Changing the mindset - theloadstar.co.uk · there are obvious implications for the ... TRENDS EME POSSIBLE FUTURE ... – Focused key trade corridors

LongRead – Vol 15 – June 2018 1

LongRead Vol 15

Writer: Gavin van Marle

Production: David BadgerDesign: Alison Rolph

©The Loadstar Media Ltd 2018

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www.theloadstar.co.uk@TheLoadstar

Inside

Rotterdam unveilsPronto solution

Port 2050

APMT expandsinland services

“That was awesome,” he told thisreporter, “We call Flexport a techcompany, but what I have just seencompletely blew my mind. I have neverseen robotics used on that scalebefore.”

He had just been on a port tour ofthe newly opened Long BeachContainer Terminal, the fullyautomated box facility developed tothe tune of $2bn by Hong Kongshipping line OOCL.

“For the last four years I’ve beenbuilding a digital supply chaincompany that was founded on the

understanding that the shippingindustry is antiquated anduncoordinated and hasn’t been able toharness technology to improveefficiency – and all this time, rightunder my nose, places and systemslike this were being built,” he added.

There are few companies whosenames have seemed to become thebyword for the debate over thetechnological transformation that istaking place in global supply chainsand the logistics industry, as Flexport.To say that Mr Petersen has ruffled afew feathers among the established

Last year, Ryan Petersen, chief executive and founder of digital freight forwarderFlexport, settled into the back seat of a taxi just outside the Long Beach port complexand sighed.

Changing the mindset

Ports and technology

freight forwarding companies would bea serious understatement – althoughthere has been far less malice on hispart than some seem to have creditedhim with. This itself largely, onesuspects, was created by a certainamount of envy at the ease with whichhe appears have raised well over$100m in funding.

The reaction of the freight forwardingcommunity notwithstanding – theensuing year has seen a host ofestablished operators present newdigital initiatives, as well as an evenlarger host of start-ups – whatFlexport’s near-ubiquity has done ischange the whole nature of theconversation in the industry.

Digital talkLars Jensen, founder and chiefexecutive of SeaIntelligenceConsulting, explained in a TOC Europepreview post that much of the talkabout digitising container supplychains misses what has actually takenplace.

“Looking at many of the initiativeswhich rose to prominence in 2017, twoelements are important. The first isthat the clear majority were not startedin 2017. They were instead launched inthe 2012-2016 period. This indicatesthat despite the seeming sudden risein digitisation, it is actually the result ofseveral years preparing thegroundwork for these concepts.

“Secondly, and as importantly, it ishard to see genuinely ground-breakingnew concepts among these.

“However, this is besides the mainpoint in this context. The importantpart is that fundamentally the rise ofdigitisation as seen in 2018 does nothave technology as its main driver,” headds.

When asked to define technology,the science fiction writer DouglasAdams, the late author of the reveredHitchhiker’s Guide to the Galaxy,replied with a typically comicaphorism: “Technology is what we callstuff that doesn’t work yet.”

This writer has been looking high andlow – literally, from academia to mobwisdom – for ways to frame thediscussion about technology anddisruption in logistics, and there is noone who has who captured it quite assuccinctly as Mr Adams.

“Technology is usually what is beingtalked about, but the critical thing wehave begun to see changing is theindustry’s view on how to use thetechnology,” Lars Jensen continues.

“We are increasingly seeing thelaunch of pilot projects where not onlythe tools but also the business modelsare not fully in place yet. Insteadcustomers are invited to participate inthe further testing and development.And the focus is shifting to how newtools can solve actual problems.”

In this context, it is fitting that someof the simplest and potentially mosteffective digital initiatives to optimiseefficiency of container supply chains isnot coming from logistics serviceproviders or shipping lines but fromports and terminals operators.

Ports already occupy the centralposition in container supply chains,and the latest developments on thepart of DP World and PSA demonstratethey have come to grips with theirchanging place in world trade. Therehas been a considerable change in themindset of port operators, one that haswas taking place alongside thetechnological changes occurring inwider society.

