Maritime Logistics in Ship Shape-CeMAT ASIA-Smart Logistic
While the prospect of higher tariffs and the cost of low-sulfur fuel
requirements pose concerns for the maritime industry, it's forging ahead
with bigger, more automated seaports, as well as technology that
improves visibility, reduces its environmental impact, and streamlines
While the maritime industry faces challenges—uncertainty around tariffs and concerns about the ultimate cost of the low-sulfur fuel requirements that go into effect in early 2020—it's also experiencing changes that should be positives for shippers. These changes include upgrades at many seaports as well as collaboration between neighboring ports; the formation of the Digital Container Shipping Association and the Global Shipping Business Network; and new technologies that can offer greater visibility to ships' cargo. Moreover, these positive shifts in maritime logistics promise to continue.
It's not all smooth sailing in the maritime logistics realm. In
August 2018, the Trump administration announced that it would raise
tariffs from 25% to 30% on about $250 billion in goods coming from
Prior to the tariffs, trade between China and the state of Louisiana
totaled about $7 billion per year, says Chris Kane, New Orleans-based
partner and global trade, transportation, and logistics team leader with
law firm Adams and Reese. It has since dropped to about $3 billion.
While tariffs are definitely a challenge, they also present an
opportunity. Louisiana is now exporting more than it had been before the
tariffs started. However, that trade is with Canada, Mexico, and South
Korea, among other countries. "It's a net positive for exports," Kane
To be sure, import tonnage remains down, due largely to a drop in
steel imports. "It's not like a magic wand passed over Louisiana and we
were not impacted," Kane says. But, the market "baked in," or accounted
for the potential instability resulting from the tariffs and implemented
strategies to take advantage of opportunities.
Indeed, many seaports across the East Coast are enjoying impressive
growth. They increased their total share of the inbound container market
to 43%, up from 42.7% in 2017, notes Cushman & Wakefield's 2019
North American Ports Outlook (see sidebar). Seaports on the West Coast
account for the remainder.
"I think the share will go to 50-50when both East and Gulf Coast seaports are included," says Jim Newsome, chief executive officer with the South Carolina Ports Authority. He notes that 70% of consumers in the United States live east of the Mississippi River. By moving their goods directly from Asia to the Gulf or East Coast, many shippers can cut intermodal transportation costs.
The three alliances—2M, Ocean Alliance, and THE Alliance—among top
container carriers continue to impact maritime logistics. "Alliances
bring a measure of stability to the industry," Newsome says. They enable
carriers to offer a range of routes without undertaking the massive
investment in vessels that would be required if each carrier made all
routes available on their own.
In addition to these alliances, nine of the largest carriers—A.P.
Moller-Maersk, Hapag-Lloyd, MSC, ONE, CMA CGM, Evergreen Line, Hyundai
Merchant Marine, Yang Ming, and ZIM—have formed the Digital Container
Shipping Association (DCSA). The DCSA's goal is to establish digital
standardization in the container shipping industry, streamlining
administration and enhancing visibility. "For customers, the DCSA means
less red tape. For authorities, it's one point of contact," says Nils
Haupt, spokesperson with Hapag-Lloyd. "For ports, it's more efficient
Still, concerns remain about having such a large percentage of the
shipping industry concentrated in a small number of players. The top 10
shipping companies control about 83% of the global ocean container
shipping capacity, Cushman & Wakefield reports. That could lead to
fewer options and higher prices for shippers.
In addition, the alliances often operate with a hub-and-spoke model,
which can mean more trans-shipments, in which one ship transfers cargo
to a feeder vessel, says Mollie Bailey, vice president, international
with Transplace, a transportation management solutions provider. If the
first ship is late, containers may sit before they can move to another
It's not just carrier alignments that are impacting maritime
logistics. More seaports in the United States and in some Asian
countries are collaborating to consolidate port operations, achieve
economies of scale, and improve overall efficiency.
As one example, four years ago, the ports of Seattle and Tacoma joined operations. "We've been able to prioritize our investments and develop a strategy that will optimize utilization of our terminal assets across the gateway," says Larry Kvidera, marketing and international trade manager with the Northwest Seaport Alliance.
Maritime logistics increasingly is concerned with moving goods with
as little environmental impact as possible. Seaports, carriers, and
affiliated firms are rising to the challenge. "The ocean shipping
industry doesn't get credit for its sustainability efforts," Newsome
A case in point is the ruling by the International Maritime
Organization. As of January 1, 2020, ships will need to use fuel with a
sulfur limit of 0.50%, down from the previous limit of 3.5%.
Hapag-Lloyd will meet this requirement in several ways, Haupt says.
It will run one ship on liquid natural gas, equip 10 others with
scrubbers, and use low-sulfur fuel on the bulk of its fleet. These
initiatives will help Hapag-Lloyd work toward its goal of reducing
emissions by 20% by 2020.
The shift to low-sulfur fuel is just one step carriers are taking to
reduce their environmental impact. In June 2019, Maersk unveiled a
carbon-neutral vessel powered by biofuel.
Also in June 2019, TOTE Maritime Puerto Rico began using carbon
dioxide as a refrigerant for 220 containers. Carbon dioxide has a lower
global warming potential than the other refrigerants currently used in
container systems, notes a TOTE press release.
