From “blind spot” to “supply chain optimizer”

How digitalization may redefine the future role of ports

Looking at the current degree of digital data exchange and communications in maritime logistics and transport chains, it becomes clear that the use of ICT solutions is an old hat for the port industry. Still, business experts and scientists relentlessly proclaim an ongoing transformation that is said to shift the role ports will play in tomorrow’s supply chains. Buzzwords such as “smart” and “intelligent” are already an essential part of political discussions and strategic considerations of major market players. So what exactly is about to Change?

Paperless, automated, smart

To better understand the essence of current developments, it is helpful to reconsider how information technologies have shaped the port landscape in the previous decades and what has been different from today. Just recently, scientists have specified three main phases of port digitalization (see [1]).

Driven by the tremendous growth in container shipping, the primary motivation in the early days for using ICT has been to improve the scalability by establishing paperless information exchange procedures. Accompanied by standardization initiatives such as UN/EDIFACT, the introduction of port community systems (PCS) and commercial terminal operating systems (TOS) in the 1980s has set a first digital transformation in the port industry.

 

Now established and consistent communication processes in combination with technological advances in sensor and positioning technology set the foundation for the integration of physical terminal equipment with information systems and thus to overcome capacity limitations by automated handling and administrative processes. At the same time, landside accessibility in many ports suffered from peak loads so that coordination at the port-hinterland interface was increasingly supported by means of ICT e.g. by truck appointment systems (TAS). However, practical implementations show that those coordination instruments building on “static data processing” are likely to limit the flexibility and heavily rely on the port actor’s willingness to participate. Solving those issues, we find ourselves in the ongoing transformation that will lead us to the era of smart procedures.

Future use of ICT may extend coordinative power of ports

Heilig, Stahlbock and Voß [2] describe the nature of “smart” initiatives as being able to “facilitate real-time communication to further improve the visibility, automation, coordination, collaboration, and responsiveness in intra- and inter-organizational processes in the port community and beyond.” This perspective implicates that “smart” is not only about advanced technological capabilities but also about a shifting role of ports. Today, port-related transport chains find themselves in strong competition and face the challenge to cope with ever-growing customer requirements in terms of flexibility, adaptability and visibility. Handling goods might become a commodity, but not a distinguisher between ports. As such, the use of ICT in smart ports no longer solely follows the paradigm of improving internal efficiency but to push the coordinative power way beyond the sea and landside boundaries.

Smart solutions are already raring to go

Some port operators already perform a state-change from “information blind spot” to “supply chain optimizer” by enabling better decision support with value-added information services. In the last two years, the port of Rotterdam for example has released a variety of tools such as “BoxInsider” a track and trace solution that warns customers in case of potential deviations. Another example is the beta-version of “Shiptracker” that aims at boosting the accuracy of ship arrival predictions via machine-learning algorithms [3] and thus supports pre-arrival planning.

Another example of how ports can use their predictive power to enable better decisions is the ongoing research project LAVIS, funded by the BMVI (German Federal Ministry of Transport and Digital Infrastructure) within the mFUND programme, carried out by the Institute of Shipping Economics and Logistics (ISL) and akquinet port consulting. In previous projects, hinterland stakeholders have expressed their need for more accurate information on when import containers are expected to be available for pickup at the terminal. Building upon this industry requirement, the core of LAVIS is to evaluate approaches on how to make this information available for hinterland stakeholders. Nowadays, even if a vessel arrives according to its ETA, factors such as the unloading or customs release process, prevent a reliable statement on when cargo will be ready for further transport. In practice, the variances in release times of cargo brought by the same vessel can amount to several days, especially against the backdrop of increasing ship sizes. As a result, this “blind spot” has considerable impact on the efficiency of the transport chain as planning needs to be performed rather reactively. In consequence, suboptimal use of transport capacity and prolonged container dwell times can occur. Solving this issue is of special importance for drayage operators and freight forwarders as they face growing pressure by end customers to accelerate hinterland transportation.

First results indicate that most information needed to calculate an “estimated time of availability” do exist but are either not shared by the respective stakeholders or are not integrated in the right manner. The latter indicates what task could challenge ports in the near future: As the efficient handling of physical flows does no longer represent a unique feature, tomorrow’s value proposition could be defined by the ability to integrate information flows.

Key Takeaways

In retrospective, we can state that port digitalization in the past has strongly been motivated by the need to improve the efficiency of port operations. These days, the industry draws on established and standardized communication and exploits automation technology to push the limits of terminal performance. However, a shift from a port-centric view to a more supply chain oriented perspective can be observed and will be necessary, which gives rise for a new generation of port digitalization.

Industry experts are convinced that the ongoing transformation is not just to be tackled by means of data processing technology but requires a rethinking of why and how ports should provide information to their customers. To share and deliver information does not necessarily need to be connected to instant returns. Current examples show that information services that facilitate decision support for direct and indirect supply chain stakeholders provide an opportunity to generate competitive advantage in times of unprecedented port competition.

By Patrick Specht, research associate at the Institute of Shipping Economics and Logistics

 

About the author

Patrick Specht is a research associate at the Institute of Shipping Economics and Logistics located in Bremen. His primary research interests evolve around coordination issues in maritime logistics chains and hinterland accessibility of seaports.

References

[1] Heilig, L., Schwarze, S., & Voß, S. (2017). An Analysis of Digital Transformation in the History and Future of Modern Ports. HICSS.

[2] Heilig, L., Stahlbock, R., & Voß, S. (2019). From Digitalization to Data-Driven Decision Making in Container Terminals.

[3 ] Port of Rotterdam (2019) Tools and services for current or real-time information, https://www.portofrotterdam.com/en/tools-services.