For the past few years, portoperators have become increasinglyaware that their customer base is notjust shipping lines, but also the


Rotterdam introduces Pronto solution

While many of the digitisation efforts in container supply chains have focusedon easing the movement of cargo through ports and terminals, the portauthority of Rotterdam has focused on optimising vessel movements with thecreation of the Pronto app, which it claims can reduce vessel waiting times inport by as much as 20%.

Combining a range of data sources on one platform, Pronto allows shippingcompanies, agents, terminal operators and other service providers to exchangeinformation relating to their port calls.

Once a vessel’s estimated time of arrival becomes known, it is assigned atimeline within Pronto. This timeline specifies each milestone the vessel willpass during its port call: from its arrival and stay in the port to its departure.

Rotterdam chief financial officer Paul Smits, whose responsibilities alsoinclude digitisation, says: “The application allows all users to optimally plan,execute and monitor activities throughout the entire port call. This yieldsconcrete benefits for all parties involved. The uniform mutual exchange ofstandardised data allows port calls to be planned more effectively andefficiently and rounded off in a shorter period of time. Pronto was extensivelytested over the past year during the development phase.

“We will now be making it available to members of the port community –either in exchange for data or for a fee. We expect more and more terminals inthe port to start using Pronto, which in turn will increase the accuracy of thedata it generates.”

Oil giant Shell was involved in the pilot phase, and the company’s generalmanager of shipping & maritime for Europe and Africa, Ed Barsingerhorn, says itsaw benefits even at that early stage.

“The pilot convinced us of the added value of Pronto. We have reduced thewaiting time by up to 20% for departing ships. It is essential that all partiesinvolved in the process, including terminal and agent, work closely together andshare relevant data.

“When we exchange time stamp data, not only in Rotterdam but also betweenports, the improvement potential increases significantly. Ships can sail optimallyladen and arrive just-in-time through better planning.”

shippers, 3PLs and hauliers.

As PSA group chief executive TanChong Meng explained in his keynotespeech at this year’s TOC Asiacontainer supply chain event inSingapore, terminal operators havehad to grapple with the twin issues ofliner consolidation and the efficiencychallenges posed by the widespreadintroduction of ultra-large containervessels.

“But today we talk less about mega-vessels and more about digitisation. At PSA we took a step back to try andunderstand how the world is changingbecause if logistics is an engine of theworld economy then we need tounderstand what sort of economythere will be in the future.”

He said this had boiled down to some“hard truths”.

“The first is that cargo is changing,which is quite a revolution for PSA.Previously we considered ourselvesprimarily as movers of boxes, but werealised that it is not just about thenumber of boxes we move but thepurpose that we fulfil in doing that.

“Consumer demand is changing –there is a higher demand for reliabilityand there are faster product cycletimes; and all the stuff that is affectingB2C – the last mile in the supply chain– will come to affect the middle milewhere we operate.

“Secondly there is the observation thattechnology will both enable anddisrupt – e-commerce is doubling

every four years and people aren’t justbuying online, there are buyingoffshore as well; 60% of Singapore’s e-commerce sales are now cross-border,” he says adding that the latestforecasts indicate that global e-commerce sales could reach $4.5trnby 2021.

Changing supply chainsPSA also believes that two emergingtechnologies – 3D printing and electricvehicles – are likely to “go mainstream”and fundamentally change globalsupply chains.

“3D printing will become part ofeveryday lives,” Mr Tan said, “Somereports suggest that it will account for30-50% of manufacturing, and whilethere are obvious implications for thetransport of raw materials to feed thisgrowth, the other obvious conclusion isthat there will be less manufacturedgoods to transport in containers.”

Similarly, PSA also believes thatelectric vehicles could “become thenew norm” by 2030.

“The reduced numbers of parts inelectric cars – an eight-cylinder petrolengine has 1,200 parts, compared witha corresponding electric car, which hasjust 20 – has huge implications forcontainer transport, as well as how youship lithium batteries,” he says.

“And because of all these shiftsmany manufacturing supply chains arestarting to pivot and there are manycommon themes – central supplychain planning and shorter productcycles being just two.