In August 2019, Leclanché, a supplier of battery energy storage
systems, announced the commercial launch of the world's largest
all-electric ferry. Over one year, it should prevent the release of
2,000 tons of carbon dioxide and 42 tons of nitrogen oxides, among other
pollutants. The battery's lighter weight and smaller size, when
compared to a diesel generator, will provide additional energy savings,
says Dean Jennings, vice president, e-marine business, Leclanché.
Carriers also are identifying ways to make better use of the
backhaul. Many times, containers of goods coming to the United States
from Asia are empty on their return trips. Sensors can help track their
whereabouts, making it easier to fill them with goods for this leg of
the journey, says Vicki Warker, chief marketing officer with Savi
Technology, a sensor technology provider.
Along with the vessels themselves, many seaports are going green. The
Port of Long Beach, for instance, is investing $1.5 billion to create
the world's greenest container shipping terminal, says spokesperson
Courtney Ridgway. It will accomplish this by implementing zero-emissions
electric equipment, conserving energy and water, and using recycled
materials, among other steps.
Over the next decade, the port also will invest in an on-dock rail program that will allow it to assemble trains up to 10,000 feet long. This will eliminate up to 750 truck trips for each mile of train. "We're moving more cargo with less environmental impact," Ridgway says.
Along with reducing environmental impact, the technology initiatives
underway within many seaports and carriers promise to streamline
operations and bring greater visibility to maritime logistics. "The
ocean part of a multi-modal shipment is where it has been most blind,"
That's changing. For instance, Savi can draw on the 10 to 15 million
data points it collects each day to alert shippers to growing port
congestion. To provide real-time visibility, Savi combines sensor
readings and data from GPS, telematics, ocean vessel locations, and
Another example comes from Traxens, a provider of supply chain data
and services. In June 2019, Traxens announced it was installing its
tracking telematics technology on the refrigerated containers of PT
TKSolusindo, an Indonesian non-vessel operating common carrier. Shippers
will gain visibility to their containers throughout all legs of the
Many seaports also are working to boost visibility. The Port of New
Orleans is evaluating cloud-based data aggregators that heighten supply
chain visibility. "Ports are increasing their focus on technology since
it's becoming more of a customer expectation," says spokesperson Jessica
Greater visibility can help shippers more precisely manage inventory.
Say a shipper assumes its ocean shipments take 45 days. They'll
typically double this and maintain a safety stock of 90 days of
inventory, Warker says. But if tracking technology shows that the
journey takes 35 days 98% of the time, shippers are holding 20 days of
inventory they don't need. Reducing inventory levels frees up cash.
Another benefit of visibility is agility. By maintaining a better
handle on its supply and distribution routes, a shipper can identify a
viable Plan B, or even Plan C, should it become necessary to change
course due to severe weather, political instability, or other events.
"You can compare the cost of Port B versus Port C, including the cost of
tariffs and changing routes," Warker says.
Distributed ledger technology, more commonly known as blockchain, is
penetrating the maritime logistics industry. In June 2019, CargoSmart, a
provider of transportation solutions, launched the Global Shipping
Business Network (GSBN) Services Agreements with nine maritime industry
operators. The GSBN's goal is to transform the global supply chain with
openness and transparency.
"We are excited to see carriers, terminals, shippers, and forwarders coming together to connect ecosystems and build a solid foundation for the digitization of the shipping industry to enable the development of innovative solutions based on distributed ledger technology," says Lionel Louie, chief commercial officer with CargoSmart Limited. Distributed ledger technology allows each party visibility, at the same time, to the same data, from its original source, he adds. The result should improve maritime logistics effectiveness.
Faster Turnaround Times
Few seaports of the past were built to handle spikes in traffic and
the mega-ships now traversing the oceans. "Their infrastructure wasn't
built for Easter Sunday," says Mike Wilson, chief executive officer with
Consolidated Chassis Management, a cooperative chassis pool manager.
As with other areas in maritime logistics, this is changing, largely
due to changes in seaports' physical infrastructure and IT systems. For
instance, by 2021, the Charleston Harbor in Charleston, South Carolina,
will be deepened to 52 feet. That will make it the deepest harbor on the
Along with physical infrastructure enhancements, technology is
streamlining port operations. The Port of New Orleans is investing in
technology, such as optical character readers on container cranes, to
improve production at terminals, Ragusa says.
Similarly, appointment systems can bring predictable solutions to the
drayage system, while robust on-dock rail systems can help speed goods
to market, says Noel Hacegaba, Ph.D., deputy executive director of
administration and operations with the Port of Long Beach. They also
allow seaports to better track and control cargo.
And by pulling together the information gained through technology
into a Port Community System, shippers can locate cargo within the port,
identify delays, and make transportation and routing decisions that
will save them time and money, Kvidera says.
In addition, a growing number of stowage teams are using software
algorithms to guide the loading and unloading of cargo. In the past, if a
customer had, say, 50 containers on a ship, it wasn't unusual to find
them mixed with other shippers' containers. That's not surprising, as
most ships make several stops along their voyages, collecting more
containers at each. Once the ship made its final stop, however, the
jumble of containers would slow their transit out of the seaports.
The algorithms increasingly incorporate enough sophistication that
they can account for the additional containers a ship collects. With
this intelligence, yard workers can more easily assemble distinct groups
of containers for different customers.
It's difficult to predict how the imposition of tariffs and potential trade wars will ultimately affect maritime logistics. Any negative impact, however, should be at least partially offset by the continued investments carriers, seaports, and the firms that partner with them are making in technology and equipment that promises to enhance visibility, speed operations, and improve environmental impact.
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