The Turning Point for Smart Ports (Part 3) - Connecting for Intelligence

This is part 3 of a series of four parts of a technical paper about the digital transformation of traditional ports into “smart” platforms. The different parts of the work respond to four key questions and management challenges: “What’s at the core of the digital transformation (part 1)”, “How to enhance the value of automation (part 2)”, “What makes ports smart (part 3)”, and “How to manage the transition (part 4)”. Although the term “Smart Port” has been around for some time, only gradually its full magnitude unfolds. Now, I think the development has reached its turning point.

Data flows are the new value chains. Creating value through data exchange requires connectivity. The key to connectivity in the digital era is the internet of things (IoT). In need are communication networks, seamlessly connected sensors and intelligent devices plugged under performant and trustworthy digital architectures. Interoperability is paramount in the world of global supply chains with its high number of different parties involved. International shared and commonly accepted protocols are urgently needed to ensure data exchange between the various solutions. Due to the importance of connectivity, confidentiality and continuity of service for each party along the chain, impartial platforms would facilitate the wider acceptance of solutions, architectures and protocols.

Valuable combinations

How does the world of connectivity, or more precisely the internet of things (IoT) look like in more detail? IoT includes connectivity and intelligence 1- on the increasing number of digital devices, a solution that is called “edge”, 2- on local level through local area networks, for example in ports, called “fog”, and 3- elsewhere, i.e. computing power and storage capacity in distant shared locations, in the well know “cloud”. Data, the new dollar, is dealt with on all three levels – each level is playing its specific role. Edge ensures resilience against network failures as the devices themselves are smart and don’t need the support from outside, fog delivers improved security and efficiency through local networks, reducing the amount of data that needs to be exchanged with the cloud.

The internet of things allows for example the monitoring the location and conditions of shipments in real-time. Maersk Line has equipped about 300,000 refrigerated containers with IoT sets, i.e. a suite of sensors, a GPS positioning unit, a modem and a SIM card to continuously transmit location, temperature, humidity and power status over an L-band satellite link from 400 of Maersk Line’s owned and chartered ships. Of course, this equipment assists predictive maintenance too. As the medium of transmission and remote control, the internet of things connects ‘eyes’, ‘ears’ and ‘hands’ to gather or generate data to feed the various brains which analyze and store the inputs to be used to monitor and steer the system. Distributed ledger technology, with its best known representative blockchain, can supplement the IoT, with its capability to ensure that there is only one set of shared data, one common truth and reality everybody can trust and which can be made available almost in real-time.

Hyundai Merchant Marine combined the internet of things with distributed ledger technology as part of a seven months long project which started in May, 2017. The company reported that the combination was tested on a reefer container ship sailing from Busan in Korea to Qingdao in China from August 24 to September 4, 2017. Data on location, temperature, and humidity was logged onto the blockchain and shared with third-parties in “real-time”. The distributed ledger technology was also used to issue documents while ensuring that import and export records are protected and not altered. Case studies show that real smartness comes from the combination of various advanced technologies. The smart port is not the result of isolated applications of new technologies but a real business model shift.

The digital crystal ball

Tracking fixed and mobile assets is good but maybe not good enough; avoiding delays and unnecessary costs requires to anticipate disruptions. Many factors can influence and disrupt the supply chain, starting with a sudden failure of an automated terminal or vessel, a storm or a labour dispute. When containers don't show up or appear in much higher quantities than expected, port operations and shipping lines struggle to keep their promises as well as costs at low levels. Knowing early on in the process the volumes to be expected on a specific day at a certain time can ease life for the benefit of all. Artificial intelligence (AI) can help as it is able to predict the future – with increasing accuracy.

Flex – which counts Apple, Microsoft and Ford Motor as customers – has pioneered software that generates real-time alerts of supply-chain disruptions throughout its 14,000-strong network of global suppliers. The AI-based system helps predict actual and potential challenges, such as supplier delays, peaks, congestion, strikes, earthquakes or tsunamis, and allows the relevant teams to make informed decisions on the basis of the analysis of small and big data to keep inventory moving and consumers happy.

In the digital age, algorithms become an additional group of decision makers – or at least advisors to the responsible managers and experts. The Flex Pulse Centre could be a model for ports. It could be the natural proliferation of the ports’ data and smart port initiatives. Applying advanced technology can turn ports into lighthouses of global supply and demand systems, providing highly relevant port and supply chain information as well as expert support to the various stakeholders connected to the import and export gateways and platforms.

Advanced technology also helps to improve security and safety in shipping. Tel Aviv maritime data provider Windward says it is able, through AI, to predict shipping safety worldwide. In November 2017, the Israeli tech startup signed an agreement with London-based insurance market Lloyd’s, with Windward providing Lloyd's member companies software that forecasts maritime hostilities or accidents at sea.

The FBI estimates that cargo theft costs US businesses more than $30 billion each year. Facial recognition and the detection of suspicious behaviour can help prevent this. At the Chinese AI research company Yitu Technology, the pass cards of staff and visitors taking the lifts to floors 23 and 25 are read automatically – no swipe required – and each passenger is deposited at their specified floor, and only there. Cameras record everyone entering the building, and track them once they are inside. “Our machines can very easily recognise you among at least 2 billion people in a matter of seconds,” said Yitu co-founder and chief executive Zhu Long. Yitu’s generic portrait platform already contains 1.8 billion photographs of those logged in the national database and everyone who visited China recently. 320 million of the photos have come from China’s borders, where pictures are taken of everyone who enters and leaves the country. This cutting-edge technology can be used to protect any kind of asset, from ports, to railway stations, to vessels, warehouses and even entire cities.

Not only in China are digital surveillance tools in use. In Boston for example, intelligent security cameras are anticipating crime. The security system monitors feeds in real-time and alerts authorities the moment it identifies unusual activity. Theft and other crime is going to become increasingly difficult – at least in smart ports.

Service, service, service

At the end it is all about the service ports deliver to their customers and the ecosystem community as a whole. Smart ports differentiate themselves from their less digitized peers through technology-enabled performance excellence, for instance through artificial intelligence-driven customer service. Company digitization does not lead to ecosystem optimization, it is ecosystem optimization that is the basis for company optimization. Ports need to focus on building the digital ecosystem. Digitizing the maritime world is a collective effort in the interest of the individual players. The challenger might not come from within. If the ports don’t digitize someone else might do this for the community.

Despite all operational rigor things can go wrong. However, through artificial intelligence assisted customer service excellence, customers can still be satisfied as they can be supported by the result of the analysis of real time information to act timely to avoid or at least reduce damage.

According to a survey conducted by Genesys in 16 key economies, the cost of poor customer service is estimated at $338.5 billion per year. Artificial intelligence tools, “cobots” that support not replace staff can provide proper information to assist customer-agents. At this point chat-bots have been shown to thus far lack empathy and problem-solving capability. Digital voice-activated assistants interface companies and customers – just imagine a customer simply asks: "Contact MSC and find out when my two containers from Singapore will arrive in Long Beach" the digital assistant connects to a website or chat-bot, finds the information and gets it to the customer promptly.

In the future there might not even be the need to speak to digital assistants. Machines start to be able to pick up nerve and neural signals to decode our thoughts. Though this technology is currently at an early stage of development, we can expect a very different type of human-machine interaction in the upcoming hybrid automated future in the making.

An abridged version of the entire paper (parts 1-4) was published at Port Technology.