ICT for cooperative supply chain visibility within a port centric intermodal setting: The case of the Thessaloniki port-rail-dryport integration

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1 ICT for cooperative supply chain visibility within a port centric intermodal setting: The case of the Thessaloniki port-rail-dryport integration Gagatsi Eliza 1 *, Athanasopoulos Nikos 2, Vaggelas George 3, Aifadopoulou Georgia 4, Morfoulaki Maria 5 1 Head of Freight and Logistics Department, Hellenic Institute of Transport Centre for Research and Technology Hellas 2 Strategic Planning Senior Advisor - TRAINOSE SA 3 Advisor to the Chairman & Managing Director - Thessaloniki Port Authority SA 4 Research Director, Hellenic Institute of Transport Centre for Research and Technology Hellas 5 Head of Urban Mobility Department, Hellenic Institute of Transport Centre for Research and Technology Hellas Abstract Although ICT applications in transport and logistics have gone a long way especially in the past decade, supply chain visibility still remains a challenging issue to be tackled. This is especially important in the case of a Med port-rail-dryport setting, as the FutureMed project testifies. Cooperative action of the supply chain actors involved in such a setting is required to solve the informational and ICT integration problems that still exist. This is the case of FutureMed s Greek (actually involving Greece and Balkans) pilot, which is currently at its preparatory phase. The present article initiates by placing supply chain visibility within its wider context and proceeds to the description of the Greek pilot aiming at enhancing such visibility by the use of ICT. Keywords: ICT, ports, rail, maritime, visibility 1. Introduction In the contemporary and dynamically changing environment of globalized trade, being part of the global supply network is, or should be, high on the agenda of all trans(port) nodes, seaports in particular. Being more than a complex of berths, docks, and adjacent land where ships and cargoes are served [1], seaports should play an important role in supply chain integration by serving and facilitating multi-modal transport intersection, operating as logistics centre, adding value, linking flows, and creating supply chain patterns and processes of their own [2]. In periods of economic distress and decreased freight volumes, the effectiveness of global supply networks is strongly dependant on the exploitation of intermodal, multimodal, combined, co-modal or -the recently introduced- synchro-modal ways of transportation all of which focus on the cooperation among transport modes under the unique goal of supply chain integration.

2 Among the main hindrances of intermodal transport, one could identify the complexity of multimodal freight transport information exchange resulting from the lack of interoperability along the supply chain, the need for provision of information several times for different purposes, the lack of information on multimodal availabilities and the lack of integration of information from tracking and tracing technologies and intelligent cargo applications [3]. The existence of different types of inefficiencies, costs, and reduced visibility of freight, often lead to a perceived complexity for multimodal transport and subsequently to its sub-exploitation, coupled usually with the non-optimized use of existing transport infrastructure. Visibility and interoperability are probably the most critical ones, as these underpin the performance of a number of operational issues and at the same time they operate in a mutually reinforcing manner. Supply Chain Visibility is perceived as a firm s ability to collect and analyze distributed data, generate specific recommendations, and match insights to strategy. [4]. Or, put in a slightly different way, as the ability to access or view pertinent data or information as it relates to logistics and the supply chain, regardless of the point in the chain where the data exists [5]. Interoperability [6] on the other hand, refers to the ability of information and communication technology (ICT) systems and the business processes they support, to exchange data and to enable sharing of information and knowledge. Interoperability, as identified in the Digital Agenda for Europe [7] -one of the EU 2020 Strategy flagshipsis essential to maximize the social and economic potential of Information and Communication Technologies (ICT). Today, limited transport chain visibility and interoperability are still the case, mainly as a result of the transport sector evolving along national lines and ICT systems being developed as silo-ed applications [8], following different industrial structures, operations and information/data models. In the case of a seaport, the ability to operate as an integrated node of the maritime supply chain facilitating land accessibility (road, rail) through the provision of ICT driven Value Added Services (VAS), comprises a unique competitive advantage in this particular period where the ports are depending on global supply chain and terminal operators rather than the opposite. This paper aims to present a case of a cooperative supply chain visibility within a port-centric intermodal setting, focusing on the maritime rail interface. The examined port-case concerns the Thessaloniki port, established on the crossroads of Pan-European corridors IV and X and comprising a gateway port of the eastern Mediterranean. Although being a rail connected port, it seems that still today it has not exploited its full potential in terms of traffic and catchment area. This is especially true regarding rail traffic, at a time when road transport appears as the preferred alternative, despite the fact that this preference increases the total transport cost, also through a series of relevant externalities (congestion, environmental impacts etc). 2

