Authors: Dr. Jean-Paul Rodrigue, Dr. Theo Notteboom & Dr. Athanasios Pallis

Digital transformation (or digitalization) is the integration of information technologies into business processes, changing how they operate and deliver value to their customers.

1. The Digitalization of Ports

Like several sectors of the economy, the port and maritime industries have been impacted by digital transformation. Technology is used to enhance, and sometimes substantially improve, the performance and reach of organizations, including their management, operations, and assets. Information technologies, combined with leadership, can turn technology into new opportunities. Digital transformation entails a managerial and cultural shift that requires organizations to challenge their existing practices and integrate technology effectively. Still, digital transformation has been an ongoing process since the 1990s, with the widespread adoption of personal computers in organizations, a trend that was further accelerated by networking technologies in the early 2000s. By 2010, a critical mass of storage and processing capabilities embedded in ubiquitous and large-scale information networks allowed new forms of digital transformation to occur, with the latest trend involving artificial intelligence. It relies on two complementary processes:

• Digitization. The transformation of documents, including contracts, bills of lading, and any relevant information, into a digital format. This allows for more effective analysis, storage, duplication, and transmission of information.
• Digitalization. The transformation of business processes and operations through various forms of automation. It can range from managing customer orders to terminal automation.

Digital transformation challenges organizations to adopt a set of key concepts that impact their governance and organization, including the strategies and business models that should be implemented. The outcome is a reduction in human involvement, often resulting in the replacement or reduction in the amount of labor. These corporate challenges can also be found in the logistics industry, shipping, and ports. For example, port and logistics companies adopt a customer-centric approach by adjusting their objectives to include key performance indicators and metrics that measure customer satisfaction, and, if necessary, overhauling business processes that are deemed less efficient. Service reliability in a digital era implies that a company can deliver a service efficiently, conveniently, and consistently, a concept closely tied to the ease of doing business. Furthermore, users and customers have expectations regarding the ability to track the location and conditions of cargo under their responsibility or ownership.

Another key to competitiveness involves cooperation between supply chain partners and the use of digital and integrated data solutions. Horizontal collaboration between transport companies and logistics service providers underscores the need for shorter, more convenient, sustainable, and cost-efficient supply chains. This entails additional complexities, primarily in terms of mutual trust regarding data-sharing protocols and protecting respective competitiveness. Thus, cooperation is typically associated with new governance models to build trust among the parties involved and achieve a fair distribution of costs, efforts, revenues, and returns. However, there are several concerns to be addressed when developing cooperation initiatives and introducing performance measurement tools and systems across supply chains:

• Lack of trust. Organizations are reluctant to share their internal data. Trust in data sharing, acquisition, and monitoring needs to be built, as most of the data can be perceived as market-sensitive and could have damaging impacts on a firm’s competitiveness if compromised.
• Lack of understanding. Many managers focus on internal systems, so moving to an inter-organizational scale often demands the development of a deeper understanding of what matters when cooperating with other parties in the chain.
• Lack of control. Managers and organizations are often focused on initiatives and measures they can fully control. Inter-organizational measures are challenging to manage and thus control.
• Different goals and objectives. The cooperation between organizations might lead to a confrontation between different goals and differing views on achieving these goals.
• Information systems. Information systems often have to be adapted to include non-traditional information relating to supply chain performance. Also, information exchanges between organizations might be complicated by a lack of standards (in terms of units to use, structure, and format) and harmonized protocols and procedures.
• Difficulty in linking to customer value. Not all organizations see the corporate and stakeholder value of cooperating with other organizations. They may have difficulties identifying and measuring possible value.
• Deciding where to begin. Organizations might face challenges when starting to develop supply chain-wide practices and related performance measurements.

Service providers in logistics, shipping, and ports improve supply chains with the support of increasingly performant IT systems. The data component leverages service providers to transform into organizations with a new outlook on logistics services. Next to an increasing number of traditional activities being outsourced, such as transport, warehousing, and various types of value-added services, the presence of collaborative platforms enables service providers to develop new types of logistics services, share assets and capabilities, and compete to attract and retain customers.

