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Rethinking maritime businesses for the digital age: the evolving role of ship agents

By Mikael Lind, associate professor and senior strategic research advisor at Research Institutes of Sweden (RISE) and Chalmers, and Juan Carlos Croston, VP marketing & corporate affairs with Manzanillo International Terminal (Panama). 

Traditionally, a ship agent (as a representative of the owner, the charterer -or both- of a visiting ship), ensures that the essential requirements for a ship visit are arranged and met. Therefore, they have an important monitoring role, before and during a port call, taking the necessary actions to avoid or minimise disruptions. Ship agents also guarantee that involved port actors are paid at the right level of compensation.

Enhanced digitisation and collaboration in the maritime transportation sector, through implementation of digital data sharing, is an inevitable and unavoidable change and one that will affect the ship agent’s business.

The current article explores emerging opportunities, and prerequisites to harness these.

The traditional role of ship agents as the ship’s port call coordinator

The shipping industry is a self-organising ecosystem where all its members are capital creation systems. They each develop their specific recipe for creating capital by converting capital from one form to another form of capital. For example, a shipping company uses economic capital to hire human capital to staff ships.[i] The combination of individual members’ capital and their related systems for transforming capital from one form to another is the shipping ecosystem.

Ship agents provide two major types of capital. First, they provide social capital in the form of a network of connections with a port’s service providers because they typically have personnel physically located in a port’s city. Their specialised local social capital means they know whom to contact for routine and special services.

Second, they have developed routines and procedures, organisational capital, to deal with the local laws and regulations and atypical features of their port and its environment. They have created efficient procedures to weave together the various local requirements and services needed for a successful port visit in their territory.

Digital challenges for the ship agent

Traditionally, the port and its operators have relied primarily on the information provided by ship agents to understand the current and future status of a port call. However, increased implementation of digital data sharing among port actors is changing that.

Enhanced digital collaboration, by direct digital data sharing, creates a dynamic, up-to-date, common situational awareness as the basis for the alignment of activities in the port call process. An increased focus on port call optimisation offers significant opportunities for efficiency improvements and environmental gains for service providers and consumers. But this requires rethinking many port call activities and roles.

In this context, digital data sharing and collaboration could challenge the power of the ship agent as the primary information hub for all involved in a port call and may be interpreted as a force reducing the value proposition in the ship agent’s business concept. For instance, agents’ social capital will decline in value if they do not accommodate digital data sharing for establishing the phasing of a port visit and managing its execution. For example, communicating by individual phone calls or emails could be a time consuming, costly and inefficient alternative to a seamless digital data exchange with service providers to establish when, where, and what services will be provided and to update these as circumstances require.

Shipping agents who want to continue to participate profitably in the ecosystem will need to re-blend their social and organisational capital to match the digital connectivity and standardised digital data exchange that will dominate the execution of the future port visit.

Revisiting the foundations: The role of the ship agent in a maritime digital ecosystem

The future role of ship agents is now coming under the spotlight. That role will be influenced by digital systems of record and data sharing that provides dynamic high-fidelity situational awareness for all stakeholders. Digital data sharing and greater visibility of plans and their modification could enhance the role of agents willing to embrace digitisation.[ii]

With the growing ability of the ship agents to collect and analyse incoming data streams, their value proposition for both the ships as well as the port actors opens new opportunities to change and enhance their business model. They could go beyond organising the delivery of local services to ensure that they are delivered with full satisfaction and predictably as well as validating invoices against real time data. This means that a ship agent could become the provider of information and imitation services to transport buyers and cargo owners by becoming the physical and informational integrator of maritime operations in the global transport chain.

An agent’s organisational capital needs to be reformulated as software that can seamlessly connect with all parties within the port because the ecosystem is being rewired with fibre optics, WIFI, 5G, and satellites. To facilitate interoperability between information systems, the agent must also use an established data exchange standard, as well as building data analysis capabilities.

A digitally connected and coordinated agent can contribute to lower costs for the shipping company or charter. For example, if the ship agent has greater certainty over ship arrival times because of digitisation and data sharing, then crew replacements as well as inspections could be supported without the need for extended overnight accommodation in hotels.