“In addition, cross-integrationbetween industries is taking place,which is redefining the value curve with new physical-digital connectivitybut is also coming at a time when thereis a lack of connectedness and visibility in traditional supply chains,”he says.

According to a survey last year bythe Business Performance InnovationNetwork, 82% of respondents “feel thelevel of connectedness and visibilityneeds to be improved”, while 12%thought there is “virtually no visibilityat all”.

Further, the logistics industry isfacing a problem of perception – 57%believed there was poor coordinationbetween supply chain partners; 50%believed there was too littletransparency and 37% sawinefficiencies in the supply chain.

As a result, Mr Tan said, PSA had“started to look more closely at thingsbeyond the port parameters”,


PSA group chief executiveTan Chong Meng gave the

keynote speech at thisyear’s TOC Asia container

supply chain event inSingapore

‘Cargo is changing, which isquite a revolution for PSA.Previously we considered

ourselves primarily as movers ofboxes, but we realised that it isnot just about the number of

boxes we move but the purposethat we fulfil in doing that

6 LongRead – Vol 15 – June 2018

• Ports as hubs for wider economic activity – logistics, manufacturing, ‘free areas’

• More solutions specific for customers• Decline in coal and hydro-carbon

cargoes• Connectivity – ongoing shift

to multi-modal

• Remotely operated equipment (e.g. cranes)

• Autonomous operations (e.g. container yards)

• Operators as supervisors & technology users

• Further applications of enhanced technology developments

• An Internet of Things enabled world• New business opportunities –

‘Air Traffic Control’ for near UK waters; drone operation hubs; human services to enable remote / autonomous operations

• Changed roles for human interface

PhysicalAugmentation

and Automation

TRENDS EME

POSSIBLE FUTURE

• More flexible usage of assets – Use of data for real time utilisation – End to end supply chain visibility – Adaptable buildings / space

• Large scale port-based value addition• Connectivity

– Focused key trade corridors – More & better integrated hub & spoke water borne freight – New modes (e.g. hyper loop)

• Constrained assets / ‘capacity markets’

Port 2050What could shape the port of the future?

THE HUMAN DIMENSION Challenges but also opportunities

• Safer jobs – Less man / machine interface, height, confined spaces• Different jobs – e.g. high intensity crewing, data services• Better jobs – more skilled, new skills• Balance – Increased gender diversity• Continuity – Ports will remain significant sources and

catalysts of employment


UK Major Ports Group

• Ports as data platforms (e.g. Port Community Systems and advanced inventory systems)

• Providing tracking data• Blockchain and ‘smart contracts’• Cyber security as a core skill

Digital Sustainable

ERGING NOW

GAME-CHANGERS

• Applying Artificial Intelligence, Machine Learning, ‘Digital twins’ and other advanced analytics for applications such as predictive planning & operations, self diagnosis

• Seamless end-to-end data supply chains – data as a service

• Large scale blockchain adoption• More dynamic charging in response

to demand

• Ports as (renewable) power stations• Electrification of processes and

plant & equipment• Reducing emissions and improving air

quality through smarter operations (e.g. Vehicle Booking Systems)

• UK as a key influencer of global standards

• Large scale alternative fuelling• Ports as key nodes in energy transition

– both as consumers & enablers• Electric vessels for some uses

(e.g. coastal feeder services)• Natural capital businesses• Use of advanced analytics in

monitoring & approvals• Appropriately integrated

regulatory framework

?

THE ROLE FOR GOVERNMENT Create an enabling framework for investment, development and innovation

• Do – provide infrastructure – physical and knowledge; set a consistent long-term direction; join and align the regulatory framework with strategic goals (e.g. trade)

• Don’t – pick winners, over regulate

“Our aim is simply to add value tomanufacturing and supply chains withmore services – and this is not anoption, but an anchor.”

A key plank of this strategy is toenable the creation of advancedmanufacturing facilities, particularlythose near to its Singapore hub.

“Singapore’s manufacturing industryis changing – look at Dyson’s new planthere, producing highly pricedcomponents. We want to be part ofthat vision. If we can raise the flow ofcargo it will be good for all logisticsservice providers and not just the port,”he says.

