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HomeInsightsDigital Ecosystem in the world of Maritime 2021

Digital Ecosystem in the world of Maritime 2021

The need for a digital ecosystem in a post-pandemic world

With the maritime and trade ecosystem experiencing a paradigm shift brought about by the pandemic through emerging technologies, the unprecedented change in supply chain and logistics has presented enormous opportunities in a wave of digital transformation. The supply shock that started in China last year and vulnerabilities in the production strategy and supply chains, combined with the U.S. -China trade war, have triggered economic nationalism, putting manufacturers worldwide under greater political and competitive pressures to increase their domestic production, and minimizing the amount of inventory carried in their global supply chain. However, with consumers constantly desiring low prices and companies unable to charge more, the pressures to operate efficiently and use capital frugally render firms to make their supply chains more resilient without losing their competitiveness. Technology initiatives such as the fifth generation of wireless technology(5G), blockchain, AI platforms, autonomous trucking, and digital twin will remake the logistics sector sooner or later. 

Maritime Insight Date: IEA, CO2 emissions from international shipping, 2010-2019, and in the Sustainable Development Scenario, 2030, IEA, Paris

Green maritime transport

So fast as recent years have witnessed massive advancement for the shipping and logistics industry, advancements in technologies aren’t the only pivotal drive in the industry. Tightening shipping regulations, while carriers are working hard to meet IMO regulations, push them into ‘sustainable development,’ where while becoming greener and contributing to the environment, liners increase customer loyalty and boost growth. Designing and preparing for value change towards advanced energy management systems and electric-powered vessels to lower their overall carbon footprint will accelerate. Therefore, being green is becoming more and more of an important factor that all companies involved in logistics and shipping need to be considering. Green logistics will be key to the future, which includes any effort a firm makes to lower its emissions and reduce pollution produced from all logistical endeavors. This includes all changes made in the flow of products, information, and services. With the growing demand for same-day, next-day, and lightening-fast last-mile deliveries, green logistics aims to establish standard procedures of sustainability while reducing packaging waste minimizing air, soil, water, and noise pollution. Collaboration between various actors in shipping, such as carriers, ports, and transport buyers, is necessary since a seaport is a transshipment hub that is visited by multiple transport means and can provide the function of supplying energy for the subsequent support of transportation. Hence, Ports can play an important role in the green conversion of maritime-related transport as well as maritime itself. 

Maritime Insight Data: IEA, Investment in smart grids by technology area, 2014-2019, IEA, Paris

Focus on how ports and vessel can become emission-free with electrification technology

Constructing a re-charging infrastructure in a port for electrified carriers and large electrified vessels could enable the port to become a critical node with significant power needs connected to the electricity grid. A port needs to develop capabilities to supply electricity to operate fossil-free vehicles and machines used within the ports. As the maritime sector alone accounts for 2-3 percent of the world’s total greenhouse gas emissions, initiatives should be taken to make maritime transport as green as possible. However, it can be more important for ports in their capability of being a transshipment hub to have a great opportunity to support the green conversion by supplying electricity to visiting carriers of various modes of transport as an energy hub in the future. Digital collaboration plays a pivotal role in generating numerous data streams available for use in the different domains of application, such as just-in-time shipping, resource optimization, and the planning for the use of electrification in ports. 

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Implementing ‘Supply chain resilience’ in the wake of the COIVD-19 pandemic

While companies have long followed a basic formula for delivering products on time and at the lowest cost based on forecasted conditions and priorities, prolonged trade wars and a destructive pandemic manifest the limitations of the approach as global disruptions made it difficult to execute against plans. Hence, many firms are embracing the imperative to build a more resilient supply chain that can mitigate and adapt to unexpected shocks. Today, disruption emerges as the new normal and is affecting supply chains frequently. An agile supply chain network has a flexible ecosystem of suppliers and stakeholders where materials can be exchanged, and more than two sourcing strategies can be adopted. There are signs of this trend as companies move their manufacturing away from China. Moreover, although the primary reason for outsourcing and offshoring to markets of low labor cost and shipping to consumer markets made a logical sense over past decades, increasing level of fully automated manufacturing enable the cost of labor to become a lesser part. While reshoring will eventually rely on long-term infrastructure upgrades, such as the need for new railways, ports, and roads, companies can implement short-term technological investment to enhance and reroute their supply chains. According to a recent McKinsey survey, most 5G IoT unit sales stem from manufacturing. Using the latest technology such as MES (Manufacturing Execution System) software matched with strong IoT and 5G connectivity ensures proper allocation of resources to reshore and also drives business processes for multi-site manufacturers by standardizing workflows and procedures across locations. While automation and robotics are expected to realign labor resources, what World Economic Forum also expects 97 million jobs to be created in the coming years, which means that as manufacturers deploy automation technology, companies also need to retrain their labor force. It is unambiguous that the trend to have more regionalized supply chains with production closer to the market will be intensified in a post-COVID-19 world.

