Oscar Pernia is the Vice President of Applied Innovation at Navis, a part of Cargotec Corporation, and a leading provider of planning solutions across container flow. Navis specialises in helping terminals to maximise their investments in advanced technology solutions, new business processes and operational optimisation initiatives by aligning them with the terminal’s highest level strategic goals. Oscar is a Telecommunications Engineer and holds a doctorate in Industrial Engineering, with 17 years of experience on system integration and operational processes optimisation at ports and container terminals. His focus is to empower innovation at Navis portfolio strategy execution, which is determined on making global trade smarter, safer and more sustainable for everyone.
Has terminal automation and digitisation at container terminals reached its full potential?
Automation at container terminals has progressed a lot from early 90s when first experiences were introduced in Hamburg and Rotterdam. Having said that, we are still not even close to reaching the full potential of automation at container terminals. Impact at safety and sustainability areas is significant, but in terms of efficiency, we need better levels of productivity and consistency.
I feel we are at the beginning of the journey with digitization. With the value coming from combining data and technology to better manage current processes, the opportunities to tackle some of the existing problems are huge, including enablement for focusing on ways to improve the way terminals are serving transportation and logistics networks, and the role of technology solutions within.
Are terminals currently aligned with the demands of the ocean supply chain?
The ocean supply chain demand is no longer just about time and cost. The new logistic models, like the ones executed by Amazon or Alibaba and differently by Inditex or Tesla, have a common denominator on the need of an integrated network from product manufacturing to product delivery and from customer experience to market analysis – hence fundamental requirements on reliability, transparency and predictability across the cargo flow.
But terminals are subject to planning changes/exceptions, they suffer serious data quality constraints from the supporting information, and they perform ‘ad hoc’ as most of the processes are not standardised; thus, the perception that terminals are the only bottleneck is not completely fair.
Our industry evolution needs to cover different processes across the cargo flow: the end-to-end connection across planning processes as with vessel stowage and storage planning is a fundamental need to transform terminals into intelligent network nodes to cover the current demands at ocean supply chain.
Efficient terminals are more productive. What elements do you take to measure the correlation between automation and productivity?
There are many key performance indicators (KPIs) that are commonly used by terminals to quantify operations productivity. Automation is introducing efficiency enhancements across different areas, but industry benchmarks are working to provide a complete picture. Some of the key elements are:
- GMPH: Quay crane cycles per hour (gross moves per hour) is traditionally the master KPI to measure how good is terminal performance. The view using only this KPI is not as accurate as depending on vessel operation type and volumes numbers can differ. The use of other KPIs as for vessel productivity (BMPH) and port productivity (PMPH) complement GMPH measure well.
- Storage Yard: Container automated yard is the ‘heart’ of operations as it is the processor of almost every single move. Automation is providing significant improvements to yard density and inventory control. KPIs as yard occupancy (%), re-handles by productive move and, of course, dwell time are commonly used to evaluate how good is yard handling ‘processing’ throughput.
- Equipment lifecycle: With automation equipment, moves are better controlled when executed, producing important improvements in the stress level and lifecycle of equipment structure and components. The whole superstructure is becoming more reliable and controllable, and KPIs as overall-equipment effectiveness (OEE) and mean-time-between-failure (MTBF) are used.
- Manhours/Move: Normally, our industry uses cost/move and revenue/move as the fundamental drivers to measure profitability, but when comparing globally between terminals, these methods are difficult to use for benchmarking. Automation is bringing effectiveness in terms of how much manpower is needed to produce every billable transaction at a terminal; the manhours/move KPI is increasingly utilised.
This is a difficult question anyhow, as implementation of automation differs by region and the industry itself is lacking standards for productivity measures. A terminal performing 40 GMPH in Asia may not doing better than another one performing 25 GMPH in Europe or US.
Other important KPIs that are not utilised enough are the ones related with safety and sustainability areas. In those, the improvements in terms of accidents and user ergonomics, or in terms of energy consumption and pollution emissions, are significant. In the end, they are illustrating how automation helps our industry not only on be more efficient and smart, but also become a better planet.
In terms of innovation, what challenges are you faced with when introducing and implementing change at a terminal, especially with those individuals that are resistant to moving away from their comfort zone?
One important challenge is the clear definition of processes and standard operating procedures (SOPs). If you don’t have your processes defined and under control upfront, to overload those with additional technology and IT won’t work and won’t produce any return, therefore not even improving the original situation.
