I firmly believe that every industry and every business will become an application of the cyber-physical world. Digital pioneers are driving this trend. In 2019, the logistics industry has seen its first unicorn: Flexport, the startup that secured USD 1bn in funding led by Softbank Vision Fund.
The digital freight company, which wishes to revolutionize logistics has hit USD 3.2 billion valuation. Technological development is also about to significantly change the port business. Even though the impact might have so far not been what some wished, or others expected, we now see digitization all across the world of transport.
Today, strategic business conversations cannot avoid to include the 4.0 movement; and the benchmark for digital transformation are the technology companies. What were the first wave players and what comes next?
Amazon, the company that took shopping online was not only one of the initial digital pioneers but it also started to digitize logistics. Then, companies like Uber and Airbnb took businesses like taxis and hotels mobile.
But this way of disrupting industries is drying up. This wave of technology unicorns benefited from the spread of smartphones and affordable cloud computing. Now, they wish to plug automated assets below their platforms – for example in form of automated taxis and cashier-less stores.
The up-and-coming wave of technology unicorns and digital champions are largely focused on software and partially hardware for specific industries and narrowly defined activities.
In ports, this can be for example in the area of gate control to eliminate errors, reduce waiting time for trucks and improve the flow of containers. These next generation companies support the modernization of the economy, solve traffic and capacity issues, further reduce cost and waste, but also help to deal with the new challenges like increasing natural disasters and the potential collapse of the oceans.
Some next generation startups will serve the first wave of technology innovators. Like Checkr, a digital service to expedite background checks for drivers. The startup works with Lyft and Instacart but also other types of customers like the insurance company Allstate.
– Layers of innovation
Many of us have installed Uber or similar apps on our smartphones. Apps provide access to platforms and the resources available in the underlying ecosystem. Through apps operators and customers can make use of platforms.
Apps are offering the services and products that enable us to navigate better the physical space, on ships, on road and rail, in ports and cities and create services never seen before.
A new layer of operating is unfolding where creativity can break through traditional limitations into new spheres of precision management, planning and customer experience.
Platforms and apps change the way we evaluate and utilise assets and capacity. Apps enhance the value of the things in the ecosystem and promise new benefits. McKinsey estimates that in the coming two to three years Supply Chain 4.0 can deliver up to 30 percent lower operational costs and a reduction of inventories by up to 75 percent.
– Port redefined
In 2018, APM Terminals launched an online platform offering a range of services, including booking of appointments and slots as well as the processing of payments and invoices. The platform went into service at Khalifa Bin Salman Port (KBSP) in Bahrain. Ports a very active too.
The Port of Rotterdam offers PRONTO, an application that shipping companies, terminal operators and other port stakeholders can leverage to manage their tasks during a port call based on stardardised data exchange. As an example, PRONTO links into the Hamburg Vessel Coordination Center (HVCC) to exchange port call information.
Antwerp invested in NxtPort, a data platform offering a range of port services, for example around container weight data and customs information. Singapore launched Calista, an open supply chain platform that invites other ports and logistics players to join.
Calista goes beyond the gates, approaching digitization from an end-to-end perspective. All these are examples of innovation in advanced ports that have already jumped on the train of digitization – increasingly leveraging what they have built so far.
In future, digital ports will push digital architectures, platforms and apps far beyond today’s frontiers. Innovative ports will give incentives to beneficial cargo owners, shipping lines, railways, trucking companies, forwarders, agents, truck manufacturers, city governments and federal agencies to join, connect and build upon their solutions.
This can be achieved by providing operational and other data but also functionalities like planning and monitoring tools that different stakeholders wish to use and integrate into their systems. With the objective to better manage their processes and assets, and to increase customer convenience and satisfaction.
The idea is share more, get more. Reversely, ports will find value in integrating services offered by other platforms to enhance their solution or build apps on other people’s solutions. Eventually, we will witness that the entire global port ecosystem has been digitally wired and connected throughout the growing number of systems within and beyond the gate.
– Leveraging ecosystems
Traditional incumbents can benefit from partnerships with technology companies, like IBM and Oracle. They can also leverage startups. Patrice Caine, chairman and CEO, Thales, writes “Yes, you may have the capacity to invest massively in research and development (R&D) to hire the best engineers in your field. … But it is not enough, for one simple, statistical reason: there will always be more groundbreakers outside of your company than within.” He sees two solutions.
The first is incubating internal start-ups, providing them with a degree of liberty towards the hierarchical structure. The second is partnering with startups, i.e. identifying the most promising ones in the field and finding ways to work with them.
Increasingly, we see companies leveraging the power of the ecosystem. Hyperloop Transportation Technologies (HTT), a production and design company with the vision to revolutionise transportation has set up a network of 900 professionals and 50 business partners, ranging from startups to Fortune 500 companies.
This network can be activated to solve any kind of problem. The “crowd-powered” company and Hamburger Hafen and Logistik AG (HHLA) have set up a joint venture to transport containers at high speed through the vacuum tube between the Port of Hamburg and its Hinterland for example.
Port authorities are well placed to facilitate digitisation across the port ecosystem. First, by supporting the digitization of the port, for example by creating digital architectures and platforms that offer port services, second by helping the different stakeholders to build apps, and third by contributing to defining data standards.
This, by means of establishing and facilitating the creation or contributing to alliances. Latest example of alignment in the container shipping industry is the Digital Container Shipping Association (DCSA) that was established in Amsterdam, the Netherlands, by four leading container shipping companies, namely A.P. Moller-Maersk, MSC, Hapag-Lloyd and Ocean Network Express (ONE) on 10 April 2019. The priority of the new association is to drive the development of digital standards.
Platform-driven interactions are expected to enable approximately two-thirds of the value for business and society over the next 10 years – according to the Digital Transformation Initiative of the World Economic Forum in collaboration with Accenture.
Apps and platforms enhance the functionalities of ports as applications of the maritime industry and the economy as a whole. Ports can benefit from the 4.0 movement by establishing their own, but also from participating in other digital platforms.
The future of ports lies not only in their capability to overlay their traditional physical doing with digital architectures, but also in driving digital connectivity and developing, co-creating and attracting app-based services on their own and other platforms. Once we see this movement mounting, we will also realise that we are entering the phase of the Port-as-an-App.
The original paper was published at Port Technology.
- Wolfgang Lehmacher Industry and technology evangelist and polymath, assisting stakeholders across the global supply chain ecosystem – from start-ups, to asset owners, to Fortune 50 companies – in upscaling and transforming their organizations: envisioning system change, what it means, and how to stay/get ahead of the curve. Engaged in think tanks, awards committees and expert groups, including the IATA Air Cargo Innovation Awards Jury, and the World Economic Forum Expert Community, supporting projects such as the Blockchain for Supply Chain initiative