01 September 2023
How can smart ports support future cities?
Ships are getting bigger, and cargo is moving faster. The world is digital and ports and terminals have little choice but to match the pace of change or risk being left out in the cold.
Ports face an array of challenges, which are only set to intensify: increased congestion, the energy transition and reliability and visibility of supply chain. By 2050, European freight transport is expected to grow by 50%, while greenhouse gas emissions need to be reduced by at least 50%, compared to 2008 levels.
Handling over 80% of the global freight volume, ports are the place where supply and demand meet – the logistics lifeblood of our future cities. While ports’ digital expansion plans are not straightforward, eventually when operational, they will change the dynamics of the overall port system and the wider city they inhabit for the better.
What are smart ports?
In a fast-paced digital environment, the definition of a smart port has evolved. Originally the term focused solely on technology and improving terminal operations; now the scope has broadened to include all logistics activity in and around the port. Smart ports are data-centric and produce, manage and share information between stakeholders. They autonomously process port operations and optimise logistics through the use of innovative technology, including automation, AI, big data, the Internet of Things. Sustainability has grown in importance, and smart ports are being designed to take advantage of renewable energy and reduce pollution.
How can a smart port benefit the city and region they serve?
Smart ports and terminals can adapt to the predictive boom in overall demand. Improved efficiency and productivity of a smart port are two of its most attractive benefits. Cargo can be tracked, and goods are received more quickly with real-time data for customers. By way of a tangible example, a successful electronic bill of lading trial conducted by the port of Singapore, the port of Rotterdam and industry partners reduced trade document processing from an average of 6 to 10 days to less than 24 hours – vastly increasing the capacity to handle more container traffic.
Radio frequency identification (RFID) also streamlines operations, allowing port authorities sight of the origins and destinations of cargo and delivery times, making it easier to deploy port services and reducing idle time.
Smart ports’ utilisation of AI and automation can reduce accidents and increase risk detection and access to this information in real time can create a safer working environment. Condition monitoring of equipment via sensors can oversee regular maintenance, help to resolve malfunctions promptly and predict potential failures. When an issue is detected, the process can be shut down remotely, limiting the damage.
The port of Rotterdam even has a virtual twin, which digitally mimics the port’s operations, allowing the port authority to see how planned operations will be affected by potential external factors such as weather and adjust plans accordingly. The software uses technology to predict what the port will look like 80 years from now, which informs strategic planning.
A city’s physical environment, including its port, roads and public transport are evolving into smart spaces. Sensors can be used within the smart space to create a traffic management system to avoid congestion – at the port but more widely around the city.
Smart ports also offer enhanced security and surveillance. Ericsson has predicted that drone surveillance will decrease port theft by 75%. Camera-equipped drones can stream data to the port’s digital platform where anomalies like intruders or incorrectly placed containers can be quickly detected. Along with limiting the potential for human errors and crime, this move will also likely offer operators additional savings via lower insurance premiums. The use of 5G is expanding the use of drones further to include maintenance inspections, especially hard-to-reach infrastructure, and even ship-to-shore deliveries.
What challenges exist when adapting a traditional port into a smart port?
- Ports are complex operational environments that involve multiple, competing stakeholders
- Lengthy and protracted development and implementation
- Fair allocation of investment responsibilities when all stand to gain from the development
- Aligning stakeholder data management and interchange
- Gaps in digitalisation and automation between the private and public sectors
- Adoption of new technology requires significant changes to existing business processes
- Managing and communicating changes and incorporating the requirements of all stakeholders
- Stamping out any digitalisation siloes – where energy is focused on optimising an individual process, with no consideration of how this will integrate with the wider digital platform
- Understanding new cybersecurity, privacy, security and ethical threats
- Increased digital reliance increases vulnerability to extreme weather, which could impact image and detection sensors
Case Studies
The Port of Hamburg
2022 Traffic: 8.3 million TEU
Tonnage: 119.9 million tonnes
Challenge: Port community sharing data centrally
Solution: The Hamburg Port Authority (HPA) partnered with the city of Hamburg and the IoT development of the city is occurring in tandem with its smart port development. The city’s port and traffic systems are already aligned.
Successful IoT transparency relies on the flow of data from connected devices to a central port platform. However, this involves many competing firms sharing their data centrally, and some are understandably reluctant to do so. HPA overcame this hurdle by investing heavily in an encrypted system that only shares relevant data and maintains confidentiality agreements.
Certainly one of the world’s more established smart ports, HPA has learned that smart port development never stops, and its IT providers work continuously to evolve its central intelligence system, ensuring that it is capable of communicating with all connected devices in a common language.
