As global trade slowed due to the COVID-19 pandemic, cargo ports and terminals, the gateways of trade, were among the worst affected sectors. Photos of huge marine container vessels lined up at desolate ports reminded us that maritime trade had all but come to a standstill as the pandemic struck. Challenges faced by cargo ports and terminals included shifting directions of geopolitics, trade, and alliances, increasing scrutiny of goods and changing rules, paucity of skilled labor, rising capital cost, and volatile growth. The sector must now find a smart way to recalibrate operations and grow revenues by leveraging the latest technologies.
According to the World Trade Organization’s October report1, global merchandise trade could drop by 9.2% in 2020. This is a more optimistic forecast than the 12.9% drop forecasted earlier. However, the recovery in 2021 might be weak, instead of a strong rebound, as lockdowns return, it said. Drewry’s Global Container Port Throughput Index had slumped to 108 points in February 2020, a fall worse than the 2009 global financial crisis and the Hanjin shipping bankruptcy of 2016 (see figure 1). Although the index recovered to 133 in August, annual growth projections remain bleak.
Besides the lockdown-induced industrial disruption leading to lower vessel visits, the new safety procedures also affected people and cargo movement and resulting in inefficient resource use. This had a direct impact on terminal throughput values. Operational restrictions and safety-related overheads impacted vessel and truck wait and turnaround times. Delayed clearances, reduced hinterland connectivity, lockdown restrictions on non-priority cargo deliveries, avoidable charges and high utilization of storage spaces are putting additional strain on limited terminal assets.
The economic scars of this pandemic will be long-term. To stay competitive, port and terminal organizations cannot rely on the traditional improvement cycle of plan, do, check and act; it needs to adopt a smart cycle of sense, discover, learn and act to become a real-time, agile enterprise. To achieve this, organizations must strengthen the five pillars of the SMART port capability framework-sustainability, measurability, automation, resilience and transparency.
Figure 1: Source: Alphaliner, Dynaliners, carriers
Sustainable ports should focus on monitoring and reducing wastage and carbon footprint while developing capabilities related to asset optimization and renewable energy use. Technology plays a big role here; for example, 5G wireless technology and IoT can be used to monitor port or terminal assets and infrastructures, energy usage and savings, hazardous cargo and personnel movement, emission control, and safety policy enforcement. Machine learning and artificial intelligence can help build a more predictable ecosystem.
A measurable port must build capabilities to make the value chain more predictable so as to improve its ability to respond to sudden disruptive forces such as this pandemic. Investing in developing capabilities such as community collaboration platforms for real-time exchange of trade data and information, and blockchain to forecast capacity and resource demand would enable a responsive and agile value chain. Leveraging IoT sensors and satellites or 5G for real-time monitoring or tracking of container and cargo status, cargo carrier location, equipment and personnel movements, and terminal traffic or congestion will provide an edge to deal with future disasters. Enabling safety infrastructure like thermal scanning or x-ray and automated tracking of people and cargo will take care of safety issues.
The focus of port automation systems should gradually shift from internal process and asset automation to the value chain. Hands-free or contactless operation using NLP and vision analytics, remotely or fully automated equipment using programmable logic controller (PLC)/equipment control system (ECS) and an ability to operate port or terminal remotely using networking and collaboration platform are key capabilities in automation. Advances in AI and robotics will continue to improve the total cost of ownership (TCO) aspects of automated equipment for its mass adoption, while leveraging AI in areas such as terminal load forecasting and capacity simulation can help assess disaster impacts for advance planning.
A resilient organization is measured in its ability to not only consistently perform and grow but also adapt to unforeseen situations that require a paradigm shift from just-in-time efficiency to just-in-case resilience. Investment in cloud and SaaS-based business solution and IT services to reduce the overall TCO of captive IT assets and resources, online communication and collaboration platforms to enable distributed teams to share ideas, decisions and policies effectively, anytime and anywhere, and AI for actionable port or terminal insight are what will build resilience in port organizations.
Transparency plays a pivotal role in improving regulatory compliance, stakeholders’ trust, end-to-end visibility and responsiveness. In a disaster, the ability to effectively communicate practices and policies and compliance with government or industry regulation and guidelines is as important as the ability to proactively engage community and stakeholders. The industry can improve its transparency quotient by continuously evaluating and enhancing relationships with customers and suppliers, utilize real-time self-service platforms to notify, track, and analyze services, and develop community platforms for partners to engage and exchange information.
The ports and container industry must use the SMART port model to turn the pandemic into an opportunity to reinvigorate itself for a smoother sailing.
1. World Trade Organization, "Trade shows signs of rebound from COVID-19, recovery still uncertain," October 2020, https://www.wto.org/english/news_e/pres20_e/pr862_e.htm