I also found it difficult to work with terminals on defining exceptions and contingency procedures without a predominant manual intervention, just letting the system find the recovery path. At terminals, the user experience is exceptions-based. So far, we haven’t been able to augment human, machine and software to manage uncertainty at exceptions scenarios in an integrated and proactive manner.
Another fundamental one is the mindset change. We tend to position automation against people or employment. I see this the other way around. The more advanced on technology a terminal is, the more we rely on the human brain; new jobs and profiles are created, and the existing ones have a better working environment. With additional economic activity generated as volumes grow, additional human brain power will need to be hired.
Please talk to us about how competitive advantages can derive from automation and digitisation:
It is about redefining the way terminals are serving the ocean supply chain. Sometimes I feel we are just accepting that our industry works in the way it does and we can’t change it. I believe automation and digitisation are here to stay and will be fundamental actors on that shift. More concretely:
- Performance Consistency: Terminal business is 24/7. Automation enables capabilities for terminals performing consistently in a reliable and predictable manner. That is of enormous value for the terminal operator when serving vessels of different sizes and traffic patterns.
- Operational Control: This industry always needs a ‘Plan B.’ The mentioned planning changes and inherent cargo flow dynamics establish several challenges for terminals to stay in control. To be able to manage operations from performance, capacity and cost perspectives is fundamental.
- Asset Utilisation: Equipment and space utilisation can be improved significantly by using automation technologies, as well as making equipment allocation more effective across vessel operations, and enhancing equipment life cycle with better preventive and corrective maintenance.
- Customer Experience: Automation creates a better scenario for a better and more transparent Service-Level-Agreement (SLA) to shipping lines. To be able to customise SLA by vessel service or by customer is of great potential to terminals, including a more open and data-driven real-time customer engagement.
Beyond efficiency for terminals and ports, at the end it is all about competitiveness. Automation can make terminals far more competitive.
What key elements do you focus on when taking on a new project?
Being a believer on what I call the ‘Automation Promised Land,’ with all these years of hard work and lessons learned, I am very careful on my assessments and advice about new automation projects for container terminals. Having said that, there are some key elements I consider on my recommendations:
- Terminal Design – The different operational components and interfaces need to be connected with infrastructure, equipment and software requirements. Modeling techniques (simulation) have improved design methodology significantly, but still our industry needs to improve its utilisation to realistically utilise modeling technology for terminal specification and throughput expectations.
- System Architecture – Proven and standard solutions are consolidated in many industries. In container automation, there is concerning trend on ‘reinventing the wheel’ and making it more complex in every iteration. Systems architecture will always be complex but they need to enable simple operations and the related features on automated decision making, user experience and data analytics.
- Technical Integration – The way software supports the related interactions is key and the number of applications supporting operations is increasing with automation. How mature the integration between the fundamental applications and terminal testing infrastructure is to enable effective deployments and upgrades is a key factor.
- Control Room Organisation – With automation, control room organisation and related job descriptions evolve. The team needs to perform cohesively, and the use of technology is embedded within the workflow and interactions between users and departments. Training is a fundamental need but also the cultivation of a customer (ocean supply chain) oriented culture.
- Use of Data – Automation opens opportunities for continuous improvement as equipment and software are providing a system of record, to enable continuous improvements by improving the learning loop from operations. The way the terminal uses data to create a data-driven methodology and culture is important for producing smart evolution on performance and SLAs by customer.
Are there any limits in terminal automation?
In terms of state-of-the-art technology, I think the current state provides a framework to go far beyond the current impact of automation at terminal operations and the way terminals serve the ocean supply chain. This industry is at an inflection point to leverage all learnings during last decades and to produce consolidation, but also change in order to push current boundaries out. Limiting factors in my opinion are:
- Modularity: Terminals are all different and systems providers need to provide flexibility through modular automation blocks that can be combined in different ways depending on the specific terminal design requirements regarding productivity, capacity and cost parameters within its business case.
- Standardisation: Covering different aspects at processes and IT architecture levels, the need of better ways of connecting products and systems from different vendors. We need global institutions to be more active, including open standards that enable terminals to build an automation ecosystem from multiple manufacturers.