3 2. Port-rail integration in perspective 2.1. The wider view Port and rail integration is a strategic element of port development, both in economic and competitive terms but also in terms of environmental protection. Even though, railway represents a tremendous opportunity to improve port competitiveness, their effectiveness varies according to the particular characteristics of each port and industry. Geographical and economic aspects -whose main impact is on cargo-demand-, industry structure, type of foreign trade which doesn t only influence the demand, but also, the types of services that need to be offered- and institutional aspects and regulations are some of the factors influencing effectiveness in any strategy [9]. The improvement of port to rail integration will not only shift the modal split share, but will also create a port to port healthy competition. Europe s major clusters of economic activity are in the hinterland, which gives the railway the opportunity and forces the ports to integration [10] [11] [12]. Inland waterways are complementary to the railway network, accounting to a combined total of a little over 22%, with rail reaching 16.5% of Europe s modal split share, with road transportation up to 75.5% [9]. Robinson [13] and Carbonne and De Martino [14] stressed the importance that ports are just a link in the supply chain whose functional and organizational integration should extend except from ship to port connectivity, to a port-hinterland relationship which is of equal or greater importance. Cullinane and Wilmsmeier [15] are arguing that the port s rail connection with dry ports and inland load centers is a key factor of port development. It is increasingly important to integrate hinterland infrastructure with the port in order to extend the port development life cycle, where rail is seen as a key factor for resolving problems such as scale economies, congestion and lack of space. One of the positive effects of integrating rail and maritime transport is first of all the increase of the area that can be serviced. Decrease or, even, elimination of congestion in ports could be achieved by improved utilization of resources, predictability of service, improved transit times, strengthening of the logistics chain, improved competitiveness of ports, hence increase in business volume, are some of the benefits of port and rail integration with the scope of the reduction in Logistics Cost of doing business [16]. More and more ports are having, nowadays, a Master Plan for Rail Transport. The Port of Antwerp, one of the biggest and most important rail ports in Europe, with rail traffic being 12% of its total traffic, has already a Master Plan for the future of rail connectivity of their port, and wants to heavily invest in this sustainable mode of transport. The port authority of Antwerp launched ( ) an Intermodal Solutions project by which rail operators are able to bid on the grouped volumes of shippers and 3PL service providers. In 2010, this resulted in no less than eight (8) additional rail connections. In the medium term, the Port Authority wants to increase the share of container rail transport to 15% [17]. Los Angeles/Long Beach is a port that used to suffer from capacity and congestion problems just before the crisis of If no rail connectivity was existent, problems would have been a lot worse during that period. In the case of Europe, the network of logistics centers, mainly in the Western Europe, forms a belt along the so called Blue Banana [9]. This freight belt is mainly based on rail links, which are integrated with inland waterway and road transport. Both rail & ports should invest

4 in resources for them to be able to meet customer requirements and improve their competitiveness, cooperating in operational planning, communication, marketing and information exchange [18] The case of the Mediterranean basin Port-rail integration is a critical issue for the Mediterranean basin as well. Looking at the current state of the ports & maritime sector one can clearly see that, since China s advent in the world economic scene in the last decade, the main maritime flows of Europe and the Mediterranean are linked to the Far East (13.7 m TEUs from Far East to Europe and 6.3 m TEUs on the opposite direction in 2012 [19]). From these flows, approximately 1/3 uses the Mediterranean ports and the remaining 2/3 the north European ports, creating a trade, transport and economic imbalance. Allowing a more balanced distribution of entry/exit flows is a vital aim of the European infrastructure policy for ports, as stated in the 2011 White Paper. The main reason behind this imbalance is the relative (to the north European region) ineffectiveness and inefficiency of the Mediterranean as a maritime gateway/transhipment zone. And this is to a large extent due to the lack of the required port-rail integration. FutureMed is a strategic project of the MED Programme that aims to improve the competitiveness of the Mediterranean port system by enhancing accessibility through technology and procedural innovations. The project addresses the three strategic sectors involved in maritime transportation namely freight, passenger and cruise and focuses on the realization of interoperable management information systems and on the reduction of transport related externalities. Regarding freight, FutureMed focuses especially on the portrail integration area. In the first months of 2013, the project partners conducted an extended survey based on personal interviews with private and public supply chain actors along the Mediterranean coast. The interviews were undertaken in 6 Med countries (Greece, Spain, France, Italy, Slovenia and Cyprus), involving ports/port operators, ocean carriers, rail operators, terminal operators, customs, health inspection authorities, cruise lines, and public transport operators, and were focused on identifying gaps in three areas: trade facilitation, supply chain visibility, and passenger/cruise infomobility. The area where the major gaps (i.e. opportunities for improving Med ports competitiveness) were identified, was the one of supply chain visibility and integration along the port-rail-dryport chain. Three real-life cases (pilots) are focusing on that issue: one in Spain, one in Italy, and one in Greece. The latter one is described in the following section. 3. The pilot project 3.1 The physical corridors For the needs of the Greek FutureMed case, two intermodal corridors have been identified as test beds (see Figure 1): Corridor A: linking the port of Thessaloniki via rail to the inland terminal of Yana (Sofia, Bulgaria) Corridor B: linking the port of Thessaloniki via rail to private (company) terminals in Skopje (FYROM) 4

