Automation and Blockchain: A New Freight Distribution Paradigm for the Shipping Industry?

Transcription

1 Annual Conference of the Shipping Federation of Canada, Montreal (Canada), May 22, Automation and Blockchain: A New Freight Distribution Paradigm for the Shipping Industry? Dr. Jean-Paul Rodrigue Dept. of Global Studies & Geography Hofstra University New York, United States

2 Forthcoming in Port Technology International

3 How automation changes processes but also locations within supply chains Asynchronism between operations and transactions in the shipping industry

4 The Automation Ceiling: In which context further automation makes sense? Quay Cranes Hard Horizontal Transport Tracking Yard Cranes Automation Ceiling Gates Yard Management Adoption Diffusion Maturity 25% 50% Easy 1990s 2000s 2010s 2020s 2030s

5 Four Unexpected Consequences of Automation for Maritime Shipping Shipping Network Terminal Facilities Further network segmentation. Rationalization of shipping networks. New types of container terminals. Changes in terminal operations. Changes in velocity and throughput. 1 Segmentation and rationalization of shipping networks? 3 New types of container terminals? X Terminal Footprint Decline of the global terminal footprint. Less multiterminal ports. Vertical Integration Development of 3PL and 4PL services. New partnerships. 2 Decline in global terminal footprint? Less multiterminal ports? 4 New entrants and stakeholders?

6 Transshipment Volume and Incidence by Major Ports,

7 Is there a Scale Effect for Automation? Automation Cost (per unit of cargo) 1 million TEU is usually considered the scale at which comprehensive automation strategies can be implemented. Technological developments As the cost of automation goes down, automation can be applied to smaller and more numerous terminals. Profitability threshold Scale effect Terminal Traffic

8 Automation and Terminal Design Conventional Emerging Loading / unloading area Container crane Container storage Reefers Reefers Empties Drop / Pick up Gate Empties On dock rail terminal Chassis Straddle carrier Rubber-tired gantry Wide span gantry Linear Layouts Block Layouts

9 The Fourth Industrial Revolution: The big picture of value chains Value Chain Added Value Infrastructure Labor Logistics R&D Procurement Fabrication Distribution Open innovation, Collaborative design Flexibility and compliance, New materials 3D Printing and robotics, Distributed manufacturing Automation (warehouses, terminals and vehicles) Marketing Ecommerce, Omni facilities Services Internet of Things, Shared services

10 Automation changes processes but also locations High automation potential (>50%) Manufacturing Food service and accommodations Retail and distribution Non-material inputs (Labor, Capital, Technology, Policies, Regulations) Low automation potential (<30%) Education Healthcare Management Outputs (Markets, Customers) Material Inputs (Resources, Parts, Energy, Land)

11 The Core Principles of Blockchains Sequence of Blocks Creation and transfer of unique digital objects Digital Ledger Digital Trust Transparency, verifiability and immutability Smart Contracts Programmable actions that can be traced Open Source Accessibility and inclusiveness

12 Cryptocurrencies are giving Blockchains a bad name Became speculative instruments (bubbles) Counterintuitive to the concept of currency (medium of exchange, store of value, unit of account) Worse than fiat (no thin air but large amounts of energy for mining ). Bitcoin network consumes 2.55 GW of electricity, the equivalent of Ireland.

13 Blockchain does not perform anything new Processing documentation: 20% of the cost and 30% of the time for containerized trade involving developing economies. Blockchain does not change the cost structure, but increases the velocity of freight with less friction in transactions (documentation) Could impact the most cold chain trades and niche high value trades. Not much impact on existing trade structures. Developing countries could benefit. At this point, shipping lines are in the experimentation phase. Do not expect to be a generator of value.

14 Blockchain: Showing how the sausage is made? Distribution Center Port Port Inland Port Distribution Center Physical Flows Truck Ship Rail Truck Carrier Operations Packaging Packing Palletizing Empty receiving Stuffing / Loading Gate entry Yard drop off Stacking Berth drop off Loading Unloading Stacking Inspection Yard pick up Gate exit Unloading Stacking Yard pick up Gate exit Receiving Unstuffing Depalletizing Stocking Empty return Information Flows Certificate of origin Commercial invoice Packing list Insurance Booking Order # Gate date Pickup date Equipment # Events Entry date Customs clearance Yard slot # Loading date Demurrage Events Pickup date Equipment # Events Arrival notice Unloading date Customs clearance Yard slot # Pickup date Demurrage Events Pickup date Equipment # Events Unloading date Yard slot # Pickup date Demurrage Events Pickup date Equipment # Events Receiving date Order # Blockchain Order Trucking BoL Master BoL Rail BoL Trucking BoL Receipt Smart Contracts Match consignment with BoL Pay supplier (FOB) Match consignment with BoL Pay supplier (CIF) Match order, invoice, shipment Pay truck carrier Pay supplier (CIP)

15 Expected Benefits of Blockchains on Supply Chains Velocity of Supply Chains Faster transactions. Less latency, improving cash flow and inventory carrying costs. Supply Chain Visibility (Tracking) Track shipments along an intermodal transport chain and identify issues causing delays. Create a market where service providers bid to handle blocs. Supply Chain Security (Tracing) See where, when and how a specific event took place (e.g. cold chain logistics). Counterfeiting and the use of sub-par materials easier to detect. Standards and Certification Compliance Proof that cargo was handled by specific modes, carriers and distribution centers. Calculate accurately energy use and environmental impacts (e.g. CO2 footprint).

16 Convergence towards a standard? Implementations in maritime supply chains through pilots (it is going to be a mess) Several competing platforms (wasteful duplication) Regulatory backlash (errors and horrors) Convergence to a widely accepted standard (coordination problem) Why not use a centralized system instead? At this point shipping lines do not see blockchains as effective value generators (experimental phase)

17 Automation and Blockchain: An Opportunity and a Risk Irrevocable automation trend increasing the capital intensiveness of terminals Improved physical (automation) and transactional (blockchain) efficiency of maritime shipping Paradoxically automation is likely to result in less shipping demand