Ports of the Future: Smart & Green Ports?
Ports, as one of the critical infrastructures like Airport and Roads, is a fundamental enabler to the global economy. Around 90% of the world trade is carried by the international shipping industry. Ports have been playing a catalytic role in the World’s economy and trade development which give rise to the demand for logistics services. As the world travels through the Fourth Industrial Revolution (4IR), the global market for Smart Ports is expected to expand, mainly driven by growth coming from the ports to reduce the time and cost of shipping through digital transformation.
In light of the Fourth Industrial Revolution (4IR), the fundamental infrastructures including ports will undergo digital transformation to cater to the increasing market demands, achieving higher efficiency. The emerging 4IR technologies have opened up a wide array of application possibilities for the port operation. An ideal Smart Ports would be one in which processes are automated and connected via IoT. The ports’ operations can be automated using nascent technologies such as Big Data, Internet of Things (IoT), Artificial Intelligence (AI), blockchain solution and other forms of smart technology methods to improve performance and economic competitiveness. Such smart technologies will also improve the environmental sustainability of the ports.
Key Improvement Area: Operational Efficiency
The growing size and volume of containers, transport and cruise ships bring daily challenges to ports. With nascent technologies such as IoT, the port facilities management and inventory management can be greatly improved. Besides, IoT could also be applied in load automation, dispatching and transportation of goods.
The application of AI in Smart Ports would focus on security checks and automated screening processes, which would standardize and reduce the time of tasks being conducted. In addition, AI applications will help improve both the safety and reliability of port tasks and reduce human failure dependency.
Another technology that can be applied is aquatic drones. Placed underwater, these drones are facilitated to impact ships or piers and are able to find faults that may exist in the ports. In addition, aquatic drones are able to conduct work that is harmful to humans in terms of safety. It is also possible to computerize algorithms that will be beneficial to operators, as they will be notified of any potential hijacking or privacy when a vessel suddenly slows down or changes direction.
Efficiency could further be enhanced by the use of other technology such as sensors, cameras, and drones which would automatically collect and share information such as weather, traffic and pollution data for ports owners and customers, enabling the Big Data Analytic to optimise operation planning.
Key Improvement Area: Business Economics
From an economic perspective, ports are expected to be able to efficiently streamline and minimize costs. Determining the traffic flow of ships may be difficult manually, but simplifying this task with automation, the outcome will be better loading and unloading times of ships which would save time to allow more ships and cargo to be cleared in less time. Besides such potential benefits, automation also helps reduce overhead and costs, which allows smart ports to be less financially dependent on political authorities and allows greater flexibility for private investments and improvements.
Key Improvement Area: Environmental Sustainability
Over the past years, ports have suffered from high levels of environmental pollution. The application of automation and smart technologies could solve this issue by better management of energy consumption and waste.
One city that not only operates a smart port but has also been able to apply technology effectively is Hamburg, located miles inland in Germany. Having access to the sea river, Hamburg effectively utilized a system of sensors, cameras and smart lights on roads to help monitor and direct traffic, helping to optimize traffic and therefore, lower emissions.
Ports of the Future will Smarter and Greener
Green Port and a Smart Port are intertwined with each other. Ports should, as its key goal, develop itself as a Green Port and for technicality, take up intelligent port development. Developing a port into a smart and green one will lead to low energy consumption, low emission, and low pollution. In order to achieve ports that are both smart and green, it is necessary to have support in terms of intelligence and technological innovation. Besides having aims of increased efficiency and effectiveness, as well as a greater contribution towards environmental sustainability, a smart port, in addition, takes complete advantage of space, and produces higher revenues, saves natural resources and benefits from the technology accessible to the logistics community.
Therefore, there is no doubt that the application of Smart Technology towards ports in the future will not only increase but become a necessity, becoming indeed, the ports of the future. However, such transformation for both brownfield re-development and greenfield development of ports will require massive capital investment from the operators and government bodies. Hence, proper planning is imperative to ensure a successful transformation. Below are a few pertinent areas to be considered:
- Masterplan with complementing elements & state-of-the-art digital infrastructure. Port developments have close relationships with other industrial activities such as manufacturing, refineries and inland logistics. The planning for land use and digital infrastructures should take into consideration of optimal logistics flow and operational efficiency that maximise the land assets’ value and productivity.
- An efficient funding and partnership model. Port developments can involve capital investment up to billions of dollars, depending on the scale and location. There are various funding models available, but the government will need to create a concession structure to ensure more efficient use of the government budget.
- Life-cycle cost aspects. The components especially the digital infrastructures and facilities will be used for a substantially long period, up to 20 years or longer. The cost to maintain and repair the infrastructures could be significant if not properly managed. Hence, it is imperative to adopt a life-cycle costing approach for development options evaluation to shortlist the optimal development combined with the desired cost profile.
Written by Yasuna Ogimura, Intern at 27 Advisory, Bachelor of Business and Commerce (Accountancy and Banking and Financial Management), School of Business, Monash University. Yasuna has an interest and passion for financial services and investment banking. After her internship, she aims to pursue a career in finance.
Speak and rebuild with us if you need fresh ideas or more efficient financing or project implementation to improve your KPIs at ivan@27advisory.com.my.
