Jakob Friis Sørensen- Managing Director APM Terminals Pipavav: Adoption of new age technologies to flourish maritime sector in the new normal

September 24, 2020: The global health pandemic has disrupted the process of globalization as economies lay restrictions on trade and travel in order to stop coronavirus from spreading havoc. The adverse impact of pandemic has been visible on almost all sectors barring technology. Technology sector benefited the most as the world went online from their safety nests. Global maritime sector was also adversely impacted following trade restrictions across economies. As factories re-opened in many countries, the international trade resumed bringing life to global maritime sector. However, the volumes are yet to reach pre-covid level. This is evident from the significant dip in volumes reported by several road, air and sea transport companies as well as cargo volumes reported by ports globally. According to various media reports global unconstrained trade demand is likely to fall by 13% to 22% in Q2 and Q3 2020, depending on macroeconomic scenario.

However, if this pandemic has disrupted the supply chain, it also has given an opportunity to embrace new age technologies that are a must for building resilience and help the economy come out of its cocoon. In the last few decades, technology has been at the forefront of evolution of many sectors; be it retail, financial services, infrastructure or manufacturing. New age technologies such as machine learning, data analytics, artificial intelligence & internet of things are redefining the growth of many sectors. For the maritime sector, these technologies will build the resilience to ride the disruptions in future smoothly.

A unique aspect faced during this crisis was the disruption in supply chain as factories were closed down and manufacturing stalled for longer periods ranging from 20 days to two months. This created a gap between demand and supply in majority of the sectors. The labour unrest that followed further impacted manufacturing; resulting in longer transit time for essential commodities at most places. When the companies fixed the supply chain as lockdown eased, the falling demand was evidently visible that arose from drop in income of households and small businesses. Companies that adopted these new age technologies have had lesser impact on overall operations as they were able to restore their supply chain more quickly.

Since about 80% of global trade is through sea route, one can imagine the amount of data that is generated every day from the maritime sector. No wonder, this data provides an immense opportunity to apply data analytics which could improve the productivity and efficiency of shipping, ports and connected logistics industry. Data analytics will also ensure reduced transit time and freight cost, which could further bring down the sea transport cost. Machine learning (ML) algorithms have a far larger role to play in the shipping industry. The critical issues such as sailing schedules, freight rates, turn-over time, maintenance work and supply chain management can be improved upon through application of ML algorithms. It will also play a significant role in reducing carbon emissions as it is utilized to predict shipping emissions based on engine parameters like engine load information.

Artificial intelligence (AI), on the other hand, has a bigger influence on port’s operations. The ports today are focused on sustainable operations ensuring that not a single stakeholder has to suffer due to round the clock operations at port. Apart from the livelihood of surrounding communities, the safety of employees at port is of paramount importance for the Port authorities, more so in times of such pandemic. The role played by ports and terminals as gateway towards the economy cannot be undermined and it is evident from the fact that most of the ports did not shut operations even during lockdown in respective countries as that would severely impact supply of essential commodities such as food and medicines. AI-based ecosystem is essential for the port as it would not only ensure safety for port employees, but also develop an efficient engagement of port authorities with other stakeholders such as vessel owners, third-party logistics providers, customs and even traders.

As the global maritime sector grows in size and value, it is inevitable for the industry to resort to new age technologies. Even today, the maritime industry remains very traditional with most of the processes being carried out manually. This is impacting efficiency and increasing costs. Though, there is an improvement as ports and big shipping companies are taking digitisation in its stride, there is more scope to make the industry technologically-savvy in order to capitalize on cost competitiveness and utilizing the spare capacity. Due to several challenges that the maritime sector faces including size of operations and lack of digitalization, the time is crucial for the sector to embrace new age technologies and make use of automation to ensure the sector is resilient by choice and not by force during such a pandemic.

Authored by Mr. Jakob Friis Sorenson, Managing Director, APM Terminals Pipavav