Automation of container terminals has been a work in progress for decades. Although there have been many advancements, there is still a long road ahead before terminal automation is the norm and not the exception.
In May, the port of Qingdao unveiled its futuristic vision of the container terminal: Day and night, unmanned quay cranes swing from ship to shore, where, guided by lasers, they load and unload containers onto and off of driverless trucks. These electric-powered, automated guided vehicles scurry back and forth between the ship and yard, where yard cranes, devoid of onsite operators, stack and sort. Qingdao New Qianwan Container Terminal Co. Ltd., or QQCTN, is Asia’s first fully automated terminal. Shanghai is constructing an even larger fully automated terminal, which is scheduled to open in December.
The latest technology is transforming these Chinese terminals into highly productive machines. But they also stand in stark contrast to the vast majority of the world’s container terminals, where technology is fighting to gain a foothold on operations and where resistance to new forms of automation can run high.
A Long Road Ahead
“We still have a very long road to go,” said Yvo Saanen, founder and managing director of TBA, a Netherlands-based terminal design and simulation company. “It’s not so simple to simply issue an order [that says], ‘OK, we’re going to roll out technology,’ and have it.”
Terminals offer an often-surprising patchwork of traditional and state-of-the-art, sometimes on the same piece of real estate. In various forms, automation technology is readily available. True, there are limitations. But the technology is getting better and better. And, by and large, it works.
However, it’s by no means a given. Terminal operations and its various components represent an industry that can be surprisingly old-fashioned and tradition bound.
“People just don’t understand the difficulties of moving toward automation and, at the same time, don’t appreciate the benefits,” said Joseph Discenza, president and CEO of SmartCrane LLC, a Virginia-based company that supplies anti-sway software to quay cranes. “It’s hard for people to get their minds around the idea of doing lots and lots of automation. They’re going one drip at a time.”
This isn’t just a matter of having the latest and snazziest technology for bragging purposes. The consultancy McKinsey & Co. has estimated that port and carrier inefficiencies cost the industry $17 billion a year.
“Ports and terminals are always looking for innovative ways to solve operational problems,” emailed Eva Salvesberg, the senior vice president of the logistics division for the German software company INFORM, which makes optimization software for terminals.
There are anywhere from 1,000 to 1,200 container terminals worldwide. The degree of automation varies widely. According to one estimate quoted by Salvesberg, “Only 3% of maritime terminals are fully automated, with a further 7% to 13% partially automated. So, at best, 16% of terminals have made real investments in automation technologies,” she wrote.
Saanen offers an even more sober view: Less than 5% of the world’s container terminals have a degree of robotics, he believes. There’s a higher use of so-called process automation, which monitors systems, Saanen said, but it’s still far behind the degree of similar technology used in factories and warehouses.
“The expectation is that most automation will be conversions,” he said, “step-by-step,” adding, “Harsh outdoor conditions, poor information availability and accuracy, a high degree of dynamics (e.g. vessel arrival times), [all] make automation more difficult than in factory or warehouse environment.”
The Challenge of Terminal Automation
There’s nothing standard about a terminal. Each one is different, with many moving parts and a unique geography. Multiple operations occur simultaneously amidst exacting and exceptional working conditions.
“It’s a very complex environment,” said Raj Gupta, the chief technology officer and senior vice president of engineering at Navis, which designs terminal operating systems. He quipped: “If you’ve seen one terminal, you’ve seen one terminal.”
Take quay cranes. In most semi-automated terminals, computers get the boxes into position and operators take over. The difficulty, Discenza explained, is that vessels move constantly, even when tied up, a victim of tides and shifting weight as three or four cranes are loading or unloading boxes. According to some estimates, fully-automated quay cranes in terminals like Rotterdam, with operators who sit in offices offsite, have cycle times that are 20% to 30% longer than those that are semi-automated. (This doesn’t take into account the ability of a fully-automated crane to operate in darkness, a distinct advantage.)
Operators provide flexibility to loading and unloading.
In many ways, terminal automation can be a tale of two worlds. Planned from scratch, some new terminals make ample use of highly automated equipment and systems. These fully automated terminals include operations in Rotterdam, Melbourne and Hamburg. They are incredibly advanced facilities, and carry with them huge price tags. Shanghai’s new Phase 4 Terminal, for example, is expected to cost some $2 billion and boost the number of automated guided vehicles at the Yangshan complex to 130, the most in the world today, and three times the number now running at Qingdao.
