Ports of the future

A Vision

Indra Vonck, Deloitte Port Services, Baltic Ports Conference 2017

© 2017 Deloitte The Netherlands

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the most adaptable to change.”

Charles Darwin

Ports of the future, a vision 2

© 2017 Deloitte Port Services

The Shipping and ports industry is under pressure and undergoing structural changes, driving the need for innovation

Ports of the future, a vision

Increased complexity Pressure on revenue and costs Energy transition

• Technology challenges

• Sustainability and social license

to operate

• Global trade flows

• Price volatility

• Operating costs

• Capital costs

• Energy demand growth

• Energy mix and carbon shift

• Energy efficiency

Big data analytics allow for a renewed vision on the complexity

of supply chains

Technologies like predictivemaintenance and automation allow for a reduction in opex

New players are targeted focused on renewable energies and

alternative fuels

3

© 2017 Deloitte Port Services

Digital is extending the range of innovation possibilities as IT and OT converge…

Ports of the future, a vision

1960 -1979 2020-…2000-20101980-1999 Today

OT: Operations Technologies

Source: Monitor Deloitte

OT

IT

OT

IT

OT

IT

OT Application

IT Application

Technology

Analog operational processes

Computer technologiesintroduced into

industrial operations

IP technologies introduced to

industrial controls along with network

connectivity

Prevalence of networks, sensor prices decrease,

cyber risk increases

Technology, Data, Platform

4

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…And Digital is providing opportunities across the entire value chain

Ports of the future, a vision

Seaside Port Landside

ProducerTransport

node

Maritime

transport

Approach

services

Loading/

unloadingStorage

Industrial

processing

Intermodal

transportDry port

Hinterland

transport

Virtual Reality

Commodity data analytics

Intelligent Asset Development

IoT enabled remote operations

Big data Analytics

Big data Analytics

Cross-functional and geographical

working

Drones/RoVs

Drones/RoVs

Smart Cities

Smart grids

Safety Analytics

Internet of Things

Drones/RoVs

Machine to machine

communication

Platform solutions

Smart energy management

Autonomous transport

Smart meteringSupply

analytics Demand analytics3D Printing

RFID for logistics and

transportation

RFID for logistics and

transportation

Intelligent risk and compliance

Intelligent risk and compliance

Robotics

Robotics

Robotics

OutsourcingOutsourcing

Predictive maintenance

Predictive maintenance

Autonomous transport

Autonomous transport

Collaborationtools

Collaborationtools

Supply chain and vendor optimization

Supply chain and vendor optimization

Single view of stock

Single view of stock

Real-time digital resource management Pricing analyticsRobotics

Intelligent Asset Development

Mobile Workforce

5

Note: Non exhaustive Source: Monitor Deloitte

© 2017 Deloitte Port Services

A port of the future has 3 defining characteristics which allow it to adapt to the changing environment because…

Ports of the future, a vision

Cooperation Innovation Sustainability

• Technological innovation will push ports to work together

• Cooperation will occur on a horizontal and vertical level along both the supply chain and across different

• All stakeholders will be cooperating with the port, for e.g. smart cities

• Ports will be forced to accept innovation through automation and digitization

• Ports of the future will harness the innovation for new insight driven business models

• Ports of the future will become “smart” and require different skills to operate

• Ports of the future will promote renewable energy sources and cleaner forms of industry

• The logistics fleet will use alternative fuels like electricity (cars/trucks) and LNG (ships)

• Ports will adhere to the triple Pvalue of People Planet Profit to grow in a sustainable manner

6

© 2017 Deloitte Port Services Ports of the future, a vision

Source: The Future of Port Logistics, ING/UA, 2017

15%

18%

21%

11%

13%

46%

62%

61%

22%

39%

18%

54%

48%

15%

33%

18%

17%

43%

34%

24%

35%

34%

40%

24%

15%

43%

13%

17%

7%

15%

9%

100%80%40%0% 60%20%

Autonomous trucks 5%

Autonomous vans

Autonomous terminal equipment

1%

Autonomous inland navigation

Automonous drones for regular logistics

5%

Autonomous drones for port services

5%

2%

Autonomous rail vehicles/applications

Autunomous drones for emergencies

6%

6%

Autonomous vessels (maritime)

6%

Long term (+10 years)No opinion Already happeningShort term (- 3 years)Mid to long term (+ 5 years)

13%

17%

39%

50%

39%

21%

8%

11%

8%

28% 67%

57% 23%

40% 60%20%0% 80% 100%

5%Operational expertise, efficiency andknowledge will be indispensible for supply chain descisions

