Ports, Walmart and the Tragedy of the Commons
International ports and terminals can benefit by learning from companies such as Walmart, Ford and Emirates, the UAE airline, argues a group of port efficiency experts and not falling foul to the “Tragedy of the Commons.”
In a fourth Concept Note written for Fathom World the authors, representing The EU funded Sea Traffic Management, argue that many ports and terminals remain so fearful of sharing what they consider competitive data that they are losing out from the benefits of streamlined just in time operations.
“Collaboration requires a willingness to share data.1 Maritime transport has a strong legacy based on autonomous, often competing, actors in a self-organizing ecosystem. This has meant that shipping’s actors are often oriented towards keeping data within their organization,” argues Mikael Lind, from RISE, a Swedish research body.
They argue that current best practices have moved a long way from these competitive silos and cite how car industry competitors often develop cars together, with common suppliers sharing synchronized real time inventories, how airline alliances with code share flights are good examples of competitive collaboration. They also cite Walmart, the US supermarket giant, that pioneered bar code scanning, analysing point of sales data, launched a satellite network to enhance supply chain management through data sharing with suppliers – the suppliers were then able to take care of Walmart inventory levels, thus making savings for both themselves and Walmart. Walmart’s competitors thus lost market share.
The authors identify that within the STM validation project, a major challenge has been to decide what data the terminals should and are willing to share with other actors as the common success of Port CDM relies on the standard sharing of the right information. One issue that is highlighted is the time when cargo operations will be completed.
“We have learned that the precision in the estimated time of departure is often used as a basis for planning, with an unfortunate low degree of predictability. This in turn affects the terminal’s capabilities of planning the next port visit, the ship’s capability of planning its next sea passage, and all other port call actors’ possibilities to plan their operations,” the authors argue.
The STM authors say that within the validation project, terminals have raised competitive concerns, due to competitive concerns, about sharing their plans related to cargo operations.
“Berth productivity is of competitive concern and is measured by taking the time of cargo operations divided by the time at the berth. Bearing in mind that cargo operations can be followed visually by anyone, data about cargo operations might as well be shared for the benefit of optimizing berth productivity before the actual berth visit,” they argue.
“The Tragedy of the Commons describes a situation where the farmers with a right to a common area of land decided individually to increase their herd size. As a result, there was overgrazing, the land degraded, and it was no longer able to support grazing any animals. The Tragedy of the Digital Commons occurs when those who similarly rely on a shared resource, such as a harbour, don’t share data to enhance their common interest and lose business to those who realize that extensive data sharing enhances efficiency and service and attracts customers. A mature port avoids the productivity losses of the Tragedy of the Digital Commons.”