The number of container terminals now in operation dwarfs that kind of project, however. “At the moment, there may be out there worldwide 25 new projects, each of them taking three to five years” to construct, explained Saanen. “Out of a total of 1,200 container terminals, that’s nothing.”
He added that over the past five years, “more capacity has been added conventionally than has been added in automated fashion.”
Planners cite varied rationale for full automation, and it’s not necessarily increased productivity. Automated operations provide one way to counter the high price of labor in the US, Europe and Australia, although unions can hold sway on how many jobs can be eliminated.
In many developing countries, where most of the new terminals are being constructed, it’s still much cheaper to hire laborers than to automate. But in China, the issue is worker turnover, which is very high in the industry. Terminal operators train up operators and other highly technical jobs, only to lose their employees after.
According to reports, QQCTN has reduced the number of workers necessary to unload a shipment from 60 to nine.
Expensive equipment is only one part of the equation. Software is now available that helps speed up and optimize performance in a variety of terminal tasks, from gate automation to being able to pinpoint container location faster and more accurately, from intelligent stacking to yard management.
On the other hand, inadequate software drags down equipment performance, no matter how sophisticated that equipment is.
“For automation to advance, it will take a combination of continual process refinement and optimized execution. Technology is only as strong as its weakest link,” said Salvesberg, “Equipment capable of handling 30 moves per hour paired with a decision-making process that can only achieve 20 will never live up to the hype.”
According to Salvesberg, adding optimization software to a five-high rail-mounted gantry yard can result in up to a 51% decrease in re-handles. “The flow-on effect is that less space is needed to handle the same volume of containers, thereby resulting in an increase in the total volume the same physical yard can manage,” she said.
As older terminals upgrade, there’s a tendency to add costly, new equipment rather than optimize operations through software. Salvesberg, for one, sees this as a sometimes-unnecessary expense. She provides this example:
A terminal has 60 straddle carriers, 30 of which are old and need to be replaced. Adding INFORM optimization software could reduce the number of straddle carriers necessary from 60 to 40, meaning only ten new carriers are necessary.
The IT Conundrum
Part of the resistance to information software, or IT, comes from terminal operating executives and managers themselves. “Traditionally, it’s a manual world. A lot of senior staff comes from operations. They prefer more equipment over intelligent IT,” Saanen said. Not only does this hinder operations, it reduces the potential for collecting information on what is being shipped and stored, what containers are likely to sit around the yard for weeks and which ones are likely to be picked up the following day.
This is intelligence that could better model the supply chain. “Standardized data is crucial to the future of our industry,” said Salvesberg.
However, an inability to incorporate adequate IT goes beyond the terminal operators. A container terminal is dependent on many different parties – shippers, vessels, trucks, railroads. They must work in concert. Instead, there’s distrust and the hoarding of vital information.
Not sharing information stands as one of the biggest impediments to the use of technology. Yet, bad information is one of the worst offenders in driving up costs at a terminal. Saanen, for one, estimates that eliminating imperfect information could reduce re-handling in the yard by 25% to 50%.
“The technology that is out there should facilitate seamless connection between shippers, terminals, shipping lines,” he said, adding that some parties make money over an ability to sit on information. “There’s still a lot of paper around, a lot of faxes. It’s unbelievable.”
Others agree that withholding information is a huge issue at terminals, one that terminal operators are often powerless to alleviate.
“The primary goal is to make port processes as smooth and as painless as possible for all parties. This is all about sharing information and data so we can all make smarter choices,” said Frans Swarttouw, managing director of TEUbooker, an online container-transport booking portal. But, he added, “There is a lot of mistrust among stakeholders.”
To break through these barriers, it’s sometimes necessary to call in honest brokers. Port authorities are assuming that role in a number of ports, including Rotterdam.
“They take the roll of connector of all the parties within the port,” said Saanen. “Because they are neutral, that makes it easier for other parties to share information.”
“All parties in the port industry need to realize that we operate in the same industry,” Salvesberg concluded. “Working together, sharing resources like data and lessons learned are crucial steps in improving as a whole. The more siloed we are, the weaker we are as an industry.”