Traditional social capital maintained through informal means, such as a dinner or coffee together, will still have its place. It will remain a source of innovation and reinvention as it will keep the shipping agent aware of what its port partners are planning in terms of new services and facilities. Every formula for success, even in past traditional times, requires an ongoing recipe rejuvenation because of changes in practice and technology. Routine interactions will be digital, but the future will be socially constructed by shipping agents and service providers and then digitally engineered.

Collaboration (and sustainability) are key drivers for the future of shipping and supply chain industries. The enhanced degree of digitisation and collaboration now occurring in the maritime transportation sector offers greater efficiency, predictability and profitability for the involved actors.

Although it will change the capital creation recipe of many actors in the maritime transport ecosystem, this development should be welcomed by ship agents. By embracing the digital port scenario, ship agents can continue to be the primary source of local information in port call visit coordination and can create new business opportunities. The implementation of data sharing for enhanced transparency and harmonization among port actors creates opportunities for ship agents to deliver faster and higher service quality empowered by digital means and new services, including some of those mentioned in this article

[i] Watson, R. T. (2019). Capital, Systems and Objects: The Foundation and Future of Organizations. Athens, GA: eGreen Press.

[ii] The UNCTAD guidelines for shipping agents, published in 1988, would accordingly need updating, to reflect these developments - https://unctad.org/en/PublicationsLibrary/unctadstship13_en.pdf

The article was originally written for UNCTAD and has been reproduced by Digital Ship with permission of the authors. The original article can be found here https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2306 

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  • Digital twins for the maritime sector

    Digitalisation

    By Mikael Lind, Research Institutes of Sweden (RISE), Hanane Becha, UN/CEFACT, Richard T. Watson, University of Georgia, Norbert Kouwenhoven, IBM, and Phanthian Zuesongdham and Ulrich Baldauf, Hamburg Port Authority.

    A digital twin is a dynamic digital representation of an object or a system. It uniquely describes in a binary format a person, product, or environment’s key characteristics and properties and can be rendered in one or more physical or digital spaces.

    Decision making options

    Decision making is the central activity of all organisations, and decision makers use explanatory or causal models either implicitly or explicitly. They decide based on the anticipated effects of their intervention. Decision making is typically improved by open sharing of decision models with colleagues and calibrating them with data. The value of a decision model is often determined by the quality and breadth of data used for creation and calibration. The vast and growing Internet of Things (IoT) will be a key source of real-time data for model building and reality assessment.

    The simplest and most common decision model is based on a measured association among variables in a data set. Methods such as regression and machine learning fit this mould. A more advanced approach is to test interventions prior to implementation, such as with pilot studies and experiments, aimed to validate a causal model before scaling to a larger population. Randomised field experiments have been applied to test key economic principles, and the key proponents were awarded the 2019 Nobel prize in economics. The problem with interventions is that some don’t work and might harm the subjects, such as when testing new drugs, or jeopardise financial sustainability, such as infrastructural investments for a port that are below the intended return. The most rigorous approach to decision making is to build a hi-fidelity mathematical or biochemical model, or digital twin,[1] of the environment of concern and simulate a possible range of interventions. This enables the exploration of counterfactuals, such as what if we did x instead of y. Such models do not physically harm humans or nature and provide a conceptual foundation for decision-making for future sustainable business operations. You can distinguish these three approaches, respectively, as building a theory from data, testing a theory in one or more real settings through interventions, or testing a theory many times using a digital twin to simulate many possible settings. The latter is the least risky and likely to be the most successful.

    Digital twins require the construction of a precise set of equations for each component in the model and the interaction among the components. They also need data for their calibration and operation. As the digital transformation of the maritime sector proceeds, it can also create the data required to calibrate digital twins of the various components of a ship, a port, and other elements of the transport infrastructure such as the goods being transported (as e.g. dry and reefer containers). In many industries, included shipping, there are “emerging opportunities to digitally represent and simulate objects and events prior to decision making”.[2] As more devices become connected, such as a smart container with data generated by diverse use cases (e.g., executed transit time, deviations alerts, and infrastructure utilisation associated to container movements and operations),[3] digital data streams built upon standardised data sharing provide opportunities for real-time representation and simulation of authentic situations. Digital twins will displace simulation models because of the order of magnitude increase in the fidelity of representation of the physical world and their continual recalibration via digital data streams to local conditions and changed circumstances.