Furthermore, logistics, shipping, and port companies are reassessing their labor strategies as the nature of tasks evolves with technological advancements. Service providers invest in self-service systems to replace operational staff internally and improve the ease of doing business. For example, advances have been made in cargo booking systems, cargo tracking systems, and invoicing, which have become paperless and are available online. The ultimate objective behind these digital systems is to have staff perform only tasks that the systems cannot handle, such as addressing exceptions. This implies staff moves towards new managerial, commercial, and programming roles as basic logistics tasks are automated.

2. ICT Innovations for Ports

A. Automation and innovation

The port and logistics sector is implementing technology and digital transformation strategies. Some innovations are particularly relevant and will affect almost all aspects of the transportation process. There are four categories of automation:

• Transport automation encompasses the use of robotics in container handling equipment, such as automated mooring systems and automated ship-to-shore cranes. With automated ship-to-shore cranes, over 90% of the work duties are performed autonomously, with the final movement of the spread guided by an operator from a remote control room. Autonomous vehicles, particularly Automated Guided Vehicles (AGV), have been deployed to support lateral movements within the terminal. Most container ports that have employed significant robotics-based automation within their terminals have also incorporated automation into process-based and decision-based elements of terminal operations.
• Process automation involves the use of technology to automate processes external to cargo handling. These include gate processes that utilize a combination of hardware and software to minimize human involvement through appointment systems, vehicle and container identification detection, radiation scanning, driver identification, and routing within the terminal. It typically involves gate systems that utilize optical character recognition (OCR) and radio frequency identification (RFID) technology to automate the inspection, clearance, and tracking of people and equipment moving into, out of, and within a terminal, with supervision and exceptions managed from a control room. It also involves intelligent terminal operating systems (TOS) technology to optimize planning, monitoring asset utilization, and administrative tasks.
• Decision-making automation involves utilizing technology to guide and optimize decisions related to stowage and yard planning, container positioning, and scheduling of vehicles and equipment. Port community systems have emerged as a digitalization strategy by offering a common exchange platform for key port stakeholders.
• Process monitoring involves applying digital technologies to commercial operations, planning, and support functions, with a focus on data aggregation, analytics, and network optimization. This ensures that operators and customers have real-time information about the assets and the cargo they manage.

Technologies such as the Internet of Things (IoT), Big Data, and Artificial Intelligence (AI), along with their predictive capabilities, have all, in one way or another, enabled more efficient supply chains. Automated warehousing, real-time tracking, and supply chain visibility, including transportation assets, have become widespread in the industry. Digital ledger systems were designed with the stated goal of adding a new layer of transparency and credence between supply chain players.

B. Automation and robotics

Automation can be implemented at the process, infrastructure, and mobile asset levels. Process automation can play a key role in the transformation of logistics service providers. For example, technological advances make it increasingly possible to dynamically integrate pricing, schedules, bookings, and shipment visibility with customers, carriers, and marketplaces in real time. This can create new opportunities for service providers, as these decision tools enable deeper integration with carriers, further facilitating shipment and asset allocation optimization.

Asset and infrastructure automation and the use of robots are not new to the logistics industry. For example, automated stacking systems in warehouses have been in place since the early 1990s. The world’s first container terminal using automated stacking cranes and automated guided vehicles (AGV) became operational in Rotterdam in 1990. Driven by cost control (such as labor and land) and efficiency, automation in warehouses and terminals has progressed. The extent of automation ranges from remotely controlled operations under safe and efficient conditions to fully autonomous operations with limited oversight.

Since the 2010s, automation has expanded beyond warehouses and terminals. When opting for automation in terminals or warehouses, market actors can fully control the working conditions for automated vehicles or equipment. Enclosed entities offer a controlled environment for automation that is less subject to random disruptions. However, outside these controlled environments, automated vehicles are subject to numerous influencing factors that cannot be controlled, such as weather, traffic conditions, and topological conditions (including turn priorities and one-way streets). Moreover, the use of automated vehicles in the public domain (sea, land, and air) requires legislative and regulatory actions. A broad range of autonomous or remotely-controlled vehicles is being developed, from small last-mile solutions (e.g. drones) to full-sized autonomous sea-going vessels. The development and implementation of these unmanned systems will entail their unique threats and opportunities, which may lead to setbacks, unintended consequences, and new market opportunities.