- Augmentation: At automated terminals, it is fundamental the operator conceives equipment, systems and people performing as a whole. There is a need for augmenting each element’s capability for optimising operations: robots on execution reliability/consistency, software on decisions intelligence/learning and humans on proactive control/assessment.
- IT vs OPS: Automation implementation is highly on people, a mutual empathy between technology and operational experts is fundamental as with automation, boundaries between traditional IT and OPS departments need to be removed. The joint effort philosophy is a fundamental driver at projects and it should persist far after the go-live.
- Simplification: Unfortunately with all the emerging IT platforms offering, the solution ecosystem scenario is becoming really complex, and, in my opinion, really confusing. Strategies implementing enterprise architecture should be catalysts for IT solutions better supporting business and operational processes.
We are led to believe that it is a matter of time that artificial intelligence (AI) technology will be available to us in the future. Do you foresee an application of AI in shipping?
My academic background and PhD is connected with AI and the use of expert systems for solving different maritime operational problems, and the level of maturity coming from those technology and progresses at other industries are really meaningful. When thinking on the AI capabilities we can leverage, I see huge potential as those are really matching with some of our constraints:
- Self-learning, and understand the reality in front,
- Adaptation when something is not according to plan,
- Prediction and pattern recognition to be able to ‘look ahead’,
- Deep analysis and recommendations to the user.
Our focus at ATOM Labs is always on understanding the problem better, and using data for doing so. Now with the problem defined upfront and an iterative rapid prototyping methodology, we are able to produce input to Navis roadmaps faster and more accurately. The introduction of AI in our solutions is an important goal we have, and we see terminal operators and shipping lines strongly investing on leveraging AI capabilities.
I think in our industry it will take some time. We need to establish the core foundation for enabling those algorithms providing the expected capabilities and helping to solve the problems that our industry faces to get smarter and intelligent. We cannot expect magic from one day to another, but I find Mr. Stephen Hawking’s quote, “Intelligence is the ability to adapt to change,” really applicable to our industry. I think it points to the potential of leveraging AI capabilities to take the ocean supply chain to the next level.
Collaborative information sharing between stakeholders is important for port operations to take place. Is Blockchain the solution?
Our experience with XVELA as a many-to-many digital collaboration platform is a confirmation process for the need of jointly achieving following goals across our industry:
- Lower uncertainty within shipping stakeholders’, eliminate middlemen actors.
- Transform collective distrust into collaboration and change behaviors.
- Simplify relationships and workflows, enabling network reach and personal control.
And we see the evolution at shipping lines, terminal operators and ports regarding digitisation and the continuous investment in technologies like Blockchain to enable the required evolution across processes and relationships between shipping stakeholders.
From a conceptual point of view, everything makes sense. Through a decentralised, shared and well-structured database, stakeholders will be digitally identified, registered, qualified and evaluated and transactions will be secure, tracked, historically recorded into an immutable and unforgeable blocks of data. But technology is recognised by experts as still in its infancy, and still we need to identify specific relevant use cases and execute experiments with key actors to find out what Blockchain will mean for our industry.
How Blockchain will get there?
I believe Blockchain, or any other coming technology in the near future, will realise the vision to enable increasing, faster and more open collaboration across the container flow, and it is not just an economic evolution but innovation in computer science to articulate at the end a distributed, secure and autonomous supply chain.
What will the container terminals of the future look like?
I am a dreamer, but I will keep my explanation simple. I imagine a terminal readjusting itself to produce the required SLA for the next vessel in operations, performing in an ecosystem that helps vessels in and out from the port and providing visibility and predictability to the whole ocean supply chain. But we really need to focus on solving problems at present; and while terminals implement automation in order to become responsive and proactive agents in the ocean supply chain, we need to keep the bigger picture in mind and have a holistic approach to drive change. The existing paradigm is reinforced through interlocking beliefs, practices and processes, so trying to fix one item in isolation will not bring the maximum benefits, as other pieces can hold us back. We must not revert to old approaches when a change fails to produce immediate results. Changes in terminals must be accompanied by changes in the whole ocean supply chain: altering only one part of the ecosystem will not be effective.
There is a long way to go to get there, but I believe we are towards that future. Automation and digitisation, and all the different aspects we mentioned in this interview, are fundamental drivers to enable step by step that dream coming true.
This month, Girbraltar Shipping launched its new brand, Marine Strategy, providing interviews with key maritime industry stakeholders.
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