The effects of the global supply chain crisis have been felt worldwide. Fuel shortages, surging consumer demand for goods, and even a dramatic decrease in automotive production have in some way or another impacted our day-to-day lives. The knock-on effects of this crisis are widespread with no definitive end in sight. It’s not a case of when do we start trying to rectify some of these issues, but more how do we start? What are the options available to us? This week, Thetius Technology Analyst Lauren Brunton looks into what is causing the current congestion in ports around the world and asks, how can emerging digital technologies help alleviate some of these issues?
It is possibly the most cited statistic in the industry, but it is true that the United Nations estimates that at least 80% of the volume of international trade is carried by sea, with this percentage said to be substantially higher for developing countries. The carriage of goods by sea is a well-established bedrock of the global economy that allows the world to function and operate the way in which we do on a day-to-day basis. The extent to which shipping supports and underpins most aspects of everyday life was brought to the fore during the COVID-19 pandemic. This challenging time highlighted shipping as a vital lifeline that facilitates the flow of energy, materials, food, clothing, and medicines, in addition to white goods, gaming consoles, and digital devices. For the first time in a very long time, sea blindness was temporarily lifted and port congestion concerns were elevated to prime time news media.
Since the height of the pandemic, shipping remains in the midst of a crisis of its own. Ongoing supply chain disruptions caused by port congestion are causing widespread issues throughout the industry, affecting various organisations and subsequently numerous households. This disruption and the domino effect which it is having is evident. At the time of writing, AIS is showing over 100 vessels at anchor in the Los Angeles approaches and over 350 vessels anchored off Hong Kong and Shenzhen. Data from digital logistics and tracking platform GoComet is showing container delays of up to 22 days in the port of Rotterdam. These issues can only be exacerbated by the surging consumer demand expected to occur this Christmas season.
The cause of this disruption cannot simply be placed on one factor, it is the result of a myriad of causes that when combined in the way they are, result in a complex problem. A pandemic-related surge in consumer demand has existed since 2019, with many opting to purchase goods online in a greater volume than we have seen before. The port of Los Angeles has experienced this pandemic-related surge, with their productivity levels reported as being 50% higher than their pre-pandemic levels, however, severe delays are still occurring as they cannot keep up with demand. Not only did the pandemic affect consumer demand but the imposed restrictions and self-isolating rules have resulted in ports and terminals struggling to cope due to reduced staffing.
These factors, coupled with political challenges such as the severe HGV driver shortages in the UK and EU, congested in-land terminals with outdated infrastructure, and poor vessel scheduling are all components that are increasing this issue further. Every link within the supply chain is experiencing operational issues, so it is imperative that solutions are found and implemented to help ease and eventually solve these challenges.
Attempts are being made to try and alleviate the ongoing congestion issues. US President Joe Biden has spoken extensively on efforts to assist; with the White House announcing that they have an agreement in place with the International Longshore and Warehouse Union (ILWU), for workers to complete extra shifts to allow ports to operate 24/7. In the UK, the Port of Felixstowe is also attempting to reduce the congestion issues, with one quarter of all containers now being transported inland by freight trains. These attempts to assist with easing the congestion are a step in the right direction, however, some argue they are a drop in the ocean.
Other, more impactful measures could make more substantial steps to not only fix the current problem, but also mitigate against the potential of it happening again. Digital technology and the broad range of solutions it enables could play a vital role in alleviating port congestion now and into the future.
Port call optimisation tools could be upscaled to have a greater usage in a wider number of locations. These tools are built on the foundation of collective and continual sharing of information between parties, that can ensure assets are available as and when they are required, as well as providing real-time updates to allow reallocation of resources. For example, since its implementation in 2018, “Synchronizer” by PortXChange, which is an optimisation platform developed in the Port of Rotterdam and rolling out globally, has shown promising results in its mission to make port calls smarter and more efficient through data sharing.
Such smart technologies cannot solve all contributory factors leading to port congestion, but they do offer the potential for better planning and scheduling, which could improve port call efficiency and take a good deal of the strain off the world’s ports when demand is high. The use of this combined information system is a solution that Los Angeles Executive port director Gene Seroka is an advocate for, as he believes the United States is ‘decades behind’ foreign ports with regards to port optimisation. Port call optimisation is a valuable solution that can aid ports in becoming more resilient to unexpected circumstances.
Taking a longer view, another solution that could ease congestion is a hyperloop system. This concept has the potential to transport containers at high speeds over long distances, in specialised container carrying capsules. This freight loop concept is still very much in its infancy, with varying concepts currently under development including DP Worlds Cargospeed and Elon Musk’s (claimed conceiver of the Hyperloop concept) ‘Boring Company’. These systems can move high volumes of containers in closed operating environments and could complement maritime exim freight transport. This idea could revolutionise the industry and be the starting point for a new digitally efficient era.
The ongoing congestion issues have served as a sharp reminder of the fragility of our interconnected global supply chain. The port congestion problems and it’s outward effects are not as distant and detached as they may seem, it is an issue that to some extent will be affecting us all. Short-term measures will be required from government-level downwards to help to ease the scale of the demand issues experienced today. The challenge moving forward will be to take a radical view of the world’s port and shipping ecosystem and ask where new technology can be applied to avoid similar issues in the future. These solutions come with their own pros and cons, but a suite of digital solutions offer promising potential to the industry to not only alleviate the congestion problem, but to create a smarter, more efficient global supply chain.