5 Corridor A is to become operational until September 2013 (containerised transport), while corridor B is already being used mainly for the transportation of bulk products. Figure 1: Graphical representation of corridors A and B The main actors involved are the Thessaloniki Port Authority, the rail operator (Trainose), two inland terminals (one for container handling and one for bulk handling), and the shipping agents. 3.2 Informational and ICT integration The main problem currently faced is the limited (regarding containerised cargo) or nonexistent (regarding bulk cargo) visibility along the intermodal chain, and more specifically between port, rail and inland (dry) port. In the case of containerised cargo (Corridor A), although a number of status messages are currently being exchanged (CALINF, COARRI, RAILCOARRI), these are confined between the port and the railway operator, but do not extend to the dryport operator. As a result of this: the shipping agents (customers ) view of the whole process is confined to the part from the ship arrival to the loading of the train (and vice versa) the shipping agents and/or freight forwarders are not provided with any visibility on rail wagon availability and schedules so that they can plan the further movements in advance, and of course they cannot proceed with any wagon bookings the port operator, having no visibility on the planned rail movements cannot plan adequately its operations (manpower & equipment planning)

6 the final customer (retail or manufacturing company) does not have visibility over the entire intermodal journey. all actors have to combined various pieces of information from various sources (no single visibility solution available). To overcome those visibility gaps, actions for port-rail-dryport integration are foreseen, focusing at two levels: at the informational level, and at the ICT level. These actions are to comprise the core of the Greek pilot within the FutureMed project. Aiming at port-rail informational integration, the information currently exchanged is to be extended covering currently missing information elements, business areas, and supply chain actors. The following table summarises the current and pilot-specific (future) information exchanges. Table 1: Information exchanged (currently and in the pilot scenario) Information currently exchanged Additional information to be exchanged in the pilot testing Info element Actor Info element Actor From To from to Ship ETA Shipping ThPA Rail ETA Inland port / ThPA Trainose / Rail freight forwarder Ship arrival Shipping ThPA Rail wagon Shipping ThPA / notification Cargo unloaded notification Cargo in temporary storage Cargo loaded to rail Rail arrival notification ThPA ThPA Rail wagon availability availability inquiry ThPA ThPA Rail wagon booking Shipping Rail freight ThPA Consignment status Inland port / forwarder request (containerised Shipping Rail freight forwarder ThPA cargo) Consignment status (containerised cargo) Damage report (containerised cargo) Consignment status request (bulk cargo) Consignment status (bulk cargo) Trainose Trainose ThPA / Shipping ThPA / Trainose ThPA Inland port / Shipping ThPA / Trainose ThPA / Trainose ThPA / Trainose Inland port / Shipping Rail freight forwarder ThPA / Trainose Inland port / Shipping In the case of corridor B that involves the bulk terminal of the port of Thessaloniki, currently no integrated IT system is available. The information exchanged among the different actors is implemented via paperwork, telephones, physical presence etc. No Single Window service or standardised messages are currently applicable in the case of the bulk terminal. Regarding 6