Operational expertise, efficiency and knowledge will be digitized

Importance of conceptual and abstract capabilities will increase

10%

Different profiles will be required in the future

N=82, respondents include shipping companies, Maritime Transhipment, Port Logistics, Logistic service providers, Freight forwarders & customs, Shipping & industry, other

Evolution of staff characteristicsSpeed of introduction of robotized and autonomous equipment

… the impact on work force and knowledge requirement will be extensive

7

© 2017 Deloitte Port Services Ports of the future, a vision

Source: Havenmonitor, Deloitte Digital Disruption Map, Deloitte analysis

Impact of digital disruption on port employment

Forecasts show at least a 25% drop in generated employment as a result of digitization

8

30%

50%

90%

70%

40%

60%

100%

80%

10%

0%

20%

1,3%

Shipping

1,8%

Ports

8,2%

OffshoreMarine

1,3%

1,9%3,5%

Maritime service

Fisheries

100%

Maritime suppliers

Total today

1,0%1,3%0,2%

Yachting and sport

1,2%75%

Aquaculture

3,4%

Inland navigation

-25%

Ship building

Forecasted total

Employment

Note: Impact calculated based on the Deloitte Digital Disruption map, multiplied with the total employment generated by each sector in 2015

© 2017 Deloitte Port Services 9FEPORTS | Proposal 'The changing face of ports'

0

10

20

30

40

50

60

70

80

90

100

Jan-1

8

Jan-1

5

Jan-0

4

Jan-1

0

Jan-1

3

Jan-1

7

Jan-1

4

Jan-1

1

Jan-1

6

Jan-1

2

Jan-0

9

Jan-0

8

Jan-0

7

Jan-0

6

Jan-0

5

Cyber Security search

Threats to Cybersecurity in PortsAvailability of a large port could present a major economic incident for a state or country, and could bring 'just in time' supply chains to a grinding halt in a number of days.Source, PTI

Maritime cyber security awareness lowIncreased automation and the decrease of manual intervention in the maritime industry provides fertile ground for security breaches,Source, BPO interview Indra Vonck Deloitte

Container terminals APMT down through hackSeventeen APM container terminals in Rotterdam and other parts of the world were successfully attacked by hackers.Source, Lloyds

How hackers are targeting the shipping industryThe head of Europe's crime fighting agency has warned of the growing risk of organized crime groups using cyber-attacks to allow them to traffic drugs.Source, BBC News

Maersk revealed that the (hacking) incident could cost it as much as $300 million (£155 million) in profits

Search frequency of cyber security topics1

1Source: Google trends analysis

Security, both physical and digital is a growing concern, since the majority of goods, as well as strategic stockpiles are often stored and handled in local terminals

© 2017 Deloitte Port Services

Port authorities and regulators have the important role to support the industry and guide it in a proactive manner towards a sustainable future

Ports of the future, a vision

Role of the regulator Role of the port authority

• Accelerate the development of common standards

• Increase the attractiveness to investments in the production of digital products

• Increase the level of digital skills amongst the current working population

• Push our cybersecurity standards further

• Support the port cluster in a sustainable manner

• Facilitate the transition to a new digital workforce

• Be resilient and adapt to change in a successful manner

• Reward green initiatives

• Create awareness surrounding cybersecurity in the cluster

• Be prepare to cooperate and integrate

10

© 2017 Deloitte Port Services

• The future of the ports is challenging but bright since innovation will have a greater role to play and will enable the port to generate significant value for customers, shareholders and employees

• The regulator and port authority must strive to guide ports through these turbulent times as well as facilitate them in this process of change

• Collaboration is critical on both a horizontal and vertical level and nurturing an ecosystem where innovation can truly thrive is now essential

• Rethink how change is currently managed in your port and develop specific strategies for transformational innovations: be bold, set up a specific structure operating with protected funds, measure and incentivize with non-economic metrics

• We need to manage the risks of innovation in proactively and prepare our workforce and organizations for the impact of digitalization and automation

Some suggestions moving forward

Ports of the future, a vision 11

About Deloitte Port Services

As Centre of Expertise Deloitte Port Services offers a point of view on the port industry’s challenges and opportunities, with

pushing industries and businesses to transform themselves in

Indra Vonck

Indra Vonck is a senior subject matter expert in the Deloitte Port Services team. He has a PHD in Maritime economics (specialisation port development) from the university of Antwerp and Solvay Business School Brussels.

ivonck@deloitte.nl

Tel: +31 8 82 88 62 18

Mob: +31 6 13 35 64 02

About Deloitte Port Services

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