    In this article, we elaborate on the key fundamentals of digital twinning followed by how it may improve the decision making of shipping companies, port operators and others in the transport and shipping ecosystem, as well as in developing standards, that support both the integration of transport supply chain operations and the development of digital twins for operational enhancement and strategic planning.

    Digital twins

    A digital twin is a dynamic digital representation of an object or a system describing its characteristics and properties as a set of equations. Complex processes involving a multitude of actors are often difficult decision-making environments that are best modelled digitally prior to action.  A digital twin includes both the hardware to acquire and process data and the software to represent and manipulate these data. Digital twins are more powerful than models and simulations because they leverage digital data streams to bridge the barrier between the physical entity and its representation. This means that digital twin analytics relies on historical data (e.g., a data lake), and real-time digital data streams (e.g., IoT generated data), to analyse possible outcomes (Figure 1). A digital twin is a generic model of a situation that can be tailored to a specific situation by specifying relevant parameters to provide answers to “what happens if …” or “what happens if this does not …” to support decision-making.

     digital twin jul 15

    Figure 1: The components of a digital twin

    A digital twin can be continually calibrated through its entire lifecycle by integrating real time digital data streams.[4] This also means that a model can be continuously refined to so that it converges to a very high-fidelity model of reality.

    Standards to support digital twins

    Traditionally, we have used data modelling to surface that core component within a standard and to ensure compatibility across standards. This has been followed by efforts of defining standardised interfaces for communication, so-called APIs (Application Protocol Interfaces). Now, we need to recognise that data have a dual role: transaction processing and data analytics, such as that facilitated by a digital twin. Thus, a digital twin is another use case that needs to be supported by standardised digital data streams using standardised APIs. We need to redesign business processes to support the generation of IoT derived data necessary for digital twin creation and operation, so that they become powerful tools for risk management analysis and mitigation, as well as effective decision making aids  To prepare for the era of digital twins, standardisation bodies, such as UN/CEFACT, GS1, WCO, and DCSA have developed various building blocks in support of the digital twin concept, namely the UN/CEFACT Smart Container data model and the DCSA IoT connectivity infrastructure. Extra standards are still needed to build and deploy fully the digital twins. Standards need to serve both the transactions of today and the digital twins of the future. Three areas of operations are now discussed for which maritime sector digital twins would serve as an important foundation for strategic and operational decision-making to enable ecological and financial sustainable maritime transport.

    Examples of digital twin use cases for the maritime sector

    Digital twinning is an acknowledged opportunity for maritime sector improvement. “There is no doubt that the digital twin is the future. Being able to predict potential dangers and create the optimum design, will enhance safety and operation greatly. With the element of the unknown significantly limited, the digital twin concept can help the shipping industry make better use of digitalization and move to a new era”.[5] Three areas that will likely benefit from digital twins are fleet optimisation, port optimisation, end-to-end supply chain optimisation and increasing key stakeholders’ situational awareness, which we now elaborate upon.

    Fleet optimisation

    Typically, a shipping company serves multiple clients at the same time, and clients may use different shipping companies simultaneously. Thus, a shipping company needs to maintain and gain in competitiveness by optimising its fleet in terms of ships and their cargo carrying capacity. This need for sensitivity analysis could be served by a digital twin based on historical, ongoing, and predictions of business transactions. This digital twin could form the basis of strategic decision-making by testing a variety of scenarios for trade patterns and shipping fleets.

    Furthermore, a digital twin for fleet optimisation could also enhance operational decision-making under diverse contextual factors, such as weather conditions that create atypical situations, and various options need to be rapidly reviewed.

    Port and terminal optimisation

    Port efficiency relies on balancing demand and supply in a flexible way and integration within the entire transport system.[6] A port is dependent of a continuous inbound and outbound flow of cargo and passengers arriving and departing from the port by different means of transport. For strategic planning, a port and its partners need to capture historical, ongoing, and predicted future trade in a digital twin. Such a model should incorporate the different parameters and relationships that port decision-makers should include in their strategic decisions, such as investment in infrastructure,  port design, and terminal capacity. Typically, questions that such a model should address are how many berths are needed for the port need to meet punctuality goals, or how much yard space is needed to allow for different customers to store their cargo as it moves between transport services, either shipping or other modes.

    A digital twin, fed by multiple data streams of real-time data and historical databases, is also an operational planning tool for the coordination and synchronisation of port operations.[7] It could be an essential foundation for virtual arrival processes and green steaming[8] and for the hinterland window to support efficient use of trucks, trains, and infrastructure for diverse needs.