Opened in February, the hi-tech UKmanufacturer is set to invest US$561min its Singapore technology centre,which will be focused on developingartificial intelligence (AI), machinelearning and software, and criticallycontains a supply chain control towerthat runs its global production andshipping programmes. The centre isalso adjacent to Dyson’s West Parkmanufacturing facility, where one of itsdigital motors comes off a highlyautomated production line every 2.6seconds.

PSA’s philosophy to align itself withmanufacturing trends has been alsoreflected in the development of newtrade corridors, in a move notdissimilar from APM terminals’strategy of going inland (see page 9).

This includes the seven-daytransport corridor it is developingbetween China’s inland manufacturinghub of Chongqing and Singapore,which it conceived in conjunction withSingaporean shipping line PIL.

Another example is the developmentof an air-sea supply chain forperishable goods moving from NewZealand to North Europe, which takes,on average, 42 days by ocean.

Vast improvementPSA has helped to improve theinterchange between ocean and airfreight modes, so that goods are nowair freighted from New Zealand toChangi airport in Singapore and thentransferred to vessels at PSA’sterminals – and the new 25-26-daytransit times offers a vastimprovement in value for shippers as itbrings goods to the end market sometwo and a half weeks earlier,representing considerably moreearning power as well as reducingexporters’ working capital tied up ininventory.

In terms of technology, the basis forits investment has been “about gettingdeeper and further into supply chains”,and its recently unveiled Calistasolution was developed after extensive,and unprecedented, consultation with“shippers, 3PLs and stakeholders andas we focused on innovating physicaltransport solutions, we encountered alot of non-physical problems”.

“Many of the pain points are knownabout, but in general the industry hasbeen unable to deal with them,although there have been numerousefforts to solve them over the last fewyears,” he explains.

“However, logistics is a three-dimensional challenge: the physical,the regulatory and the financial. Ideally,we should be able to deal with all threeon one platform.”

The result, developed in conjunctionwith Singapore-based CrimsonLogic isCalista [CArgo Logistics, InventoryStreamlining & Trade Aggregation], anopen platform that connects the digitaland physical movements, and allowsshippers and 3PLs to better managetrade finance and documentationflows.

The pilot phase will see aninvestment of S$20m (US$15.12m)and will principally allow electronicdocumentation to be reused to avoidrepeated manual processes – andalthough it is backed by PSA, Calista isintended to be an open and globalplatform which other port and logisticsplayers are invited to participate in,eventually covering the flow of goods insupply chains across different regions,countries, logistics providers andports.

The architecture is open and usesblockchain technology, which meansthat shipping instructions can be read


Dyson’s Singapore technology centre contains a supplychain control tower that runs its global production and

shipping programmes. The centre is also adjacent toDyson’s West Park manufacturing facility, where one of itsdigital motors comes off a highly automated production

line every 2.6 seconds


While the DP World and PSA developments are differentsystems looking to address different – but certainly relatedissues – they jointly demonstrate that the attitude and outlookof port operators has undergone a profound change in recentyears.

A similar transformation appears to have taken place at APMTerminals which, as part of the corporate restructuring beingundertaken at parent company AP Møller-Maersk, is laying out anew capital expenditure (capex) strategy aimed at optimisinginland box flows, and a reduced focus on large-scale port andterminal development projects.

This means honing the synergies with sister companiesMaersk Line and Damco.

Speaking to The Loadstar on the sidelines of the TPMconference in Long Beach earlier this year, the then chiefoperating officer, Henrik Lundgaard Pedersen – who has sinceleft the group to become the new chief executive of AssociatedBritish Ports – said the next phase of AP Møller-Maersk’sinvestment programme would be focused on serving itslandside customers: the shippers whose cargo passes throughits global facilities.

“We have four main container terminal expansion projectsunderway – Moin in Costa Rica, Vado in Italy, Tema in Ghana andTangiers in Morocco – and once these are completed our focusin terms of capex will be on optimising our terminals and theway they interact with the hinterland.”

