The next generation of ports

Ports are the backbone of the Malaysian economy. The transhipment of goods at the port today is highly labour intensive. Over the last 10 years we have seen a development of larger vessels and faster cargo handling. The introduction of sea containers back in 1955 meant a revolution in goods transport. Because of the standard dimensions of the container, new ships, new terminals, new cranes, and new jobs were created. The container meant that cargo could move seamlessly between ships, trucks and trains. Intermodalism was born. Cargo handling techniques become more advanced and robotics are increasingly used. Handling speed of vessels and goods in ports are accelerating, resulting in shorter port turnaround times.

Today ports are physical hubs of containers, oil, gas, wood, iron ore, palm oil, etc. Ports of the future are logistics information hubs. The next revolution, a digitalisation of the commercial space, is a super internet where ships communicate with cranes, trains communicate with containers, weather stations communicate with pilot boats, trucks with entry gates, trucks with distribution centres, etc. All objects communicate with the super network.

According to a European study it has been estimated that by aligning the planning of the shipping line, terminal operator and transporter you could dramatically reduce lead-times throughout the port system and save an estimated EURO 80,000.- per vessel in a port. This means that there is a lot of potential to increase the quality, reliability, sustainability and efficiencies of our ports. This requires port participants to share existing information with a super network. Next to location data, you also require communication with a container through technologies such as GPS, sensors, and smart seals (important for customs). This can be combined with other information such as traffic and weather data.

In future people will still be needed in ports, but their job will change from operating physical activities to designing and managing logistics processes. Automated terminals are more predictable than people operated terminals, with less variability. Robots make fewer mistakes and damages than people do, and are more reliable. Therefore these ports will be more reliable and through economies of scale can operate at lower costs. This means that the new third industrial revolution will need high investments by countries in this new generation transportation and logistics infrastructure in order to become a logistics hub, which will create many new jobs. Because of its mechanised and automated nature, it is highly dependent on electricity. This requires the adoption of renewable energy, such as solar energy, in order to be sustainable. Key issues to address however are cyber crime and mobile reception of wireless networks.

The next era of shipping will see the introduction of ships that are unmanned, operated partly autonomously and partly by remote control. Rolls Royce is currently developing this new generation of vessels. The technology level needed has already reached maturity, which can make this a reality. Over the coming 30 years, you will see a gradually reduction in the number of crew in vessels and change of ship design. A pilot will be able operating the ship remotely to bring cargo vessels in and out of ports, supported by automatic mooring systems (without ropes). Remote control provides a better control environment to operate a vessel, providing a bird’s eye view around the ship instead of the current reality where much of the view is blocked by cargo and other blind spots.

Automation will be the key for the growth and competitive advantage of Malaysia as a hub port in Asia. The better people and smart systems work together, the more profitable the port business will be.

Freight pipelines to solve traffic congestion in KL?

While Amazon and Google are experimenting with drones, a British company is experimenting with delivery through pipelines in the UK. The logic of Roger Miles from Mole Solutions (UK): “If clean water and fuel can be transported via pipelines, why not goods”.

As an alternative to the conventional road, rail, air and water transport, freight pipelines are highly reliable, economic (after water the cheapest mode of transport), safe, secure, and environmentally friendly way to carry goods quickly and on time. Furthermore underground transportation pipelines are unaffected by aboveground traffic congestion and weather conditions. Freight pipelines are especially attractive to facilitate high volume cargo flows from fixed origins to fixed destinations that are affected by congestion.

How do freight pipelines work?

A freight pipeline is a pipeline of 2 – 2.5 meters in diameter transporting cargo capsules on steel wheels driving on a rail track. These capsules are electric powered and unmanned. The capsule can carry pallets/load carriers with unitised cargo, liquid/gas containers or bulk materials. These capsules travel at a speed of around 50 km/hour. These capsules can also be temperature controlled to facilitate the logistics of flowers, fish, meat, chocolates, medicines, etc. A second possibility is that capsules are propelled by a fluid moving through a pipeline instead of rail. When the fluid is air or another gas, the technology is called pneumatic capsule pipeline, and, when water or another liquid is used, it is termed hydraulic capsule pipeline. The first practical implementations of freight pipelines were in post and mail, whereas today’s concepts, prototypes and testing are being developed for palletised freight & consumer goods (Germany, Italy, UK), flowers (the Netherlands) and food (UK). Freight pipelines can best be developed along existing rail or road infrastructure to avoid issues with land acquisition.

Possible applications?

In Malaysia freight pipelines could be used for example to link KLIA with Kuala Lumpur as well as the logistics hub Shah Alam with the centre of Kuala Lumpur. This infrastructure could act as a key building block in a total city distribution concept in order to facilitate a more sustainable, efficient and more reliable city logistics in Malaysia’s largest metropolis.  In Kuala Lumpur this pipeline could ‘end’ in a city logistics distribution centre, from where with electric vans and bio diesel trucks goods can be delivered and collected.

What is the urgency?

Innovative logistics concepts will be crucial for Kuala Lumpur’s city logistics in the coming 15 years in order to avoid a so-called traffic infarct, which Jakarta is experiencing today. Similar to Kuala Lumpur, Jakarta has a large population and fast growing rate of urbanisation combined with a fast growth of shopping malls and businesses located in its capital city. These factors resulted in massive traffic jams in Jakarta, leading to poor truck utilisation. According to logistics companies based in Jakarta a truck can do less than one trip per day on average. This has resulted in high logistics costs, a highly unreliable logistics system, affecting businesses, consumers and foreign investment. 