    Situational awareness: short and long term

    Cargo owners, transport buyers, and end-customers seek enhanced visibility and predictability on the state of the transport of goods in their movement from origin to destination. To enhance situational awareness for these groups, it is feasible to consider a parallel linking of relevant digital twins so that the repercussions of a delay in one stage can be thoroughly analysed, adjustments made, and situational awareness updated. In addition, connected digital twins are a tool for investigating the coordinated development of infrastructure investments across a web of ports that frequently interact so that key stakeholders also gain long-term situational awareness. This allows them to collaboratively make decision to serve the common goals of the eco-system like minimising emission in ports. Understanding a complex interacting world is increasingly beyond the cognitive capabilities of humans, and we must build and use high-fidelity models of that world that enable them to perceive the state of the present and the future.

    Optimisation of container flows in the end-to-end supply chain

    Recently, smart containers supporting IoT connectivity standards for have been introduced.[9] There are numerous use cases for smart containers that overcome some of the pain points that the transport industry experiences. The data streams generated by smart containers are a valuable input for fleet optimisation, port and terminal optimisation, and situational awareness as elaborated previously. Containers pass through many transport hubs and are managed by different carriers (of the same and different type) in the end-to-end supply chain. As a result, data generated by connected containers is a very valuable source for data for digital twins, whether retrieved from a data lake or handled real-time as a data stream.

    A digital twin for supply chain optimisation will provide transport buyers and coordinators opportunities to optimise the choice of transport mode and route for serving their clients. This should strengthen their strategic relationship to transport producers, such as carriers and transshipment hubs. Furthermore, a digital twin will be a basis for optimising the flow of empty containers. Connected containers are an electronic necessity for "smart" supply chains[10]  and an essential building block for digital twins of supply chains.

    Final words: Standardising for digital twinning

    A digital twin is constructed by generic mathematical representations of many components (e.g., a container crane, a container, the machine of a ship, and a bollard) and their relationship with other components (e.g., a container crane unloading a container ship, the utilisation of a berth for a visiting  ships).

    These generic representations are parameterised so they can be tailored to specific circumstances, such as the unloading speed of a crane given its position, the position of a container on a ship, and the prediction of berth slots occupied by visiting ships.

    Those groups with deep knowledge of each component, such as crane manufacturers, port infrastructure designers, and ship designers, need to develop, or advise on development of, a standard model of their component. Standardised digital models of all components in the shipping industry is the next wave of standardisation if the industry is to achieve higher levels of capital productivity through analytics based operational and strategic decision making. The physical instances of all components need to have embedded sensors that generate standardised data stream to calibrate their associated digital model. Current operation and future needs can be both guided by digital twins provided the maritime industry cooperates to standardise digital data streams and models of digital components.

    References

    [1] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [2] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [3] UNECE (2020) Trade Facilitation White Paper on Smart Containers: Real-time Smart Container data for supply chain excellence, Geneva

    [4] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [5] https://safety4sea.com/cm-the-digital-twin-concept-explained/

    [6] Becha H., Lind M., Simha A., Bottin F. (2020) Smart ports: On the move to becoming global logistics information exchange hubs, Smart Maritime Network, 20/4-2020 (https://smartmaritimenetwork.com/2020/04/20/smart-ports-on-the-move-to-become-global-logistics-information-exchange-hubs/)

    [7] Lind M., Bjørn-Andersen N., Ward R., Watson R.T., Bergmann M., Andersen T. (2018) Synchronization for Port Effectiveness, Ed. 79, pp. 82-84, Port Technology Journal (http://www.porttechnology.org)

    [8] Watson R.T., Holm H., Lind M. (2015) Green Steaming: A Methodology for Estimating Carbon Emissions Avoided, Thirty Sixth International Conference on Information Systems, Fort Worth 2015

    [9] https://dcsa.org/dcsa-establishes-iot-standards-for-container-connectivity/

    [10] Becha H., Frazier T., Voorspuij J, and Schröder M., (2020) Standardized Container IoT is Key for "Smart" Supply Chains, The Maritime Executive, 27/05-2020 https://www.maritime-executive.com/editorials/standardized-iot-for-containers-is-the-key-for-smart-supply-chains-1

    To find out more about the authors, please click here.

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