Ecosystem innovation – don’t pave the cow paths

Numerous initiatives building upon digitalisation, standardisation and collaboration are now underway to increase the efficiency and sustainability of maritime transport. To date these have focused on synchronisation and connectivity between ship and port operations, as well as assuring visibility of the status and condition of the goods being transported – all based on data sharing.

Emerging regulations on data sharing are expected to boost this interaction, but to ensure a truly beneficial change in approach there are other initiatives that need to be taken to avoid simply using new technology to replicate out of date practices – or “pave the cow paths”, to use a phrase from Professor Michael Hammer of MIT in 1990.

The professor, one of the founders of business process reengineering theory, said that “Instead of embedding outdated processes in silicon and software, we should obliterate them and start over. We should reengineer our businesses: use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance.”

In particular, we need to move beyond the individual actor view that has previously predominated in maritime transport and towards a more collaborative, data sharing approach. Efforts are now being taken to better synchronise by:

  • increasing the interaction between what happens at sea and in ports, to allow for just-in-time arrivals

  • enabling autonomous shipping by introducing capabilities for sensor-equipped vessels and remote operations

  • providing new standards for digital messaging and interfacing to enable accessibility to data for all involved stakeholders, for fine-grained situational awareness to support better decision-making processes

  • boosting collaboration and data sharing throughout the global supply chain through connected maritime transport networks (e.g., Global Shipping Business Network (GSBN) and TradeLens) and Internet of Things (IoT) technologies (e.g., Smart Containers)

Current situation

Historically, both shipping companies and ports have tried to optimise their operations based upon a limited knowledge of what is currently happening in comparison with their pre-set plans. However, it is typical in the maritime sector that events do not unfold according to the initial plan, and in most cases changes are not adequately communicated to those that need to know that these alterations have occurred. As a result, the involved actors then need to rely heavily on last-minute scheduling.

Today, larger ports are establishing sophisticated capabilities to update and re-assign their resources at the last minute to optimise service levels as far as possible. Waiting times have certainly been reduced, but the results remain sub-optimal.

The lack of predictability in transport events along the door-to-door logistics chain involving maritime means that clients are not receiving the service that they have come to expect in other modes of transport.

IoT initiatives associated with connected cargo, such as the smart containers initiative, seek to overcome this by providing supply chain stakeholders with data for monitoring the status and the progress of the transport. Connected cargo enables stakeholders to access data directly from the source regardless of whether the cargo is on a ship, in a yard, or at any other point during its pre-haul and post-haul journey.

Many global ports continue to operate on a first-come, first-served basis, with the ship agent, acting on behalf of the shipping company, seeking to achieve the best possible port visit outcome for their client(s).

In times gone by, port operators have acted somewhat in isolation and with limited information, often relying on glimpses of a ship’s progress by following AIS patterns, combined with trust in the ship agents’ reports on ship arrivals and desired services. Meanwhile, the ship operators and masters get only limited indications of the preparations being made from their ship agents.

The increasing availability of digital information means that we are now beginning to see information hubs established as the foundation for data sharing among and between the communities of involved actors, and as an interface to the outside world.

One unresolved question is whether this refined landscape will challenge or enhance the role of the ship agent in the value-creation process. It is important to be aware that the ship agent acts on behalf of individual shipping companies, most often associated to one type of trade, while the port is serving multiple shipping companies pursuing different types of trade.