Source: Pexels

The Cold Chain in a post-pandemic world

Cold chain companies all over the world play a very important role in the global pandemic. Food manufacturers, distribution centers, and refrigerated storage warehouses are still operating to ensure the flow of fresh and frozen foods to supermarkets and grocery stores. As consumers redirect the money they once spent at restaurants or cinemas to the purchase of record amounts of imported clothing, computers, and other goods. The unexpected and unprecedented spending shift has upended long-standing trade patterns, leading to bottlenecks from the gates of Chinese factories to U.S. households. Food insecurity is also haunting some of the richest countries in the world, the COVID-19 pandemic having exposed some of the weakest links in the global food model, a system that already loses or wastes a third of all food intended for consumption. With less than 15% of perishable foods protected globally by the cold chain, the opportunity for investment and impact in the developing world is immense. In the developed world, the emphasis on data sharing and richer analytic can strengthen the ability of a mature cold chain to adapt to disruptions in supply and demand. In times of disturbance, it becomes even more essential for the most vulnerable populations to keep receiving enough nutritious, affordable food and safe, effective medicines. Shipping companies will need to expand their fleets of trucks and shipping containers, utilizing advanced technology. Every public and private player with a stake in both the food and life science fields must prepare for and adapt to the challenge of ‘a new normal,’ where future pandemics might come and last for a year battle, where traditional distribution patterns haven’t worked anymore, and where extreme weather threatens to disrupt production and supply chains.  

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Digital Twins for the maritime 

A digital twin is a dynamic digital representation of an object or a system, by combining the physical and the virtual world, data is provided enabling the virtual entity to exist simultaneously with the physical entity. This is achieved by analyzing real-time data collected by sensors and IoT devices connected to a cloud-based system. The most significant attribute of a digital twin is that it can simulate a ship’s performance without running any test in the real world. The three crucial parts where it acts as a valuable asset are performance, shipbuilding, and maintenance of the vessel. For example, as the shipbuilding process is quite complex, it becomes vital to understand how a vessel behaves in various real-world scenarios, identify its shortcomings and deliver high-quality solutions to the stakeholders. With data gathered from the lifecycle of a vessel, one can generate complex operational simulations and adjust the ship’s design or layout using technologies such as cloud computing, machine learning, and IoT. Given the systemic complexity of vessels, it is reasonable that most current digital twin implementations do not include significant, integrated digital twins; they are usually in the early stages of development or were created to address specific problems. Recently, Korea Shipbuilding & Offshore Engineering(KSOE) announced that it has developed a digital twin ship technology that allows it to test operate a vessel in a virtual environment and it has obtained approval in principle(AIP) from classification society Lloyd’s Register for its ‘virtual vessel test solution for LNG carriers,’ which is estimated to cut testing costs by up to 30%.

Blockchain is revolutionizing the shipping & logistics process

Blockchain, sometimes referred to as Distributed Ledger Technology(DLT), makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing. Blockchain consists of three important concepts: block, nodes, and miners. By digitizing the paper trail of international shipping instead of signed and stamped cargo and freight documents with hundreds of pages that need to be physically delivered to different agencies, banks, and customers, blockchain technology can save money and time. The information that can be held on a blockchain exists as a shared and secured decentralized and encrypted public ledger. Blockchain technology can help the shipping industry maximal, operational efficiency. Once an important source of data and an organized marketplace are established, the shipping industry will benefit from more trustworthy communication and a streamlined way to match buyers and sellers at the best price. Moreover, blockchain can help connect all parties involved in a transaction throughout the whole lifecycle of a shipment, offering increased transparency, reliability, and tracking. Danish shipping and logistics giant company, A.P.Moller-Maersk, shows a good example of how blockchain can be applied in the maritime sector. Maersk wanted a more efficient and cheaper way to track shipping containers. The company aimed to reduce the administrative costs of handling shipping containers and digitize shipping documents for paperless trade, introducing TradeLens, its blockchain platform, partnered with IBM. By November 2020, TradeLens had an ecosystem of more than 174 organizations and more than 600 ports and terminals, and it processed 1 billion shipments, 30 million containers, and 14 million documents. Global container carrier CMA CGM and the Mediterranean Shipping Company(MSC) also joined Maersk and IBM’s TadeLens. 

Source: TradeLens and Blockchain Technology Supply Chain Demo

Source: Pexels

Predictive Analytics: being used to speed up various steps in the supply chain

With Businesses leveraging artificial intelligence and machine learning to process data at scale to make a better decision, they utilize insights collected from data to get across customers. Predictive analytics implies a type of data analytics that uses both current and accumulated data to predict future outcomes, eliminating the need for users to manually make predictions. The automatic resulting analytics are highly accurate and beneficial for businesses. Predictive analytics are increasingly becoming part and parcel of the modern marketing ecosystem. In the shipping and logistics industry where time and resources can make or break a company’s bottom line, predictive analytics helps it to adjust shipment patterns, predict customers’ behaviors, and provide on-time delivery through the most efficient routes, reducing the risks of cargo inventory errors. Predictive analytics will improve inventory management by considering the impacts of factors like geopolitics, weather and climate change, and consumer sentiment on product availability or demand. Integrating data across the supply chains unlocks new opportunities, allowing carriers to reroute parcels in real-time as conditions change. Besides optimizing how an item gets to its destination, big data and analytics also provide insights into how to structure a global logistics network, such as where to build new hubs and distribution facilities. As methods for predictive analytics based on big data offer new potential to optimize the port and terminal operations without investing in expensive IT infrastructure or equipment, the ongoing digitization and massive growth in the implementation of sensors in all areas of the port, such as roads, bridges, equipment components, and gates, produce masses of data. Therefore, utilizing and consolidating this data gathered from several sources offers opportunities to gain new and precious information about the current condition of the system. 

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