The ever-increasing size and cargo volumes for commercial vessels require ports to be growingly digital, sustainable and connected. These requirements highlight the complexity of today’s port infrastructure and define the competitive environment. 5G, Internet of Things, Artificial Intelligence, autonomous transport and blockchain technology are the necessary tools of this competition. However, to become more efficient and handle higher volumes of goods, it is not enough to adopt these technologies. Instead, they must be fully integrated and connected throughout the logistics chain.
How technology is revolutionising port logistics
Every port is characterised by a complex system of people, goods and means of transport, which produce and require large amounts of data. In this context, the 5G connection, thanks to a volume of data traffic a thousand times higher than 4G and extremely low latency times, will increasingly be essential for any further technological application. Indeed, 5G combined with the Internet of Things makes it possible to connect trucks, ships, cranes and even containers into a single network so that they can exchange digital information with each other. The techniques for analysing Big Data then allow them to be used in models that track the object's movement and state and work out the best combinations of goods' routes and storage. According to UNCTAD estimates, applying these technologies could save $300 per delivery in customs clearance costs, equivalent to, for example, $5.4 million on the cargo of an 18,000 TEU ship. Besides, blockchain technology offers a way to securely and transparently link the different systems used to record and track goods. Unnecessary intermediaries can thus be excluded. The burden of document management, which accounts for around 50% of the transport cost, is greatly reduced. Consequently, day-to-day operations will become increasingly automated, efficient, and sustainable.
Global and European benchmarks
In the absence of an internationally recognised Smart Port Index, we need to look at logistics performance to identify the ports that are best implementing the digital transition. The port of Singapore is the busiest in the world in terms of ship tonnage, with more than 130,000 ship calls per year. Its state-of-the-art vessel traffic management system has enormously contributed to this result. It uses intelligent algorithms to predict high-traffic areas and enables autonomous and uninterrupted information exchange between ships, even if they are unmanned. The collaboration with the National University of Singapore is further pushing the port and, in particular, the Tuas terminal towards the technological frontier. When completed in 2040, it will be the largest fully automated terminal in the world, thanks to machine-driven shipyard and quay cranes and self-driving vehicles. Looking at Europe, the port of Rotterdam is a reference point in the field of technological innovation. Hence, the European Horizon 2020 plan aims to replicate some of the Dutch model's best practices on a larger scale. With the help of IBM's IoT technology, Rotterdam's port has equipped itself with its own digital twin. This exact virtual copy of the port includes real-time data on all its infrastructure, ship and rail movements, weather conditions and sea currents. The system will keep an eye on the assets' technical condition and conduct digital inspections. Furthermore, by 2030 it will be able to automatically guide ships, even unmanned ones, to their berths, reducing waiting times. The Port of Rotterdam Authority estimates that this platform's use can save operators up to $80,000 every time they dock. In addition, Rotterdam's port can also provide to shipping companies 10-20 euros savings per container and a 20% drop in waiting times thanks to its native software Pronto, Portinsider and PortXchange. These optimise the port call processes through standardised data exchanges. Last year, the port of Rotterdam also launched the Boxinsider and BlockLab programmes. By applying blockchain, they allow shippers and forwarders to track their containers at any point in the shipment, which becomes paper-free. This cost and time edge contributes to the Port of Rotterdam's continental lead in physical size and throughput. With 439.6 million tonnes, the port accounts for 23% of the total goods traffic of the top 20 European ports, according to Eurostat data from 2019.
Several memoranda of understanding between the two ports' authorities have been signed during recent years. The objective is to develop data standards and API (Application Programming Interface) specifications to facilitate port and maritime services transactions. A further step towards the realisation of the PortForward project, conceived by the port of Rotterdam, with the ultimate goal of creating a global network of smart ports.
The Italian context
The World Bank's Logistic Performance Index, which considers the time and costs associated with logistics, ranks Italy 19th in the world. On the other hand, looking at the UNCTAD Port Liner Shipping Connectivity Index, which reflects a port's connection to the global logistics network, the first Italian port, Genoa, is in 31st position. Its score is 40% lower than the one of the first European port in the ranking: Rotterdam. Only for cargo controls in the port area, 177 administrative procedures are required by 17 different public administrations. These numbers translate into a loss of 20,000 working hours per year in Italian ports. According to Cassa Depositi e Prestiti, this logistical inefficiency results in 11% higher costs for Italian logistics companies than the European average, and the dissipation of €70 billion a year for the Italian budget, €30 billion of which is attributable to bureaucratic burdens and digital delays. Therefore, there is enormous potential in applying technology to Italian port logistics, which is still largely unexpressed due to the difficulty in developing long-term strategic coordination. The “Strategic Plan for ports and logistics” presented to the Parliament in 2015 has so far failed in the realisation of a national Port Community System integrated into the National Logistics Platform. However, some positive signs can be identified in the recent agreement between the “Agenzia delle dogane” and “Assoporti” for the digitalisation of customs procedures relating to the entry and exit of goods in national port areas. Furthermore, the latest available version of the National Recovery and Resilience Plan schedules to make 360 million euro available for the "Digitalisation of the country's logistics systems". These funds should be aimed at developing:
- Platforms of dialogue with customers for the management/monitoring/tracking of individual shipments.
- Artificial intelligence systems for planning, scheduling and optimising loads.
- The complete digitalisation of transport documents.
The intensification of container traffic in the Mediterranean, +22% compared to 2014, especially along the Europe-Far East route, represents a growth vector for its ports. Given its strategic position in the Mare Nostrum and its geopolitical importance in the Belt and Road initiative, Italy could strongly benefit from this trend. However, last decade's delays in the modernisation of ports and the digitalisation of logistics, have led to a decrease in Italian ports' competitiveness. Italy's share of the total number of TEUs exchanged between Europe and the rest of the world has decreased, in contrast to the rise recorded in the MED area. The Italian port and logistics system is now called upon to speed up the digitalisation of its processes to respond to a competitive context characterised by the technological superiority of the Northern Range ports and the opportunity represented by the Next Generation EU resources.
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