7 Corridor A, although it was previously mentioned that this will become operational in the following months, the information exchanged presented in the previous Table is noted as currently exchanged as this is the information used in relation to all other corridors. Thus it can be migrated immediately in the case of Corridor A. Furthermore, the use of a Single Transport Document (STD) specifically focused on the portrail integration will be examined as a means of integrating the information exchanged by the different actors involved. This examination is to be performed in conjunction with the other FutureMed pilots focusing on supply chain visibility, so that any results obtained can have a Med-wide added value. The informational integration will be translated also into ICT integration. This is to be achieved by the development of interfaces between the existing systems of ThPA and Trainose, so that clients can access visibility information through a unified channel, i.e. a visibility single window. Existing sources of information, for example the CTMIS (Container Terminal Management Information System existing in the port side) and the railway operator s order/cargo/wagon management system (rail side) are to be used in that respect. 3.3 Expected impacts Enhancing port-rail-inland port visibility is the ultimate expected impact of the pilot. In order to achieve this, the pilot organisations will: Identify opportunities for harmonising information/documentation exchanges between the various operators along the port-rail-dryport chain Investigate the use of a Single Transport Document (STD) specifically focused on the port-rail integration, as a means of integrating the information exchanged by the different actors involved Implement the necessary interfaces between the existing systems and provide visibility through a single point (visibility single window) Identify the aspects of the pilot that can be transferred into other port-rail-inland port business settings. In order to assess the pilot s impact a KPI s based methodology focusing on qualitative and quantitative aspects will be employed. The qualitative aspects will capture the supply chain actors views on the suitability and usefulness of the visibility information received. The quantitative aspects will identify the cost efficiencies achieved as a result of either the additional information, or the increased cost effectiveness of capturing current information in an improved compared to the current way. Finally, quite important are the expected future impacts identified by the pilot partners in terms of increased use of the port-rail chain, in comparison to the port-road one. The KPIs groups that better define the pilot s intervention are those of Service Efficiency, Service Quality, Environmental Sustainability, ICTs Engagement, Infrastructural Efficiency and Transport Business Players Participation. In each KPI group, specific KPIs will be selected with their definition and measurement methodology. Data needed, potential sources and their availability will be checked, as well as the node/link that those data are necessary. In the cases that such KPIs are measured in the framework of other projects/initiatives it will be examined if conditions can apply to the Port of Thessaloniki case. To give an example in the

8 case of Service Efficiency KPIs group if Delay Risk is selected as one of the KPIs, then a potential definition could be: amount of serious disruption such as cancelations, strikes etc, in a scale from 1-5. Beside the existing statistical data, also qualitative data (perception) can be made available through interviews with transport services providers and clients. 4. Conclusions Supply chain integration is an area where a lot still remains to be achieved. This is especially the case when considering intermodal transportation, and even more when the focus is on a geographical region such as the Mediterranean. Among the main hindrances of intermodal transport, one can identify the complexity of intermodal freight transport information exchange resulting from the lack of interoperability along the supply chain, the need for provision of information several times for different purposes, the lack of information on intermodal services availability and the lack of integration of information from tracking and tracing technologies and intelligent cargo applications. To that respect, visibility and interoperability are probably the most critical aspects, as these underpin the performance or underperformance of a number of operational issues and at the same time they operate in a mutually reinforcing or disintegrating manner. Recently, the FutureMed project (a strategic project of the Med Programme) conducted an extended survey based on personal interviews with private and public supply chain actors along the Mediterranean coast. The interviews were undertaken in 6 Med countries, involving ports/port operators, ocean carriers, rail operators, terminal operators, customs, health inspection authorities, cruise lines, and public transport operators, and were focused on identifying gaps in three areas: trade facilitation, supply chain visibility, and passenger/cruise infomobility. The area where the major gaps (i.e. opportunities for improving Med ports competitiveness) were identified, was the one of supply chain visibility and integration along the port-rail-dryport chain. Three real-life cases (pilots) are focusing on that issue: one in Spain, one in Italy, and one in Greece. The Greek case (pilot project) involves two international corridors towards the Balkans, one focusing on containerised cargo and the other on bulk cargo. The main problem currently faced is the limited (regarding containerised cargo) or non-existent (regarding bulk cargo) visibility along the intermodal chain, and more specifically between port, rail and dryport. To overcome those visibility gaps, actions for port-rail-dryport integration are foreseen, focusing at two levels: at the informational level, and at the ICT level. Aiming at port-rail informational integration, the information currently exchanged is to be extended covering currently missing information elements, business areas, and supply chain actors. The informational integration will be translated also into ICT integration. This is to be achieved by the development of interfaces between the existing systems of the corridor actors, so that clients can access visibility information through a unified channel, i.e. a visibility single window. Furthermore, the use of a Single Transport Document (STD) specifically focused on the port-rail integration will be examined as a means of integrating the information exchanged by the different actors involved. Enhancing port-rail-dryport visibility and achieving technical interoperability is the ultimate expected impact of the Greek pilot. 8

