Getting Wise to Smart Ports
The nation’s ports are testing technologies and investing in infrastructure improvements to adapt to a world where the ultimate consumer increasingly embraces Amazon-like expectations.
In today’s world, an Amazon order for delivery to the United States might come from China, India, Germany, or Brazil. The shape and structure of global trade flows—where goods are made, warehoused, and consumed—and the e-commerce-driven growth of those volumes will continue to bring new complexities and challenges to how goods are moved.
Global volumes of export merchandise reached nearly $18 trillion in 2017, up nearly 200 percent from 2000, according to the World Trade Organization. The majority of these goods moved on a ship and transited at least two port operations before finding their way to the ultimate consumer.
“Global trade is the engine of the modern global economy,” notes a recent ARC Advisory Group brief. “It is increasing faster than global GDP, but this also makes supply chains more complex.” And it places an imperative on the ability of logistics operators—both government and private sector players—to scale and grow efficiently, process higher volumes faster, and connect with more partners that must communicate, collaborate, and coordinate activities and information to get products to global markets quickly and efficiently.
No supply chain partner will feel the impact—and have a greater need to increase efficiency, effective technology, and throughput—than global port operators.
Ports Ramp Up
Run down the list of the world’s top 25 ports, and you will find most are in some stage of redevelopment and reinvention. They are making massive investments in infrastructure, equipment, and technologies to modernize operations and capabilities, all with the singular goal of becoming the smart port of the future.
“Port operators of the future will be managing far more information technology than in the past,” notes Dr. Oscar Pernia, senior director of product strategy for maritime software developer Navis, in a paper titled Port of the Future: A Sense of Wonder. Bigger vessels, broader carrier alliances, capacity consolidation, and larger hub-and-spoke networks are changing how ports operate—and make a profit.
Ports will have to “leverage cloud-based networks, connect with far more shipping partners, and process huge amounts of data” to improve operational planning, control, and execution. “The work ahead is significant,” notes Pernia, “but will ultimately lead to a far more efficient and predictable ocean supply chain,” with great promise for reducing the estimated $17 billion in waste from current port and carrier business processes.
Speeding Toward Smart
The race to capture those savings has already begun. For example, the Port Authority of New York and New Jersey spent upwards of $6 billion in the past 10 years to modernize and expand infrastructure. It has deepened shipping channels and raised the height of the Bayonne Bridge by 50 feet so larger vessels can navigate into the port.
The port authority has realigned, improved, expanded, and upgraded maritime roadways—designed 60 years ago—to handle today’s traffic safely and more efficiently. Intermodal terminals have seen some $600 million in investments with on-dock rail at Newark, Elizabeth, and Staten Island. A fourth, at Bayonne, will be online by the end of 2018. When fully operational, the four sites will have capacity for 1.5 million lifts annually.
A smart port is composed of three pillars, according to Beth Rooney, the Port Authority’s assistant director.
First is infrastructure, with modern facilities of appropriate size and capacity in the right locales.
Second is what Rooney calls “mindset, which is having the will to make sure the port and its resources are operating safely, efficiently, productively, securely, and sustainably.”
Third is technology and innovation. This is the enabler that drives efficiency and productivity. “We have to use what we have more efficiently,” notes Rooney. “That speaks to business processes, technology, and smart infrastructure.”
Technologies currently in use at the port include traditional RFID transponders to locate and identify trucks, and “weight in motion” systems and optical character recognition to automatically read chassis and container numbers.
Rooney also cites a recently launched “port community system,” a collaborative website that consolidates ship, container, and other port information into a single visibility portal. It saves time for ship lines, port operators, and truckers, who can now go to the Port Truck Pass site for the latest ship and cargo container status, utilizing a consolidated information platform to help them more efficiently plan and manage daily activity and staff needs. In the past, operators had to go to multiple sites and sometimes cut and paste information into spreadsheets.
Port operators also must stay abreast of disruptive technologies and understand how these will impact port operations. “We are looking at some of these emerging technologies and asking how we can adapt and benefit from them as they mature,” Rooney says.
Welcoming the Revolution
Ports will have to embrace what Mario Cordero, executive director for the Port of Long Beach, terms the “fourth industrial revolution,” where e-commerce has been the catalyst, and Amazon has expedited the mindset and expectation.
“Customers emphasize speed and connectivity,” Cordero says. “The Amazon world requires ports to think about how they can move and deliver cargo faster. It goes back to the defining what a smart port is, and how today’s ports can execute a path forward to that goal.”
The Port of Long Beach is well along its journey, with hundreds of millions of dollars in planned upgrade and modernization initiatives on the books, as well as the introduction of more technology-driven, digital processes.
Long Beach, in conjunction with the Port of Los Angeles, is currently in pilot with GE Transportation, which is helping to build a cloud-based collaborative portal that will connect and synthesize data from multiple partners on a single platform, creating new opportunities to optimize all facets of port operations. On the infrastructure side, its Middle Harbor development project is in its third phase, and will ultimately create a state-of-the-art, highly efficient marine terminal emphasizing sustainable operations.