The Port of Hamburg is a major economic driver for the country. It spans over one-tenth of the total area of the city; 606,700 jobs across Germany are linked to the port, with 114,400 roles dependent upon it. The port-dependent jobs generated added value of roughly EUR 9.8 billion and tax revenues of approximately EUR 2.57 billion.
The Port of Singapore
2022 Traffic: 37.3 million TEU
Tonnage: 577.7 million tonnes
Challenge: Maintaining growth and competitive edge
Solution: Singapore’s Tuas megaport is on track to be the world’s largest fully automated container terminal when it is completed in the 2040s, capable of handling up to 65 million TEUs per annum. The aim to eventually consolidate Singapore’s existing container terminals into the Tuas megaport.
The Maritime Port Authority of Singapore (MPA) has launched a Sea Transport Industry Transformation Map, which aims to grow the industry’s value add by USD 2 billion and create more than 1000 jobs by 2025.
The port has made great efforts to champion innovation in the wider community to help support the development of its megaport. The Port Innovation Ecosystem Reimagined 71 (Pier 17) is a venture launched in June 2018 by MPA and National University of Singapore Enterprise. To date, Pier 17 has supported 100 start-ups globally, 60 maritime corporates and 100 innovation opportunities. $ 2.7 million in grant funding has been awarded to 55 start-ups to embark on pilot projects as part of the Smart Port Challenge.
The Port of Los Angeles
2022 Traffic: 9.9 million TEU
Tonnage: 219 million tonnes
Challenge: Tackling cybersecurity in the midst of a trade slump
Solution: Traditionally the port has been perceived as the main connection for trade between the US and Asia and was the busiest container port in the western hemisphere. The port lost business due to the pandemic and protracted labour disputes, which saw new routes established with the east coast and Mexico. In April the port reported a 22.5% decline in trade compared with 2022.
Cyber security has been a major issue for the port. In July 2022, it said cyber attacks had doubled since the pandemic, and the port was victim to an average of 40 million attempted cyber incidents every month.
To combat this threat the Port of Los Angeles Authority (PLA) has invested millions of dollars in cyber protection. The PLA’s Cyber Operations Security Centre has been in operation since 2015 and is part of a wider network of FBI cyberwatch programmes. Last year the port launched one of the world’s first Cyber Resilience Centres, which serves as a hub for it to receive, analyse and share information with the port community,
In a July media briefing PLA Executive Director Gene Seroka told journalists cargo volumes had risen 70% since February, with four months of consecutive growth.
The Port of Piraeus
2022 Traffic: 5 million TEUs
Tonnage: 46,951,000 tonnes
Challenge: Aging infrastructure
Solution: Since the port’s privatisation in 2009, its container-handling capacity and economic performance have dramatically improved. In fact, full-year results for 2022 showed a historic record high in revenue and profitability, with profits after tax increasing by 43.9%.Since 2020 the port has been majority-owned (67%) by COSCO. Its aging infrastructure had been limiting its competitiveness, but it has undergone digital transformation, cementing its place along the new Silk Road and as a major gateway for trade between China and Europe.
In 2021 5G and narrowband IoT solutions were installed to connect all contact points in the port. Last year, it partnered with Huawei on its data centre visualisation project to modernise its legacy data infrastructure, introduce new IT and storage systems and ensure smooth migration while not disrupting current online operations. Smart scheduling has helped to reduce power consumption, creating energy savings of 15% while operations and maintenance efficiency has improved by 30%.
As ports become smarter, how does their risk profile change?
Technological advancement will always increase the risk of cyber exposure. Progress tends to be piecemeal, with different systems and software being added and updated over time, leading to an increasingly complex legacy technology structure, which is susceptible to cyber threats.
- A systems outage or ransomware attack could result in significant downtime, impacting port operations and its long-term reputation, but also the entire supply chain.
- In a connected port, smart devices are sharing data constantly across the digital infrastructure, within the port itself but also via a wealth of third parties, creating more entry points for attack.
- The potential for physical damage also increases with the connected smart infrastructure. Sensors controlling cranes or the traffic management system could be hacked, leading to delays and the potential for injury.
- AI and automation can certainly reduce the risk of human error but what happens regarding liability when the software is making decisions or decisions are made remotely and accidents occur?
As ports evolve, they must carefully consider the consequences of their digital transformation and develop a cyber-incident risk management plan, which includes adequate training, regulatory understanding and third-party risk assessment.
Gallagher Specialty can provide specialist solutions for ports and terminals all over the world. We offer a wide range of products and risk management expertise to support our global client base. Our experienced team can support your business with its plan for the future.