Future goals

Some important initiatives and value foundations upon which to build are:

  • virtual queue tickets combined with elastic time slot allocation enabled by shared situational awareness

  • collaborative concepts, such as the concept of port collaborative decision making (PortCDM) for enhanced coordination and synchronisation of the port, as is occurring in other transport industries such as the aviation sector, enabling smart decisions to be based on collaborative alignment. A coordinated port is key to implementing virtual arrival and green steaming

  • expanding the scope beyond just-in-time arrival to also include a focus on just-in-time departures, taking into consideration the horizontal integration necessary and building upon the supply chain patterns of the goods flow, as well as the visits made by transport carriers to different geographical areas

  • ‘smartness’ in operations by moving from just being an information consumer to a digital service provider, such as in the concept of the smart port and smart ship

  • complementary data sources from sensor-equipped physical objects, such as the smart container initiative that offers the opportunity to be informed about the progress of shipments across modes of transport

  • industry driven communities for cooperation, such as the Digital Container Shipping Association (DCSA) and its initiatives for bringing competitors together to better respond to the opportunities of digitalisation, by acknowledging that digitalisation requires collaboration with others, even competitors

  • alignment between regulatory and voluntary information sharing communities, expanding the scope beyond peer-to-peer interaction

  • developing the practice of scheduling and contractual processes for carrier visits to ports as transhipment hubs

  • expanding the concept of a port being a window to the sea to reflect that the port is becoming an interface to multiple modes of transport

In order to overcome the current disconnected situation, we need to adopt a holistic approach to innovation and change. The discipline of maritime informatics, uniting practitioners and academics in a joint effort, has been established specifically to support this development by identifying, through analysis, how the maritime sector can be developed to support more profitable, resilient, predictable, and sustainable operations, empowered by digitalisation.

Digitalisation challenges the legacy of maritime operations by providing great opportunities to bring actors together that have never collaborated before. Numerous initiatives on standardisation and collaboration that enable enhanced connectivity are now emerging, both from the regulatory point of view as well as on the business level.

Digitalisation also challenges existing practices. Is it really enough to continue as usual, but just using electronic means to balance capital productivity and energy efficiency in a way that all involved parties need to jointly contribute to? Does this situation not expect all of us to both come together and think of how new patterns of behaviour should emerge, and also challenge our existing roles?

In this article we have highlighted some fundamentals of sea transport that will need to be adapted when introducing new practices into the existing established activities happening at sea and at shore.

At the core of this concept is the need to acknowledge the different perspectives of beneficial cargo owners, who want cost-efficient, visible, and predictable transport services in a sharing economy, and the shipping lines and ports that are striving to achieve timely performance with high utilisation of their infrastructure. The different digital data streams coming out of contemporary digitalisation efforts along the supply chain should be used to redesign the processes involving these actors and create the basis for the development of value-added services.

To echo another message by Professor Hammer “Think Big. Re-engineering triggers changes of many kinds, not just the business process itself. Job designs, organisational structures, management systems – anything associated with the process – must be re-fashioned in an integrated way. In other words, re-engineering is a tremendous effort that mandates change in many areas of the organisation.”

There are great opportunities for the maritime sector. We must look beyond the single organisation and move towards co-producing value for the clients of the maritime supply chain, so that everyone is a winner. Empowered by digitalisation, we will hopefully see the end of the era of sub-optimisation.

Editor’s note: This article is an abridged version of the original paper by the authors, which includes a full list of references. The full paper can be downloaded here.

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About the Authors

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Mikael Lind is Associate Professor and Senior Strategic Research Advisor at Research Institutes of Sweden (RISE) and part-time at Chalmers University of Technology, Sweden. He serves as an expert for World Economic Forum, Europe's Digital Transport Logistic Forum (DTLF), and UN/CEFACT.

Hanane Becha is the IoT program Project lead at DCSA and the UN/CEFACT Transport and Logistics vice chair leading the Smart Container Project and Cross Industry Supply Chain Track and Trace Project.

Andre Simha is the Chief Digital and Information Officer at MSC Mediterranean Shipping Company, and chairman of the Digital Container Shipping Association (DCSA).

Steen Erik Larsen is the head of Technology M&A in A.P. Moller-Maersk. He also represents Maersk in the Digital Container Shipping Association (DCSA).

Eyal Ben-Amram is the CIO of ZIM Integrated Shipping Services Ltd and is also a member in the Digital Container Shipping Association (DCSA).

David Marchand is the CEO of Traxens, a provider of digital services and IoT technology to the global container supply chain industry.

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