Cargo Reaching Record Levels
Such improvements are necessary if the port is to effectively manage surging volume, which in 2017 hit a record of 7.54 million twenty-foot equivalent units, an 11-percent increase that resulted in the port’s busiest year ever. “We will look at all options to maximize efficiency,” says Cordero.
Port managers have to continually ask “how do we move cargo faster and more transparently?” he says, noting that one initiative has reduced truck turn times by 50 percent. “If we can further improve that through applying appropriate and relevant technologies, we’ll consider it,” Cordero adds.
“We know what our customers want,” adds Cordero. He outlines four key demands: optimize the logistics chain, shorten wait times, support faster routes and service times, and increase visibility to cargo status, earlier in the shipping cycle.
While each port has its own unique needs based on factors such as location, competitive position, and size, smart ports are evolving into interconnected technological and physical infrastructures that streamline, disseminate, and analyze data across port operations and throughout the supply chain, explains John Driscoll, maritime director for the Port of Oakland.
Key technologies include cloud-based services, mobile devices and applications, sensors, autonomous transportation, and connected platforms, such as the Oakland Portal, which provides a single-entry point for seaport operations, and aggregates information from the port’s marine terminals.
“We provide a comprehensive digital view of ships, cargo, and terminal information all in one place,” explains Driscoll. “Shippers no longer have to click through multiple websites.”
FITS and Starts
Another initiative is Oakland’s Freight Intelligent Transportation System (FITS), a collaborative initiative between the port and the Alameda (CA) County Transportation Commission to develop port-specific technology infrastructure. In its early design stage, the project will encompass the port’s fiber-optic network, Wi-Fi coverage, and camera systems. The goal is to improve traffic flow, safety, and throughput, using technologies such as RFID, adaptive signal systems, electronic messaging signs, weigh-in-motion sensors, and advanced train detection systems.
The port will also soon open Cool Port Oakland, a 280,000-square-foot, temperature-controlled, state-of-the-art warehousing facility. Its technology platform will integrate management of activities such as real-time scheduling and direction of trucks (to what dock and when), container scheduling status and updates, inventory visibility, and tracking and controlling temperature levels within the secured facility. It will also manage various administrative, payroll, financial accounting, and management functions.
“Smart ports should be able to do more with less on their existing footprint,” Driscoll says, thanks to technology advances that centralize information, digitize and automate more processes, and provide more timely, complete, and accurate data. “That’s the key to better decision-making and more consistent and reliable performance,” he notes.
Getting Smart about Technology
Chasing the latest and greatest technology in the drive to build a smart port only makes sense where the technology solution enhances and streamlines a process that has been vetted and mapped as effective, and mission critical to the operation. In many traditional industries, such as ocean shipping, legacy processes and workflows can persist simply by the weight and inertia of history—they can prove difficult to change or sunset even when an independent evaluation demonstrates them to be ineffective and outmoded.
Bolting new technology onto an ineffective or inefficient process still leaves a bad process. So, the challenge for port operators and partners as they journey toward the land of smart ports, is to be vigilant in assessing their needs, understanding “reality from fiction” with respect to the ability of technology to create and deliver lasting change for the better, and above all, measuring and validating the return on investment.
With so many promising, emerging technologies and providers coming on the market, “it’s an exciting time for ports to test and determine which technologies work best for specific challenges and environments,” says Driscoll. Especially in a world where the ultimate consumer—and the ports that deliver those goods—are increasingly embracing Amazon-like expectations.
— By Parvez Mansuri, CEO, Advent Intermodal Solutions
Some early adopters in the shipping and containerized cargo industries are beginning to invest in digital solutions to differentiate their offerings and gain efficiencies.
One organization that is leveraging data to influence decision-making is the Port of New York and New Jersey, which deployed a GPS-based appointment system in its Bayonne terminal, operated by GCT USA. The system provides shippers visibility into turn times from trucks going in and out of the port’s terminals.
This information allows shippers to analyze terminal performance over time, and compare turn times at different terminals, providing insight on queue times outside gates, and the time that vehicles spend in the terminals.
Among the many benefits of this system:
- Shorter and more consistent turn times for truckers.
- More than $5 million in fuel cost savings in 2017 alone.
- Priority scheduling benefitting customers.
- The ability to meter traffic within the terminal.
- Drayage truck turn times during appointment hours improved more than 40 percent, while simultaneously improving the turn times of trucks outside the mandatory reservation window.
The Port of Oakland is also leveraging digitization as a competitive differentiator. In May 2018, the port announced the Oakland Portal, a digital collaboration platform that, for the first time, aggregates shipping information from every marine terminal in a harbor. The portal provides a single point of entry to seaport operations, allowing beneficial cargo owners (BCOs), agents, and freight haulers a single window to real-time insight on their cargo.
The Oakland Portal consolidates information—vessel schedules, up-to-date cargo status, and live camera views of port and terminal thoroughfares—from Oakland’s four active marine terminals.
With digital solutions that provide users with access to data and analytics capabilities, shippers and carriers gain insight and make smarter decisions about their assets and labor needs.