9 5. References [1] International Handbook of Network Industries : The Liberalisation of Infrastructures, M.Finger, W.Kunekke,Edward Elgar Publising Limited, 2011 [2] Bichou K and R.Gray, 2005 A critical review of conventional terminology for classifying seaports, Transport Research A, 39, pg [3] Schlewing, Astrid. ICT for transport logistics in a White Paper context:paperless multimodal freight ransport., E-Freight Conference 2012, Delft : DG MOVE Maritime Transport & Logistics. [4] Use New Supply Chain Visibility Technologies To Improve Customer Service And Return On Assets, G. Lawrie, M. Gilpin, S. Rose, 2011 [5] Council of Supply Chain Management Professionals (CSCMP), Glossary of Terms, [6] CEC, ida: Interchange of Data Between Administration, European Interoperability Framework for Pan European e-government Services FRAMEWORK, working document- V4.2-January 2004 [7] CEC, The Digital Agenda for Europe - Driving European growth digitally, Brussels, , COM(2012) 784 final [8] C. Panou, Document-based interoperability approach to freight SMEs in ECITL 2011 Conference, Thessaloniki, Greece [9] E.L. Matamala and G.P. Salas (2012). Port-rail integration: challenges and opportunities for Latin America, FAL Bulletin, vol. 310, no. 7. [Online]. Available: WEB-ENG.pdf [10] T.E. Notteboom, Concentration and the formation of multi-port gateway regions in the European container port system: an update, Journal of Transport Geography, vol. 18, pp , [11] T.E. Notteboom, Consolidation and contestability in the European container handling industry, Maritime and Policy Management, vol. 29, no. 3, pp , [12] T.E. Notteboom, Concentration and load centre development in the European container port system, Journal of Transport Geography, vol. 5, no. 2, pp , [13] R. Robinson, Ports as elements in value-driven chain systems: the new paradigm, Maritime Policy Management, vol. 29, no. 3, pp , [14] V. Carbone and M. De Martino, The changing role of ports in supply-chain management: an empirical analysis, Maritime Policy and Management, vol. 30, no. 4, pp , [15] K. Cullinane and G. Wilmsmeier, The contribution of the dry port concept to the extension of port life cycles, Handbook of Terminal Planning, Ed. Jurgen W. Bose, New York, Springer, [16] B. Dzawanda (2006). The need for Rail and Ports integration. [Online] Available: [17] Site of the Port of Antwerp. [Online] Available: [18] B. Dzawanda (2009). The need for Rail and Ports Integration: Adressing the special needs of Landlocked Countries. [Online] Available: [19] Stuck in the Slow Lane, Containerisation International, p. 6, May 2013.

10 Authors Eliza Gagatsi Ms Eliza Gagatsi, MSc Transport Engineer is a Research Associate of HIT. She is a Dipl. Civil Engineer with MSc in Transportation and a scholarship awarded PhD candidate. Her main fields of expertise are freight transport and logistics as well as maritime transportation with a particular focus on policy related research, field that is examined within the frame of her PhD research on the Greek and European Maritime Transport Policy. Since 2010 she is Head of Freight Transport and Logistics Unit at HIT- CERTH. Nikos Athanasopoulos Dr. Nikos Athanasopoulos, is Strategic Planning Senior Advisor at TRAINOSE S.A., the Greek railway operating company. George Vaggelas Dr. George Vaggelas is advisor to the President and CEO of the Thessaloniki Port Authority S.A. He holds a BSc (Shipping & Enterpreneurship), an MSc in Shipping Trade and Transport (STT), and a Phd, from the School of Business, University of the Aegean, Greece. Georgia Aifadopoulou Dr. Georgia Aifadopoulou is a senior researcher at the Centre of Research and Technology Hellas (CERTH) in the Hellenic Institute of Transport (HIT). Her professional and research expertise covers the fields of: Freight transport & Logistics, Traffic & Mobility Management, Transport Systems Optimization and ICT applications in Maritime and Multimodal Transport. She holds a civil engineer diploma, Master degrees in Operations Research and in Transport Management and a PhD in Freight Transport Optimization. Maria Morfoulaki Dr. Maria Morfoulaki, Dipl. Civil Engineer AUTh, Transport, is Researcher of HIT. Until now she has worked in many Research Programs and Transport Studies as Transport Consultant while from October 2001 she is working as Researcher of the Hellenic Institute of 10

11 Transport (HIT). She specializes in sustainable transport enhancement projects, traffic forecasts using transport models and network simulation but she is also interested in fields of Public Transport Systems, Road Safety and Freight Transports.