As there is a limitation to how many more roads you can build in Kuala Lumpur, freight pipelines could be a solution to be explored to address the fast increasing traffic and traffic congestion in one of Asia’s leading metropolis.

Healthcare logistics, an unexplored area in Malaysia

Malaysia has seen an alarming increase in chronic diseases that are related to our changing dietary habits and sedentary lifestyles, putting high pressure on Malaysia’s future healthcare system to provide fast, affordable and convenient access to safe and effective treatment. Healthcare providers need to look at the healthcare process as a whole to ensure that the healthcare system functions in a coherent and integrated way. Providers want to maximise the number of patients whom the can treat at ‘acceptable’ standards of quality at ‘minimum’ cost per case, where the care chain (patient flow) and supply chain (goods flow) is critical. Best-in-class hospitals have embraced healthcare logistics in developing a patient focus, centralised diagnostics and simplified healthcare processes; dramatically improving its overall performance.

Logistics is foremost a tool to control flows, both patient flows and goods flows.

The goal of healthcare logistics is optimal organisation and planning & control of healthcare processes for the patient (customer) at the right time & location, patient friendly, within the preferred lead-time, against lowest cost & capacity.

80% of healthcare and emergency management has a geographical relevance. The use of geographic information systems provides great potential in optimising emergency management for capacity utilisation of healthcare network and response of ambulances and during crisis such as outbreaks, disasters, and closedown of hospitals.

In hospitals, healthcare logistics can add value in improving the patient flows through strengthening diagnostics, reducing waiting time for doctor, reducing waiting time for discharge, and ensure availability of medical records. Clear and efficient healthcare processes with clear responsibilities and as little process steps as possible, is a logistics goal that contributes to a safer healthcare system.

Healthcare processes need to be seen as a process where the patient goes through. An example: after a heart operation the patient is held at intensive care unit before moving to the nursing wards.  However the beds at the intensive care unit are more expensive than the nursing wards. If the planning of the operation is not aligned with the availability of beds in the nursing wards, the patient will need to stay longer than necessary at the intensive care unit, leading to higher costs. Another example is that patients after an operation are waiting for availability at a nursing home or home care, where no bed is available, and therefore need to stay longer in the hospital. These so-called ‘wrong bed’ patients can easily add up to 10% of the beds in hospitals.

Healthcare logistics also improves goods flows through improving availability of medication, less delays in transportation of prescribed medicines, and improving inventory management and handling at units. In many hospitals products are ordered once the inventory level is below a certain pre-determined inventory level in a unit. The starting point in this systems is not the patient (end demand), but the inventory, resulting in too high inventory and massive waste of products that have expired. For operation theatres, also a push system has been practiced based on the materials required for the planned operations. However, a new way to manage inventory is to introduce a pull system, where the use of items trigger the supply, from the central warehouse and supplier accordingly. This has been operationalised through a Kanban system, an inventory system to achieve just-in-time deliveries, hereby significantly reducing waste of medicines and other consumables in hospitals.

With excellence in patient and goods logistics you can deliver a better healthcare system at lower costs, which is a rather unexplored area in Malaysia.

How secure is your supply chain?

A supply chain is a chain of interconnected links that facilitate the movement of goods from primal producer to the final customer. This chain can be very short with only a few links and handoffs, or it can be lengthy and complex with many links and handoffs. To be truly effective in supply chain security, each link and handoff should be examined, understood, and protected.

Many security risks exist prior to goods entering the chain. Therefore at origin it should be clear what the customer expects and how you might be held liable. A handoff is the point of transfer to a service provider in the movement of the goods. This handoff is important as there is also an exchange of paperwork that address the material description & condition, manifests, packing list, invoices, etc. In particular the proof of delivery has a critical function in the supply chain, as it is used to track the movement, location, and condition of goods at any given time. In fact, this is the point where a good security program inspects the condition of the cargo and requires receivers to carefully document on the proof of delivery the condition of the goods.

Third party logistics service providers are often inserted into the supply chain, which can be a distribution centre or freight forwarder. A distribution centre operations need a customised security plan for the prevention of theft and infiltration during all handling and storage at this facility. Forwarding operations also require a unique security scheme, since the cargo is moving quickly and is handled by a number of people within the operation.

What are the elements that impact the supply chain?

There are many hands that touch the goods while it passes through the supply chain. Are any of these hands dirty? Securing the supply chain takes a full understanding of the chain and your position in the chain. You must be sure to align your security program to those interests. What is the security compliance and competency in the supply chain? What does the contract say regarding liability? What are the customer demands (both written and non-written)? What is the capability of supply chain partners from the perspective of security?

For a theft to occur three criteria must be met:  opportunity, ability, and desire or motive. Opportunity can be described as being at the right place at the right time. For example: no security present during change of shift. The ability would involve opening the door and removing the targeted goods. The desire or motive is the ‘why’. The desire for cash or the particular product drives the act. It is estimated that about 85% of all thefts involve insight information. Such information can include physical location of certain goods in a warehouse, the day-time-route of a transport of particular goods, timing and shifts of security guards, alarm system and alarm codes, closed-circuit television systems, etc.

It is critical to continually audit and review your security measures to ensure that your risks are minimised as well as having a contingency plan that allows you to respond prompt, aggressive and appropriate to an incident. From my experience self-assessments by companies are notoriously inaccurate. Therefore it is a better idea to have an independent supply chain security advisor to help you to audit as well as to develop a solid supply chain security program.