Whereas previously the operator’s inland services were run byjust one executive, a new team has been hired to work on theproject, led by Dries van Dongen, the recently appointed globalhead of landside customers and inland services.

“When Maersk talks about being a global integrator ofcontainer services, that is end-to-end,” explained Mr LundgaardPedersen.

“Our part of that is to make sure the cargo moves in and out

of our terminals on the landside in the most efficient way,”explained.

At its Buenaventura terminal on Colombia’s Pacific coast,shippers deliver coffee and sugar exports in bags, and APMThas been stuffing those cargoes into containers on exporters’behalf in the terminal yard.

“Similarly, we are de-stuffing Asian container imports in ouryard before the cargo is released inland.”

In contrast, in Chile and Peru the company has set upoperations to stuff containers at shippers’ premises – a coppermine in Chile and at a large food plantation in Peru – beforethey are transported to the sea ports.

This has also led to supply chain coordination with Maersk’ssupply chain management subsidiary Damco. At an inland APMTfacility in Thailand, there are Damco employees working oncontainer logistics on behalf of some automotive suppliers.

“Ultimately, it doesn’t really matter whether it is a Damcoemployee or APMT employee performing the tasks.”

The initiative comes as the company seeks to secure cargoflows through its facilities, and Mr Lundgaard Pedersen revealedthat landside problems at some terminals had led to someshippers refusing to contract with lines that called at thoseports.

“We had an instance this year when a shipping line came to usand said that they wouldn’t be using our terminal because theirlargest customer didn’t want to use our facility.

“The line allowed us to talk to the shipper, propose newsolutions and eventually we won that service,” he told TheLoadstar.

He said that capex would now be focused on buildingwarehouses, both adjacent to its box terminals and at inlandlocations, as well as investment in smaller handling equipmentto operate those facilities and IT to process logistic movementsas its inland services builds up.

APM Terminals builds up inland services portfolio

AP Møller-Maersk has a new strategy aimed atoptimising inland box flows, and a reduced focus onlarge-scale port and terminal development projects

and revised for port gate usage andcustoms declarations.

Eugene Wong, chairman ofCrimsonLogic and its parent company,Global eTrade Services, tells TheLoadstar: “We are now in the pilotphase, and it involves multipletradelanes and different customerprofiles – multinational shippers andtransportation providers are takingpart.

“By September, we should be able toassess its impact. The main challengehas been inertia in terms of users andthe inertia that companies have inpartnering – everyone is a competitor,and everyone is a potential partner, andit has taken a while for companies toaccept this.

“It’s not just PSA – other partnerscould come in and join the project.

Strategic partner“That said, PSA is our strategic partnerand has cooperated with us on previousprojects. The value of the platform isthe number of connections and peoplewho use it – so our strategic partnersare well aware that Calista has to beneutral,” he explains.

It also does have a revenue model,currently being honed down, and it islikely to be a mixture of subscriptionsand transaction fees.

Nonetheless, what has transpired inthe years since Facebook has become aglobal corporate behemoth is that thevalue of a platform is simply a functionof the number of participants that useit, an understanding that underpins DPWorld’s Where’s My Container (WMC)app.

Currently only in use in the Dubai-based operator’s UK ports ofSouthampton and London Gateway,this year saw the launch of the nextgeneration of WMC, which managingdirector Chris Lewis describes as an“evolution” of the previous iteration,and a development that had beeninspired by customer feedback.

“Going forward we are retaining all itscurrent functionality but also helpingcustomers save money by providingreal time information on the status oftheir containers.

“Customers can take decisions basedon fact rather than assumption – therehas been a widespread acknowledge-ment in the port industry that portswere a black hole into which containersdisappeared when they had either beenunloaded from a vessel or deliveredthrough its gates by truck or train.

“DP World is embracing digitisation

to tackle the perception that there is acargo black hole,” he says.

Perhaps alone amongst terminal chiefexecutives, Mr Lewis has an ITbackground – before joining DP World hewas head of IT at the Hutchison-ownedport of Felixstowe – and has a keenunderstanding of the mechanics behindnew technology.

