At the ARC Orlando Forum 2020, Steve Banker of ARC Advisory Group interviewed with Ms. ElMarie Hugo, Senior Director of Industry Strategy at Blue Yonder – a leading supplier of best-of-breed supply chain software. The conversation focused on how critical ports are in global supply chains.
Port Inefficiencies Have Significant Ramifications
“The problem ports are facing are quite significant,” Ms. Hugo said. “if you consider the macro economic impact it has for countries to have highly efficient ports, then it is problematic for them. It’s important for them to address those inefficiencies. And control towers are actually quite relevant for them. ‘Control Tower’ is not a new concept, it’s 20-plus years old. But the technology has evolved in such a way that we today have access to data through multiple architectures within our structures, in near real time or actual real time. For ports to have visibility of what is coming to them and where their bottlenecks are, is hugely important. Resolving these translate into an improvement in the GDP of a country. PWC completed a study from which it was concluded that a 25 percent efficiency improvement resulted in a 2 percent improvement in the GDP for a country. It is important. Ports are the heart and lungs of the country. If the ports don’t work, the body becomes congested.”
I’m collaborating with an ex-colleague at the Erasmus University in Rotterdam,” Ms. Hugo added. “he is working with the Rotterdam Port authorities. This is a hot topic. The ports are under pressure for higher efficiency and higher productivity. There are only so many things they can do, e.g. dredge the port; expand the size of the port; increase the amount of material handling equipment, it is not an endless list. These are all highly capital intensive.”
With the ultra large container ships now calling on ports, the problems are growing, according to Ms. Hugo. “The congestion issue is becoming much more pronounced; therefore, the necessity to know what bay and crane is available is key. Then you’ve got 3PL transportation providers standing at the gate waiting for the containers to be released, if they have to stand there idle, they too have a problem. This dwell time is not good in an environment where we continuously hear about shortages of drivers and trucks.”
“So,” Ms. Hugo continued, “you can expand the roads, dredge the port, and do other things to increase capacity. But even with increased capacity, without good visibility trucks still stand idle, fuel is wasted, and resources are tied up unnecessarily.”
Better Visibility Is Critical to Better Port Performance
Better visibility helps all parties – ports, ocean carriers, the road freight, and air freight providers. “Visibility of where there is a deviation on the expected arrival is really important,” Ms. Hugo stated. “Being able to see this in real time and to know what to do to mitigate that deviation is really key. AI/ML have a role to play here in terms of improved predictive capabilities. The tools learn through behavioral observation. Over time the AI/ML tools identify patterns. Based on which, better mitigation actions become possible.”
When asked whether visibility improves orchestration – improving operations through more intelligent sequencing – or whether it leads to optimized moves using advanced math to drive the highest possible efficiencies, Ms. Hugo replied, “It’s orchestration, but over time it becomes optimization. But orchestration is a really good choice of words for it because with the visibility that you have, and with the connectivity that you have, upstream and downstream – through all your partners in this chain of events – they can better orchestrate what is happening.” If a ship knows the port doesn’t have the capacity to receive it, it can move at a slower speed, burn less fuel, reduce its carbon footprint. Immediately, there’s a positive impact.
With visibility, the positive effects ripple down the supply chain. A ship is not hovering outside the port for days on end without being able to be received, trucks don’t arrive and wait, and carriers can take other loads that generate revenue.
When it comes to supply chains that involve ports, there are a lot of issues that can lead to delays. Improperly filed, or incorrect customs forms can lead to cargo being pulled off to the side at a port for days at a time. Ms. Hugo added, “It could also be transshipments that went horribly wrong, a pirate event, a ship that ran aground, or God forbid, a terrorist attack. Weather events are the most prevalent source of delays.”
Ms. Hugo summed it up by saying, “…there are many events that happen, not all of these are acts of God, but none of them are predictable.” They are all unforeseen events supply chain professionals need to be prepared to mitigate.
Collaboration is critical. Ms. Hugo said, “That’s the vision – global control tower connectivity. Globally the port authorities, should aim to have a network of port authorities collaborating and orchestrating.” Afterall, she added, “The origin port and destination port are dependent on each other.”