The development of driverless trucks is ongoing, and advanced levels of autonomous driving are emerging. The immediate impact on logistics and port operations will most likely consist of increased efficiency due to assisted maneuvering, improved planning, and synchronized timing, allowing for enhanced terminal and truck operator efficiency. In a similar vein, drones are already being used for security surveillance and inventory checks in warehouses and some ports. They could also have a role in monitoring other logistics operations, detecting problems requiring maintenance (e.g. cranes), and monitoring yards. The main barrier to using drones is regulatory, but that may be only a short-term obstacle.

The first serious initiative for a crewless ship was unveiled in 2014. The main challenges of having crewless ships are regulatory, considering international maritime conventions have clear specifications on minimum crew requirements. Another challenge is safety concerns, especially weather, obstacles, and in-trip repair requirements. This includes the uncertainty about how such autonomous or remotely operated ships would cope with unforeseen or irregular events, including the risk of hacking. The primary advantages include reducing fuel consumption and, consequently, lowering emissions. Although safety is currently a concern, effectively overcoming the challenges would mean that maritime safety could be improved, as most shipping accidents result from human error, often related to fatigue. The debate focuses mainly on the projected costs. One concern is reduced operational costs, where the absence of a crew can be seen as a liability in the event of repairs or problem-solving, resulting in higher operating expenses. Another concern is the reduced construction costs associated with crewless ships, as they do not require crew facilities such as cabins and galleys.

C. The Internet of Things (IoT) and big data analytics

The IoT refers to a wide and increasingly diverse range of physical objects (“things”) connected to a network and capable of sending and receiving data. This effectively means that all such items can be tracked, and any activity in which they are engaged or any circumstances to which they are exposed can be monitored and measured.

The Internet of Things (IoT) is a development that is rapidly taking place across all industries and throughout society. Such a network of communicating units opens up an extensive array of possibilities for logistics. These sensor-driven items will enable all assets, including autonomous and robotized vehicles, equipment, port equipment, infrastructure, and the goods themselves, to become connected. This will result in the production and availability of massive amounts of data for analysis, colloquially known as Big Data. This offers a wide array of possibilities for logistics and port operators and stakeholders to optimize and automate processes, gathering ever more precise and real-time insights into their operations.

One particular field of application concerns combining AIS data with geofencing. Geofencing involves setting virtual geographical boundaries around facilities (or any feature such as a canal), which, when combined with the AIS data generated by a ship or RFID installed on containers, triggers a notification. So, a ship entering or exiting a geofenced port area triggers a notification that can be used by terminal operators and cargo owners to plan their operations and supply chains. Individual assets, such as containers, can also be tracked, including through the mobile device of a truck driver. This enables better visibility of maritime transport and supply chains, including support for port and supply chain security.

To effectively and successfully implement applications built on the IoT, robust communication systems need to be in place. Ports, with containers and equipment interfering with signals, and warehouses with attenuated and scattered signals, are notoriously difficult environments. Although many ports and warehouses have network infrastructure available, it is often not well-suited to the IoT requirements of high bandwidth and secure protocols. The possibilities are vast, and the evolution of IoT and the use of big data create prospects for logistics to become a data-centric industry where information takes precedence in the value proposition of logistics services over the actual ability to move cargo.

D. Simulation and virtual reality

Big data applications enable logistics service providers and port operators to fully leverage the benefits of simulation software. Operations can be modeled to analyze operational flows, pinpoint potential bottlenecks, define enhancements, and simulate and assess various design and throughput scenarios. This can be done for existing or newly planned facilities and networks. An additional benefit is that such simulation software can also be used to train staff in a realistic environment, allowing for the simulation of a variety of events to be problem-solved.