It is perhaps because of thisknowledge that the beauty of WMC is itssheer simplicity – all that was required inits first phase, launched in May 2017, wasthe container number. Anyone couldaccess the system, input the numberand it would report the latest milestonethat the box had passed – unloading; inthe yard stack; ready for collection etc…

“The fact is that we know everythingabout a container – we know where it is

stored; we know its status; whether ithas been put on hold by customs or porthealth and if it is to be inspected – weknow its availability.

“The key thing about this is that it is alldone in real time.

Change in status“As soon as something has happened toit and there has been a change in status,WMC knows this, and that means thateveryone also knows it – shippers ortheir hauliers are not going to be sendinga truck to a terminal to collect acontainer until its available,” he says.

The one key change in the relaunchedapp is that users now have to register –over the past year it became glaringlyapparent to DP World executives thatthe major problem with having such anopen platform was that they simply


‘The fact is that weknow everythingabout a container –we know where it isstored; we know itsstatus; whether ithas been put on holdby customs or porthealth and if it is tobe inspected – weknow its availability.The key thing aboutthis is that it is alldone in real time’

– Chris Lewis

It became apparent to DP World executives that the major problem with having suchan open platform was that they simply didn’t have any information on its users

didn’t have any information on its users.

“We didn’t know who was using theprevious system – all we knew that therewere over 6,000 different IP addresses,but that was the extent of the data. Wedid a lot of talking to customers andfound a lot of users from the retail andautomotive sectors, as well as hauliersand even shipping lines.

“I know that automotivemanufacturers in the UK are alreadyusing it a huge amount because it isfeeding information into their supplychains, and as the use of artificialintelligence in supply chains develops,this is precisely the kind of informationthat is crucial to optimising supplychains,” Mr Lewis explains.

“Users of the existing WMC have toldus they were able to reduce theirinbound distribution windows by twodays,” he says.

And privately, one DP World terminaloperations manager in the UK tells TheLoadstar that if he gets a containerenquiry WMC is generally the firstresource he turns to.

Meanwhile, Mr Lewis also promisesfurther development over the next threemonths, as premium services areintroduced.

“The current WMC system inSouthampton and London Gateway willcontinue, because the new version is ona different platform, and there will betransition phase of customers of the oldsystem have their details recorded onthe new one.

A second phase, which was demoed atthe Multimodal show in Birmingham inearly May, was WMC Premium whichgives enhanced status message andextra milestones. Customers will becharged on a subscription basis and it isset to go live this summer, with potentialcustomers given a 90-day free trials.

Bespoke milestonesA third phase has higher volumemessaging and offers customers theoption to create bespoke milestones,and will be launched in the autumn of2018.

“We are doing a pilot project of thisversion with some customers usingartificial intelligence.

“But in terms of the basic system, themain feedback we had was not tochange any of the functionality – ifanything, the main upgrade of thissecond release is the SMS alerts,” hesays.

However, that is not entirely true – a

far more significant alteration has taken place in the IT architecture, headmits.

“The real difference is mostly in thebackground – the system that wasrunning WMC got its information frominterrogating our systems such as theTerminal Operating System.

“The big change is that we are nowbuilding our own data warehouse whichhas all that information loaded directlyinto it and means that that WMC nowhas its own database and the responsetimes are much quicker.”

And by transferring that visibility toshippers and their 3PLs, suddenly a newrange of supply chain options open upthat can help shippers avoid potentialbottlenecks, such as the possibility ofcreating a “speedy boarding” or handlingfor certain cargo.

“If you have a container you areinterested in we can give you anestimated time of unloading. Now if aparticular container was critical to thecontinuation of a supply chain then onexceptional basis we could give priorityto certain boxes.

“But in general, people are veryinterested in when the cargo is clearedand available for collection,” he says.


it is fitting that some of the simplest and potentiallymost effective digital initiatives to optimise efficiencyof container supply chains is not coming from logisticsservice providers or shipping lines but from ports andterminals operators

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Changing the mindset - theloadstar.co.uk · there are obvious implications for the ... TRENDS EME POSSIBLE FUTURE ... – Focused key trade corridors