The domino effect of port congestion ripples throughout the logistics supply chain

A butterfly effect can be seen in supply chains worldwide, with disruptions in one location resulting in significant delays and congestion elsewhere on the planet. The pandemic has highlighted the fragility of this interconnected system, and in recent months COVID outbreaks and extreme weather in parts of Asia have led to unprecedented levels of congestion in ports across Europe and the Americas. This is causing a drop in schedule performance worldwide: today, merely a quarter of vessels on the Asia-North Europe route are on time.

Bringing this knock-on effect to a halt will require a dual focus: while not losing sight of the macro consequences of port congestion, we must also bring our attention to the granular level, where seemingly small actors play a decisive role to ensure that ships can arrive and leave ports as swiftly and efficiently as possible.

Small details, big impact

When a ship calls at a port, a series of actions must unfold to ensure the right staff and resources are in the right place at the right time, ready to welcome it. This includes the facilities to unload the cargo, but also pilotage and tug boat services.

Organising each of these services is a complex puzzle on its own, with variables ranging from the availability of certified pilots and boats to the shuttles transporting pilots to the boarding grounds – as pilots or tugboat crew might be in the right port and still be miles away from the vessel or pier they need to reach. Service providers also need to cater for the specific needs of complex giant carriers, which often require specialised equipment, several tug boats, and in some ports the presence of two senior pilots. Ensuring everything falls into place smoothly is akin to solving several Rubik’s cubes simultaneously.

Despite its importance, this so-called “first and last mile” of the journey is a weak link in the global supply chain. In most small and medium-sized ports, it remains a process managed manually on whiteboards and spreadsheets, with services arranged and updates provided through a myriad of phone calls.

This approach is not only inefficient – it also leaves ports and service providers vulnerable to changes in the arrival time of the ships. The multiple moving parts must be rearranged manually, which inevitably results in further delays down the chain.

Solving congestion through digitalisation

A key change that needs to happen is to digitalise tug, pilot and service vessel operations. Algorithms powered by artificial intelligence can optimise planning and ensure people and assets are available when and where they are needed. Most importantly, digital tools can swiftly reallocate resources if a vessel’s ETA changes.

Experience shows that digitalisation can make a significant difference by planning tug and pilotage services in a way that helps increase reliability of vessel departure or arrival times. For example, when AI-based software was implemented by the Indonesian port of Tanjung Priok, average waiting times for nautical services shrunk from 2.4 hours to around 30.5 minutes.

The adoption of digital solutions by a single port might feel like a drop in the ocean, and this alone will not solve all the underlying causes of port congestion. However, ports around the world are replicating these local transformations, from Malaysia to the UK, as the pandemic has made port leaders realise the importance of replacing paper-based processes with technologies that optimise their resources and enable remote working. If executed properly, these kinds of digital transformations will ultimately increase the competitiveness of ports’ offerings for liners.

This digitalisation at the granular level is the first step towards building a truly integrated global network of smart ports. It enables crucial information, such as vessels’ ETAs, to flow more effectively and more quickly across the supply chain – provided that applications are able to exchange data and communicate in the same computer language. This will improve accuracy and reliability, making individual ports and the entire network more resilient in the face of unforeseen circumstances or last-minute changes.

As the pandemic has highlighted, there is no such thing as a local crisis anymore. Two keys to ending the chain reactions that lead to congestion will be the capacity to share information along the chain, and the flexibility to adapt quickly in response to disruptions. Digitalisation will help with both.