“Digitization” is the method of converting information or objects from their original form into digital files that can be identified by computerized systems. However, the power of digitization does not come from the conversion of files, but rather from the use of the digital content that can revolutionize how the port community operates and makes daily decisions.
Today, it is implausible to attend a supply chain conference without “digitization” being on the agenda. Digitization is generally a topic embedded within Smart Ports and Next Generation Ports. The term is so broadly used in the supply chain industry by leaders and decision makers, that its meaning can sometimes become a source of misconception or intimidation.
So, what does digitization mean in the context of ports and supply chain? What is the cost of digitizing the supply chain? Why should ports and their communities re-think their perception towards digitization?
“Digitization” is the method of converting information or objects from their original form into digital files that can be identified by computerized systems. However, the power of digitization does not come from the conversion of files, but rather from the use of the digital content that can revolutionize how the port community operates and makes daily decisions. Consequently, data that gets ingested, curated, and processed from the various transportation modes (rail, sea, road, air) is key to building both real-time and a historic picture of moving cargo.
Last year, my team and I met with leaders from over 60 ports across the globe to discuss their outlook and obstacles to moving containerized cargo. We learned that their commitment towards deploying information-based technology and digital infrastructure varies greatly from one entity to another, with a few misconceptions along the way.
We are not ready for digitization. Many ports believe digitization occurs with a turn of a switch and requires a one-time overhaul of the IT system, transforming ports operation from an analog state to a digital form. This view suggests that going digital requires a large upfront investment that prohibits considering digitization all together. The reality, however, is that the path of digitization as described by digital solutions providers (like Wabtec Corporation), is a long-term journey. This lengthy yet progressive evolution starts with simple low-cost steps that evolve into more advanced functionalities. One could compare a digital journey to the evolution of our cell phones. The first cellphone that weighed 2.4 pounds, processed calls with no texts, games, or apps. This brick phone had a battery life of thirty minutes, yet it paved the way for today’s smart phone that lets us adjust our home thermostat and monitor our security cameras from our vacation destinations. Just like cellphone technology, the first step in digitization is key for ports to reach some spectacular results throughout the years. Today, many early adopters of port digitization are enjoying revolutionary insights through Artificial Intelligence and Machine Learning that enable optimization of their operations, increase in cargo volume, while reducing cost and environmental footprint. But that first step must be taken sooner rather than later and may not require extensive funding.
We are a landlord port. Many ports believe that being a landlord port precludes them from investing in an IT platform that benefits the port community. This school of thought suggests that providing land, premises and equipment concludes the port’s responsibility and requires tenants to offer their own digital platforms to manage their respective areas. While this view usually meets the port’s contractual obligation towards its individual tenants, it stops short of offering a one stop portal that benefits the port community and provides basic information about the overall operation of the port. In such cases, customers or transportation providers are required to access several individual websites to retrieve fundamental information for daily planning, which is time consuming and counterproductive. While this view may have been acceptable pre-Covid, the transportation industry has entered a new era where the existence of centralized data portals is no longer a “nice to have”, rather a “must have”; and marine ports are no exception.
We are too small to invest in digitization. The last misconception suggests that only ports that handle higher TEU volumes should be at the forefront of the digital revolution. While larger ports have witnessed a substantial return on investment in their digital journey, smaller ports can also enjoy the same benefit to undertake an ongoing rise in competition. Digital infrastructure remains a low-cost alternative to capital intensive equipment and land expansion projects and could offer a strong differentiating proposal to the port community.
If we learned anything in the last decade, digital transformation was introduced to solve some of the biggest challenges in our lives as consumers and business owners. It will be here for next generations to achieve even greater milestones.
For more information, visit www.wabteccorp.com.
Editor’s Note: Seaports Magazine is proud to feature the voices of a wide variety of thought leaders who care deeply about ports and supply chain resilience, funding, and success. This and forthcoming articles like it solely express the sentiments of the writer and may not reflect the beliefs of the American Association of Port Authorities (AAPA) and its stakeholders or members.