Barbara Babati 10.08.2017 6 min read

How Does Digitalization Improve Ports?

We’ve been recently seeing a lot of interests from around the world on improving the way how ports operate, specifically how digitalization improves ports and its value chain.

At the end of July, Youredi was holding a webinar together with our strategic partner Bestshore. Bestshore's CEO& Founder Peter Ludvigsen joined us for the session to talk alongside Youredi’s very own Dean Baxter. If you missed the webinar, you can watch it on demand from this page.

The webinar was focusing on two main topics. First, how inefficiencies are affecting ports in terms of generating and maximizing revenue. Second, how digitalization and automation of port processes can help increase revenue while straightforwardly boosting the competitiveness of the industry as a whole. Digitalization can significantly impact the way ports operate and that has an effect on the entire economy as well.

Port inefficiencies

Ports have a lot to catch up with in terms of necessary efficiency improvements. Ports operate with a disconnected information flow and the lack of it is already costing the industry dearly.

Due to often changing customer behavior, the real-time information flow across all stakeholders is a top priority for the industry. What does changing customer behavior mean in the case of ports and how much does it really account for the ports after all?

Peter Ludvigsen shared the most common industry business pain points with us. These are the following: EDI messaging costs at Terminals and Depots; unnecessary shiftings in import stack at Terminals; unnecessary shiftings related to empty equipment; excessive yard shiftings related to export containers; late cargo; unnecessary yard shiftings caused by change of destination; unnecessary yard shiftings caused by change of vessel; intermodal cost (triangulation savings); global container fleet inventory reduction; and empty container repositioning costs (greybox). The cost of these inefficiencies accounts yearly $36 billion US dollars for the industry. The industry could save $8.5 billion US dollars by adapting to real-time integrations between carriers, terminals, and landside operators.

The problem is not only that ports still live in information silos (e.g. ERPs, TOS systems, and Port Community Systems are not communicating with each other), but the lack of real-time event tracking makes it impossible for ports to track these changes in events and customer behavior, and therefore billing of these items can become difficult too.

If all event data was provided in real-time instead of random parts of the lifecycle, ports could operate more efficiently. Currently, the time when event data appears in systems can vary from 1 hour to up to 36 hours. Meanwhile, the exact status of the container is often unknown. Sharing data in real-time and improving port efficiency would be a win-win situation also for carriers as they could benefit from ports improvements and it would affect their revenues too.


Digitalizing and automating billing and tariff processes

The main benefit of digitalization can be seen in how it is lowering the overall transaction costs by allowing real-time information/data flow between parties. An additional notion behind digitalization is that the data is available for all relevant stakeholders from a single source once it has gone through enrichment and validation if necessary to provide 100% clean and accurate information.

While working with ports around the world we have seen that the inefficiencies of reconciling billing and tariff processes cost a significant chunk of the revenue as well. Inefficiencies in terms of late payments, cash flow management, managing AP/AR cause difficulties for ports.

The main issue with billing is that there is no single structure in place, the processes often need to be synced across multiple systems/parties - and the systems used by the ports are sometimes different versions of NAVIS or some home-built accounting system.

To overcome this problem, we look at the overall contracting, billing, and tariff structures and create a solution that can automate the process and create a single source of truth available, so we can update all the systems and parties in real-time information.

To automate all billing processes quickly and accurately, we can build our solution on top of the existing infrastructure with the help our cloud-based integration platform as a service and connect different systems to gather all the necessary data into a single view. With the help of an integration platform, traditionally manual processes can be automated and the savings are significant.

Starting out small and undertaking the digital transformation of billing and tariff processes of ports is the first step towards achieving big volume savings by tackling other inefficiencies. 

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