Virtual reality (VR), defined as expanding physical reality by adding layers of computer-generated information to the real environment, will further support such simulations. In a logistics environment, one can envision enhanced feeds from infrastructure, equipment, automated vehicles, and various drones. It is anticipated that VR will have a wide range of applications, spanning from operational support for executing specific processes to active safety or security interventions. VR enables the filtering of complex visual environments, highlighting important elements such as individual vehicles or containers. Furthermore, the generation of ‘digital twins‘ enables the creation of an exact virtual replica of the port facility, its vehicles, and ships, which can be utilized for operations, including ship berthing.

3. Port Community Systems and Digital Ledger Technologies

Automation relies on complex information systems supporting transactions and operations related to ports and maritime shipping. This strategy is often referred to as digitalization, for which port community systems and digital ledger technologies such as blockchains are salient examples.

Port Community Systems (PCS) are an information platform that makes available logistical information to the actors involved in port-related freight distribution, including freight forwarders, terminal operators, customs, ocean carriers, inland carriers, and the port authority itself.

Blockchains are distributed electronic ledgers shared across a network of servers that record transactions in cryptographic units, called blocks, in a permanent and verifiable manner. They are often referred to as digital ledger technologies (DLT).

The digital transformation of terminals is integrated into information systems and ledger technologies, such as blockchains, that link together a wide variety of port and intermodal stakeholders, such as customs, freight forwarders, and carriers. The purpose of digitalization is not necessarily to create new information systems to manage freight activities but to effectively link existing databases and management systems through a portal, particularly through the conversion of different formats and the adoption of information exchange standards.

While DLTs focus on transactions and asset tracking, PCSs focus on stakeholder interactions. Portals are particularly suitable as an interface, as web access is nearly ubiquitous and supported by portable devices such as smartphones. The outcome is an improvement in transactional efficiency along the logistical chain and, correspondingly, the efficiency of the regional freight distribution system. Thus, there are opportunities to improve performance (in terms of costs and reliability) that users can utilize as marketing strategies. It is essential to emphasize that digitalization can take different forms for each port region, due to its varied physical, modal, jurisdictional, and operational characteristics. Conventionally, the transactional relations between these actors were very complex, with some being unilateral and proprietary.

Digitalization is a sequential process. Depending on the current level of information technology usage, some steps may not be required, with the setup becoming a matter of portal development and data interoperability. Therefore, freight digitalization can be developed over three major phases:

• Development of key channels. The first fundamental step in digitalization involves setting up channels with key port users, who exchange digital information they need for their operations. This included cargo manifest, customs declaration, vessel call requests, and the reporting of dangerous goods. Carriers are the main drivers in implementing digital ledger technologies because they are commonly the key support of the intermodal transport chain, which becomes a channel that can be integrated. Still, DLTs are complex to implement. In 2018, Maersk, the world’s largest shipping line, initiated the development of a blockchain platform called TradeLens in collaboration with IBM. However, even if fully operational, the system was judged not to be commercially viable and was discontinued in early 2023. A collaborative framework allowing actors to track and trade shipments, handle documentation such as bills of lading, and eventually settle transactions through letters of credit, remains a challenge.
• Regional digital freight platforms. Once key channels have been established, setting up an operational port community system becomes possible, particularly by focusing on maritime shipping and inland freight distribution information channels within an area where a port authority acts as a key driver. Additional actors are brought in, notably freight forwarders and inland transport firms, which creates a freight market. The purpose is to establish a continuous information chain within the port region, encompassing the majority of steps from ship access to the port facility, through to the delivery of a container at an inland freight distribution center. Among the world’s major ports, different port community systems have been designed.
• Global digital freight systems. Once digitalization has been established and has effectively been adopted by ports and cargo users, the next step is to establish additional multiplying effects and quality improvements. This implies the further promotion of automation, such as the use of RFID, to facilitate the seamless movement of cargo and the complete digitalization of documents, ensuring that all transactions occur in a paperless environment. This also implies the diffusion of best practices with other ports (and inland ports), with their eventual integration into a wider system. This could eventually lead to a comprehensive integration of information flows along supply chains through widely available blockchains, from the factory door to the distribution center of an overseas consignee.

