6 minute read
Congestion Lessons
CONGESTION: LESSONS LEARNT
Congestion has rained pain on port and supply chain operations but as Mike Mundy discusses it has also delivered some valuable lessons, including simple fi xes, that can promote resilience and effi ciency going forward
Credit: HHLA
As of the beginning of October the maritime consultancy Sea Intelligence reported that 50 per cent of congestion had been resolved. As of November, it will doubtless be the case that the situation has further improved. The backdrop to this, though, the trade picture is by no means healthy – in October consultants Drewry lowered its demand outlook for 2022 to 1.5 per cent and to 1.9 per cent for 2023 on the back of heavily downgraded GDP predictions.
Without doubt the “feast” is over and much leaner times are in prospect.
There are still problems – lockdowns in China persist and industrial action are both ongoing causes of supply chain disruption - but in the main it seems fair to say the worst is over.
Indeed, another big indicator of this is that the “postmortem” has begun – what lessons have we learnt from COVID-19 and the resulting supply chain chaos and what needs to be addressed to make supply chains and port operations in particular more resilient?
A new report from IAPH entitled Closing the Gaps makes a very useful contribution in this respect with insight into its content provided in the Strategist column on p23.
Closing the Gaps, along with many other sources, rightly highlights the deficiencies in infrastructure provision that served to intensify the congestion problems. As Closing the Gaps puts it: “The congestion in key global port hubs and the reduced efficiency in hinterland connectivity for inbound and outbound cargo resulting in consumer and industrial supply shortages has exposed the lack of long-term investment in port infrastructure.”
Arguably, this was most notable on the US West Coast in the San Pedro Bay area where both major ports of Los Angeles and Long Beach were choked with monumental vessel queues waiting. For sure there were port capacity deficiencies but beyond this it was very apparent that the offtake infrastructure, rail and road, was a root cause of many problems. This is further underlined by the announcement at the beginning of July that the new California state fiscal year budget includes an unprecedented US$2.3 billion provision for port infrastructure improvements and upgrades, with US$1.2 billion of this set aside for projects that increase goods movement on rail and roads.
The inability of existing infrastructure to weather constant heavy utilisation or what some might define as moments of stress became very apparent in the congested Covid era in turn highlighting the need for more investment to be put in place the essential elements to confirm system resilience. Clearly, this is an aspect when reviewing experience under Covid conditions that all involved government agencies should look at and, if necessary, make provision for.
DIGITALISATION
IAPH’s Closing the Gaps report focuses at some length on the benefits to be derived from digitalisation.
This report, which IAPH developed in conjunction with the World Bank, makes a number of interesting observations regarding digitalisation including: 5 “The incidence of a significant number of respondents yet to commence or reach the first stage in the implementation
8 Container
terminal operators identify relatively simple fi xes that can play a part in keeping cargo moving
Congestion has rained pain on port and supply chain operations but has also delivered ‘‘ some valuable lessons
of digitalisation of ship-shore FAL requirements and port community processes was confirmed… 5 “The overall absence in applying the same data standards, often within the same country between different ports is seen as a major obstacle to achieving improved port efficiency in a port call. 5 “The gap in governance and understanding on the definition and inclusion of stakeholders in a maritime single window system and port community system and their roles are an impediment to digitalisation, and 5 “The lack of cooperation between neighbouring and or competing ports makes data collaboration challenging.”
To solve these and other problems highlighted there is of course some requirement for investment but it is generally true to say that this requires a comparatively ‘light touch’ compared to the scale of investment required in conjunctionwith basic infrastructure.
The report makes good points when it identifies many problems in this arena as fixable through actions such as: greater collaboration between parties, establishing a realistic long-term digitalisation road-map and complementing this with a three stage plan which encompasses: 5 The optimisation of processes around trade to close the gaps between stakeholders. 5 The use of digitalisation elements to resolve specific supply chain and port issues – for example, the Internet of
Things; Artificial Intelligence and 5G. 5 Digital transformation brought about by combining the preceding two elements. This, it is suggested, will, “provide the opportunity for ports to extend their activities and offer new solutions thereby improving their competitiveness.
Overall, however, what is interesting about the commentary on digitalisation is that it indicates that with understanding, organisation, standardisation and collaboration progressive benefits can be achieved with a relatively low level of investment.
Suggested actions in this area border upon relatively simple fixes – in itself an aspect that offers great potential to promote more resilience and efficiency, as is particularly noteworthy at the terminal operations level.
TERMINAL OPS: SIMPLE FIXES
Focusing on the specific area of container terminal operations it is very interesting indeed to obtain the feedback of diverse terminal operators pointing out relatively simple fixes that have been successfully implemented during the peak of the pandemic that provide a range of benefits including: maximising terminal resilience under stress conditions; raising efficiency levels and boosting capacity. Furthermore, the characterisation of these steps as “simple” basically means comparatively easy to implement and without big costs involved. Key examples are:
Capacity Initiatives
– Expanding the hours of terminal operation to match cargo volume flow – Making use of bonded off-dock facilities/capacity to reposition containers for clearance – Regulating truck flow through Vehicle Booking Systems
supported by disciplinary systems that maximise compliance – plus potential app usage. – Encouraging optimising the truck capacity – e.g. carriage of 2 x 20ft and not just one whenever possible. – Barges: encouraging consolidating different cargo loads on barges to reduce barge traffic overall
Administrative/Organisational
– Working with port management and other parties to maximise the uniformity of the working hours of warehouses and other cargo receiving parties with terminal operating hours – Standardisation of data protocols/ensuring communications compatibility with interfacing customers and other parties – app for container tracking – Implementation of robust cyber security measures – Reducing inefficiencies caused by manual processes/ automating – for example gate operations – Optimising compliance to safety to measures to avoid accidents and maintain efficient working – Promotion of continuous improvement processes – Fostering a collaborative approach with other parties along the supply chain
Human Resources
– Investing in human capital/training and development
Bottom line, the message is that yes significant investment is required in certain areas – offtake infrastructure as noted earlier – but it is not the sole solution. Relatively simple fixes are available on diverse fronts to raise terminal performance with the ensuing benefits often feeding along the supply chain.
It has regularly been acknowledged in the past that the container terminal represents the major interface between transport modes. The importance of this role at a physical and online/communications level can be seen to have heightened during the pandemic with arguably a greater appreciation being fostered of the terminal’s role in the supply chain. This mind-set is to be welcomed as part of a collaborative effort to learn from recent events and build system efficiency overall on an ongoing basis.
8 The US state
