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  June 4th, 2019 | Written by

How Global Shippers Optimize Deep-water Strategies

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  • With this regulation change, there will be a 0.5 percent global sulfur limit on fuel emissions.
  • “Being a smart port is much more than merely introducing awesome new technology into a port to make it safer
  • The common denominator is found in digitization through advanced technology solutions.

Deep-water ports continue to make leaps and bounds within the trade sector, increasing overall twenty-foot equivalent units while breaking new ground and records, as seen this year with the Georgia Ports Authority’s recent confirmation of an impressive 4.36 million TEUs for 2018 and projecting a continuation of success for 2019. The port recorded 8 percent growth compared to the 2017 numbers.

Executive Director Griff Lynch cites the combination of cargo expansion and increased U.S. demand with shifting the global logistics arena toward the deep-water terminals in Savannah. The port implemented a strategy focusing on trade in December that was projected to set them up for continued success.

The Connecticut Port Authority claims that efforts toward integrating solutions that fit individual maritime needs are the driving factors behind its growth and successes.

In a detailed report highlighting deep-water port trends, the environment was the first on the list of increased industry concern and priority, which can prove problematic for trucking companies and beneficial for global shippers that anticipate regulation changes before industry competitors do. In 2020, the IMO fuel sulfur regulation will officially change how emissions are handled, ultimately restricting options for those who want to maintain uninterrupted operations. With this regulation change, there will be a 0.5 percent global sulfur limit on fuel emissions.

Proactivity is the driving force behind the success and stability of shippers looking for solutions for sustainability. Seatrade Maritime News presents three options that shippers should take into consideration sooner rather than later: install exhaust gas cleaning systems; purchase fuels within compliance (which are at a higher cost); or run ships on liquid natural gas. Whatever the choice might be, the demand for each of these tangible solutions is bound to increase drastically and change the pace for the global refineries.

“Global refiners will be put under enormous strain by the shifting product slate,” explains the International Energy Agency. “If refiners ran at similar utilization rates to today, they would be unlikely to be able to produce the required volumes of gas oil. If they increased throughputs to produce the required gas oil volumes, margins would be adversely affected by the law of diminishing returns. In order to increase gas oil output, less valuable products at the top and bottom of the barrel would be produced in tandem, which would likely see cracks for these products weaken and weigh margins down.”

Beyond proactivity and preparation, global deep-water ports focus on redefining infrastructure while evaluating opportunities for significant increases in cargo intake. But what about the ports that aren’t seeing the results they want? Let’s take a look at the European ports and the challenges and proposed solutions featured in an article from Port Strategy. Of all the solutions presented and discussed, the first was the need for infrastructure evaluation.

“The challenge ports everywhere face now,” details a report shared by the ESPO, “is to implement projects which often are financially unattractive to the port authority and even less attractive to external investors, but which are essential for wider societal and economic reasons. Some ports are financially strong enough to finance such projects and accept the low financial returns. Other ports are challenged to implement projects which are essential but are entirely beyond their means.”

Another challenge is the demand for increased cargo but a limit in capacity, as many ports claim they are close to reaching max capacity but can’t provide an opportunity for competitors to swoop up that for which they can’t make room. Gauging these issues requires a carefully thought out and strategic approach to ensure shippers evaluate the next steps for 2019.

In the theme of modernization, Port of Oakland shared insight into its 2018-2022 strategic plan, which is inclusive of growing net revenue, modernizing and maintaining infrastructure, care for the environment and improving customer service. The use of technology to streamline operations was one of the highlighted objectives and strategies (impacting almost every area of the business) that the report emphasized on. In the age of information technology, automation and technology solutions, this goal would provide more than just a seamless flow of information, but it would supply owners, customers and employees improved efficiencies and reduced room for error. There seems to be a trend among these ports.

“Each of our businesses has specific modernization and maintenance objectives to meet, notably development of long-term asset management plans,” states the Port of Oakland report. “Moreover, those objectives require careful attention to environmental, social responsibility and human resources issues.”

The key to implementing strong logistics solutions can be found in an all-in-one approach that is inclusive of your company goals and vision, the well being and safety of your employees, customer satisfaction, competitive advantage as well as cost-effectiveness and proactivity. The common denominator is found in digitization through advanced technology solutions, fully integrated within the service platforms, touching on all bases of the operations and supply chain.

For 2019, more of these solutions will become the wining differentiator with competitors, and the demand for digital integration will continue to rise. Take advantage of the opportunities to research and learn the primary areas of improvement, addressing those first. The primary issues will ultimately impact the remaining areas of your business–start at the root and go from there. Implement proactive measures to ensure your company is well prepared for changes in regulations, considering long-term solutions over short term. Consider analyzing what competitors are doing; this is just as important as knowing what they are not doing to stay ahead in the markets.

Vincent Campfens, author of IBM’s THINK blog, put success initiatives into perspective: “Being a smart port is much more than merely introducing awesome new technology into a port to make it safer, more efficient and more sustainable. It is also about looking further ahead in time, making strategic choices to ensure that the port still exists in the future, whilst responding to changes in climate, politics, technology, industries and cargo flows. One of our recent strategic choices is a targeted commitment to digital innovation.”