One of the key challenges in digitalization is creating a consensus among port users who are traditionally disconnected and often compete for market share. Since many ports already have various IT strategies, digitalization does not mean using the same template; substantial efforts need to be made to adapt to the cultural and operational realities of the locale. Developing web-based applications and wireless networks has made digitalization, such as PCS, an operational reality. The issue is to assess the extent to which digital transformations generate added value to the port community through improvements in supply chain productivity, efficiency, and reliability. As an asset-based industry, ports remain cautious about adopting technologies, including digital means. On the positive side, once a technology has shown clear outcomes, the potential for its adoption, diffusion, and scalability is high.

4. Digitalization in Cruise Ports

Digitalization is a process that is transforming cruise ports as well. While digitalization in the maritime freight sector focuses on operations and integration between stakeholders, digitalization in the cruise industry focuses on improving customer satisfaction. The evolution of the check-in processes is an illustrative example. Guests complete their online check-in at home, which is verified by the cruise line. Passengers can then print their tickets or save them to their smartphones. Identification and ticket authentication occur at the port through check-in agents with scanning devices or self-service check-in kiosks. Cruisers receive their room key and RFID wristband and proceed to the cruise ship. The industry is considering online visa processing, but differing national regulations impede its development.

Digitalization has multiple impacts on cruise terminal operations. Ports and cruise terminal operators, as well as other responsible stakeholders, may redesign the terminal, as the process provides them with more flexibility due to the reduced number of check-in desks. A further redesign is required to address security arrangements, potentially involving the addition of more X-ray machines and security lanes to prevent guest congestion. The technology used at the cruise terminal has also been upgraded, and high-speed broadband Wi-Fi is needed to support a large number of mobile devices.

A further implication is reduced in-port shopping due to less pre-cruise shopping, resulting from expedited ship access. Combining this with the increased amenities and shopping facilities that cruise ships offer onboard, the importance of shopping malls as a cruise port selection criteria declines. Ground handlers who provide services at the cruise terminal are assigned reduced documentation checks, and pier staff are given a greater focus on customer service, guest flow planning, and manual check-in, which is required for guests who have forgotten their documentation. As a mitigation strategy for digital services, a backup plan is necessary in the event that the system goes down. For example, deployable check-in desks and staff on standby are crucial for addressing any unexpected events.

Cruise lines can benefit from efficient port operations, which provide real-time digital updates for the boarding process and enhance guest comfort during check-in by reducing paperwork and shoreside staffing. Cruise passengers benefit from a seamless and more straightforward process, involving fewer documents, fewer queues, or even no queues, and a quicker journey to the cruise ship.

Digitalization has led to several additional innovations, including the presence of holograms throughout the port, which direct guests to the terminal and the ship. Cruise line apps provide guests with information such as boarding procedures, onboard entertainment, luggage tracking, tour transfers, and last-minute shore excursion offers. Ground Handling Operation Support Systems have also been upgraded due to digitalization. For instance, innovative staffing systems facilitate scheduling, training needs, invoicing, and related operations. Another example is operation report applications, which provide reports generated after an operation and are then shared with all stakeholders further to improve future services for cruise passengers and shipping.

Another issue concerns customs, as many cruises are international, with procedures more stringent at the final port of disembarkation (turn port). Like international arrivals for airports, cruise ports require a large number of cruisers (and some of the crew) to be processed quickly. The cruise lines must thus be able to match the disembarkation pace with those of customs over a few hours, which requires notification systems for passengers.

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Related Topics

• Chapter 3.2 Terminal Equipment and Design
• Chapter 3.4 Terminal Automation
• Chapter 7.4 Safety, Security, and Cybersecurity
• Chapter 8.1 Cruise Ports

References

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• Ollivier, P.R.G., S.P. Sahu and P. Saragiotis (2024) Port Community Systems: Lessons from Global Experience (English). Washington, D.C. : World Bank Group.
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• United States Government Accountability Office (2024) Port Infrastructure: U.S. Ports Have Adopted Some Automation Technologies and Report Varied Effects, GAO-24-106498.
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