May 17, 2020

Bringing ports into the digital age

supply chain logistics
digital ports
shipping technology
Freight Forwarding
Jan van Casteren
5 min
Container port
Flexport is quietly revolutionising the freight forwarding industry. Its combination of software, data and complimentary forwarding services is steadily...

Flexport is quietly revolutionising the freight forwarding industry. Its combination of software, data and complimentary forwarding services is steadily helping to transform a business that is at once one of the most globally important and yet least modernised. Moving goods and materials from one corner of the globe - be it by ship, plane or truck - is a trillion-dollar industry, and the likes of Flexport are finally removing the need for a fax machine.

But, says Flexport's VP EMEA Jan van Casteren, there's one corner of the world's commercial circulatory system that remains stubbornly resistant to change: Ports.

Here he details for SupplyChainDigital.com the three things ports can do to get with the programme.

Today’s consumers expect fast shipping times and low costs. In order to cater to their needs, retailers are increasingly integrating logistics technology to innovate the process. We’ve seen the introduction of Alibaba Logistics, a service that handles end-to-end shipping, and earlier this year Amazon [registration required] expanded into ocean and air freight. The delivery industry is ripe for disruption.

That said, ports have up until now remained unthreatened by disruption. They will always be an established partner for retailers because of the unlikelihood of new entrants and the geographic monopoly they have. There’s also the fact that retailers don’t want to build their own ports, as that requires so much time, expense and expertise.

However, this doesn’t mean ports can avoid innovation altogether - they have to compete against each other as well as against the potential of disruptive entrants. Below are three of the main ways ports can become more efficient and stay relevant.

1. Move to full data transparency

The move to full data transparency is a contentious issue, with some existing parties fiercely protecting the status quo. It’s not uncommon for freight forwarders to charge premiums, using the lack of data transparency as a way to cover up inefficiencies. As truckers get paid by the hour, long wait times translate into more money. In Long Beach, the average wait time for truckers hovers around 100 minutes [registration required], and it’s not unheard of for them to wait up to 8 hours and leaving without a container.

The problem is that port authorities tend to be passive when it comes to innovation, functioning more as landlords rather than investors.

However, as automation reaches more terminals, data is becoming increasingly accessible. With a smarter digital infrastructure, terminals can speed up supply chains and offer a more transparent service to customers. The Port Authority at Rotterdam is a good example of a port that’s conscious of innovating - it spends more than $2 billion a year upgrading physical and digital infrastructure and operations [registration required].

Crucially, updating digital infrastructure can be a sturdy defence against cyber attacks, a widespread concern after the recent ransomware attack which hit a number of global APM terminals as well as Maersk. It’s vital that ports are vigilant when it comes to security - they can implement penetration testing platforms like HackerOne which run continuous tests against systems to protect from any breaches. As logistics infrastructure becomes more interconnected and technology-dependent, security cannot afford to be an afterthought.

2. Automate your ports

On the face of it, automating a port seems like a pretty costly option. For example, it costs around $600 million for OOCL to move their newly-opened terminal at Long Beach, California from diesel, manpowered cranes to fully-automated electric cranes - with a large IT expenditure on top of this.

In the short term, this might appear to be unnecessary spending but in the long run, making these updates will save ports an enormous amount on labour costs. Ports that run on software work more efficiently and free up resources for other tasks.

The backlash against automation comes from labour unions who see their jobs at risk. And while it’s true that when it comes to traditionally union-protected labour pools, automation is supplanting a number of jobs, in reality it is generating new job opportunities for the development and maintenance of new technology. Aside from this, more efficient ports will gain market share, leading to the creation of more throughput as well as jobs. As is the case in any industry, tech innovation leads to more opportunities, not fewer.

3. Watch your carbon footprint

There are many reasons why ports should switch to electricity as their power supply of choice. Diesel-operated machines are hardly environmentally friendly - they directly affect quality of life and cause potential health problems for anyone in the port’s vicinity. Equally, they are expensive to maintain and are certainly not the most efficient option.

Electric and automated machines don’t need to take breaks, so their usage enables terminals to make higher margins. They also have a significantly reduced impact on the environment, with studies showing that electric cranes reduce the emission of air pollutants by around 70 per cent.

There continues to be resistance to the initiative to replace diesel with electric, the primary reason being high upfront costs. It’s true that it’s hard to measure benefits, and companies operating and investing in ports aren’t always bothered about the potentially huge reduction in healthcare costs for residents living near ports. Therefore, there needs to be sufficient incentives to drive this transformation. Governments and port authorities should use regulation, taxation and subsidies to motivate investors. Without a tangible goal and some measurable benefits to funding, the fear is that protecting the environment will remain a prisoner’s dilemma.

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While ports aren’t under threat from other new business models, they can contribute more positively to the supply chain industry by becoming more integrated with technology to make them faster, cheaper, and safer to operate. By committing to investing in infrastructure for environmentally friendly automation and data collection and distribution, ports can stay competitive and become really effective, interactive tools for their partner shippers and carriers.

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Jul 22, 2021

Uber Freight to Acquire Transplace in $2.2bn Deal

UberFreight
Logistics
supplychain
Acquisition
2 min
Uber Freight’s acquisition of Transplace will supercharge parent Uber’s move into logistics and supply chain

Uber Freight is to acquire logistics technology and solutions provider Transplace in a deal worth $2.25bn. 

The company will pay up to $750m in common stock and the remainder in cash to TPG Capital, Transplace’s private equity owner, pending regulatory approval and closing conditions. 

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, and former founder of the Uber-owned trucking start-up Otto.

Uber’s Big Play for Supply Chain


Transplace is one of the world's largest managed transportation and logistics networks, with 62,000 unique users on its platform and $11bn in freight under management. It offers truck brokerage and other capacity solutions, end-to-end visibility on cross border shipments, and a suite of digital solutions and consultancy services. 

The purchase is the latest move by parent company Uber, which launched as a San Francisco cab-hailing app in 2011, to diversify its offering and create new revenue streams in all transport segments.

Transplace said the takeover comes amid a period of “accelerated transformation in logistics”, where globalisation, shipping and transport disruption, and widespread volatility are colliding. 

Uber Freight plans to integrate the Transplace network into its own platform, which connects shippers and carriers in a dashboard that mirroring the intuitive experience found in its consumer vehicle booking and food ordering services. 

“This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most,” said Ron. 

Frank McGuigan, CEO of Transplace, said the resulting merger will offer enhanced efficiency and transparency for shippers, and benefits of scale for carriers. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment,” he added. 
 

History of Uber Freight


Uber Freight was established in 2017 and separated into its own business unit the following year. In 2019 the company had expanded across the entire continental US, established a headquarters in Chicago. Later that year it launched its first international division in Europe, initially from a regional foothold in the Nertherlands, and later moving into Germany. 



The logistics spinoff attracted a $500m investment from New York-based Greenbriar Equity Group in October 2020, and launched a new shipping platform for companies of all sizes in May, partly in response to a driver shortage in Canada.
 

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