Publications

- February 1, 2019: Vol. 6, Number 2

Seaports on autopilot: Challenges are significant, but careful planning can surmount them

by

Although ports have adopted automation more slowly than comparable sectors, notably mining and warehousing, the pace is now starting to accelerate, according to a report from McKinsey & Co. Automated ports are safer than conventional ones and can be less expensive and more productive. The problem is upfront capital expenditures are high, and the operational challenges are significant.

Nonetheless, successful automated ports show that careful planning and management can surmount these difficulties, with operating expenses capable of declines ranging from 25 percent to 55 percent, and productivity increases of 10 percent to 35 percent.

McKinsey reports the first automated container port was developed in Europe in the early 1990s. Since then, many ports — more than 20 in the past six years — have installed equipment to automate at least some of the processes in their terminals. Almost 40 partly or fully automated ports now do business in various parts of the world, and the best estimates suggest that at least $10 billion has been invested in such projects. The momentum will probably accelerate: A additional $10 billion to $15 billion is expected over the next five years.

Port automation consists of five components, according to McKinsey. They can create value by implementing each component individually but will unlock the full benefit only if all five are integrated and coordinated.

  1. Automated equipment. This kind of equipment makes operations run more consistently and without downtime. Ports are starting to recognize the importance of such benefits even where low factor costs seemingly make automation hard to justify.
  2. Equipment-control systems. Ports have integrated gate-operating software with advanced optical-character-recognition and camera technology, for example, to automate gate operations, and to identify and route containers and trucks automatically.
  3. Terminal control tower. The “brain” of an automated terminal comprises the terminal operating system, decision-making tools, advanced analytics, the digital platform, and interfaces to the port community and customers. The control tower coordinates and optimizes the management of the entire port; handles demand forecasting, workflow management, scheduling, optimization, monitoring and control; gives working instructions to the equipment controls; and receives real-time feedback from them.
  4. Human–machine interactions. The increasing use of robots and other automated equipment makes interactions between them and humans increasingly important in ports. These interactions take many forms; technologies like augmented reality and virtual reality, for example, direct robots and automated guided vehicles.
  5. Interactions with the port community. A more seamless exchange of data and connectivity along the wider value chain makes the system more efficient. Digitization and real-time connectivity are important for collaboration among the key stakeholders (including liners, logistics service providers, consignees and customs officials) and for interactions with the wider port ecosystem.

 

Excerpted from the McKinsey & Co. report titled The future of automated ports. Read the complete report at this link: https://mck.co/2AtECMx

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