. Digital platforms enable companies to harness the power of data, transforming contract management into a strategic asset.

The Future is Bright

The future of contract management in the shipping and trading industries looks promising, driven by the application of new technologies and collaborative efforts to digitalise the sector. Whether in the dry or wet markets, from enhancing operational efficiency to improving risk management and compliance, this increased integration of digital contract management promises to transform contract management practices within the industry for the better.

Our Lighthouse Webinar on the Future of Contract Management provided valuable insights into the status of the industry. By embracing these advancements and fostering collaboration across stakeholders, the shipping industry can significantly improve its contract management processes, driving efficiency, reducing risks, and ultimately achieving more sustainable, profitable business outcomes.

Watch the recording of our “Future of Contract Management” webinar to learn more about how digital solutions can transform your contract management practices.