Port optimization – process thinking gets distracted by techno-babble

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Recently, I had the chance to spend a few days with a bunch of talented operations professionals working in shipping terminals. Dealing with containers, bulk, break bulk, chemical products, and RORO, they offered a broad spectrum of opinions and ideas.

Automation was on everybody’s mind, and so was the proliferation of sensors and controls installed in every piece of modern port equipment. More sensors mean we get more operational data. Inevitably, the discussion touched on the usage of this data for optimization and its value in the terminal environment.

Terminal operations are no different from any service-oriented business – it is highly technology-dependent, centered on complicated and very expensive machinery operated by a highly technical and skillful workforce. People and machinery have to come together in orchestrated execution. This will allow them to efficiently unload and load thousands of containers, palletized freight, cars, liquid tanks, and more. Around the terminals is an eco-system of port pilots, tugs, specialized vessel services, port administrators, customs, quarantine, and security.

Broken links in the supply chain

I see this as a services-based supply chain of large proportions. Failure of one link will quickly affect the chain upwards and downwards. This will result in network delays, additional charges, performance penalties, and a lot of grief. Root cause analysis often points to broken or lack of communication between the parties.

The reason for all this? Fragmentation of decision-making, lack of process-centric approach, and the preoccupation of each participating party with their own point solutions. Whenever a port sets out to enable collaborative process execution and information sharing, we hail their effort, but weeks later, all is forgotten and we settle back into the rhythm of our own operations.

Since the terminal operating company is the largest and most cohesive element of a port (which often contains multiple terminals), I have always been curious about how they view and use IT. I firmly believe that inefficiencies form at the points where business objectives intersect technology investment decisions. Countless implementations littered with acronyms like ERP, SCM, CRM, or TMS can illustrate what will happen when their intersection with business objectives is weak, or outright conflicting.

TOS – an easy fix or are there deeper problems?

In the shipping terminal, we have our own 3-letter acronym: TOS. It stands for Terminal Operating System, a complicated piece of IT engineering that orchestrates decisions related to load and discharge of vessels. It is the most talked about subject in terminal operations circles and easily the most expensive piece of IT software acquired by terminals.

Any underperforming terminal is often advised to acquire or upgrade TOS, as if that is the cure to any operational problem. What is not often acknowledged, is that bad operations planning cannot be made better with automation, which is simply faster execution of bad plans. This is further compounded by TOS claiming the optimization capability that could relieve capacity bottlenecks formed during the execution of operations, irrespective of bad planning.

If you disregard the hype and look at the optimization approach, you will quickly realize that simply optimizing available capacity through TOS is not enough to accommodate constraints of all parties. That leaves execution of all operational activities associated with terminal operations suboptimal. It’s a waste of scarce resources of everyone involved.

Infographic: TOS vs Container Terminal Planning & Optimization

This relentless focus on TOS masks the fact that underutilization of resources (land, water access, energy, machinery, and people) is not clearly visible to all parties involved. Looking solely at the terminal, TOS leads operations staff to believe that all resources are efficiently utilized. Any delay in terminal operations is blamed on other parties (trucking companies, rail companies, barge operators, stevedores, etc.).

In reality, it is bad planning that results in the inefficient use of the port’s infrastructure, limits the terminal’s throughput, creates slot congestions, and inconveniences planners working in all those companies that depend on port and terminal decisions. Have you seen a container racing through congested areas, madly weaving in and out of the crowd, bumping into other containers and container handling equipment, blocking paths, and always confused where to go? I rest my case.

Learnings from other industries

Could we reach out to other industries to learn how to do this better? I know shipping people dislike comparisons with aviation, but experiences from the airports can be applied to the operations of the marine terminal. In fact, airport operations is even more complicated, and people using those terminals will be greatly affected by its operational inefficiency.

To lessen operational disconnects between various parties operating throughout an airport, airport operators have conceptualized and standardized procedures and policies into a coherent framework called A-CDM (Airport – Collaborative Decision Making).

Under this framework, focus is placed on collaborative information-sharing for more efficient operations of the port, airlines, ground services, catering services, fueling services, and maintenance. A-CDM is often credited by incredibly busy airports for successfully managing congestion, creating business value, and increasing the airport’s competitiveness, especially where proximity to another airport could threaten their own profitable existence.

Could a Port-CDM or Terminal-CDM become a game-changer in operating a marine port?

To successfully copy the airport framework requires transitioning from a silo-minded to a process-centric approach. There should be shared focus on executing different functions together to create a smooth sea-to/from-land flow. Accomplishing this requires all CDM partners to share accurate information in a timely manner, co-ordinate operational procedures, automate the processes, and make tools user-friendly.

What could the formalization of Port/Terminal-CDM accomplish? It could reduce or eliminate servicing delays, improve predictability of events, and truly optimize the utilization of resources of all participants. A fragmented industry and an inward-looking approach to process optimization is not going to help, but steps need to be taken.

Massive container ships, frequency of calls, the changing nature of the cargo, aging populations, shrinking workforce, rapidly increasing labor costs, just to name a few factors, are affecting every port operating today. So changes and adjustments have to be on the agenda. ‘Reasonable’ efficiency achieved through decades of mastering function-centric operations is not going to be sufficient in light of macroeconomic changes and their impact on trade flows.

If you found this topic interesting, leave your comment or suggestion. I look forward to responding to your feedback.

This post was previously published on LinkedIn.
Kris Kosmala

About Kris Kosmala

I enjoy the challenge of employing information technology as an accelerator of business growth. Of all business operations, I find supply chains provide the most fertile ground for creative re-thinking and transformative change. I find that frequently, new technology is not aligned with a company’s business strategy. I help companies address this critical issue, ensuring that the right technology is harnessed – and used correctly – to advance their organizational goals and turn it into true competitive advantage.