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Global port operations can save up to $12bn annually with better communication

TERMINAL operators and other companies involved in port operations can save millions of dollars if even simple information such as a vessel’s real arrival and departure times can be more accurate and other time stamp information disseminated better.

Soon to be published research into port operations in a number of Norwegian ports has revealed that the savings from using better data to coordinate the various activities in a more “just-in-time” fashion can create hug benefits to a wide range of companies.

In a 6th concept note by authors involved in the EU-backed Sea Traffic Validation project, the arrival and departure information from ports around the Norwegian county of Rogaland, which includes the port of Stavanger, were examined.

Taking 16 months of data the researchers say they noted that  in 4,691 arrival notifications given within 24 hours of he actual arrival, and over 4,431 departures, there were significant times when vessels arrived late, and early, and when they also departed late or early compared to their estimated schedules.

“From a terminal operator’s perspective, early or delayed ship arrivals or departures have to be managed on a daily if not hourly basis,” write the authors, adding that the goal of the operations manager is to manage variance of predictability in port or terminal operations and strive for just-in-time (JIT) operations.

“To change the execution of one task or a series of operational sequences may be impossible due to variance, and a “bull-whip” effect may occur in the whole value chain down- and upstream. If there are no means to mitigate these variances, they might cause idle resources for the terminal operator.”

The argument that this will have a knock on effect on other vessels and terminals as well as third parties that in turn need to shift their operational plans.

In the case of the Stavanger region that was examined for the research, an average loss of 5,693 man hours were lost within terminal operations  alone, and the cost lies somewhere between $3m and $5m per year. This value increases significantly, the authors suggest it can be doubled, when taking into account all the other actors involved in a vessel’s port call and the subsequent shore side cargo logistics operations.

“This equals a loss per port call off  $350 to $600. If we assume that the numbers can be aggregated worldwide (20 million calls worldwide annually) we have an annual loss of $7bn to $12bn globally,” they claim.

With demand for efficiency, punctuality and predictability growing, the expectation is that this will be seen as a significant loss that will need to be tackled, especially as companies such as Amazon and Alibaba, with their strong interest in logistics efficiencies, want to control their entire logistics chains.

Read the 6th STM Concept Note here


About Author

Craig Eason Stockholm
Craig Eason is the owner and editorial director of Fathom.World. He has a background in the shipping industry having started his career as a cadet on oil tankers and gas carriers before becoming a navigating officer on a range of vessel types. A change in career, with ensuing university studies, and he has now gained 20 years experience in written and broadcast journalism. He now is in demand as a knowledgeable and competent editor and event host and moderator, both for in-house events and ones for the public.