I always thought the main challenge for large ports are capacity issues for on- and off-loading the container ships. Then I learned the real bottleneck quite often is not offshore, but onshore, in the logistics hubs. The continued expansion of world trade leads to an increased turnover of goods in these logistics hubs, often straining the turnover capacity of physical infrastructure. Hub competitiveness relies on efficient operations which often require inter-organizational collaboration. Interaction between independent business partners leads to information break-downs, manual effort, delays, and in worst case scenarios, wrong decisions. Lack of transparency of current location and destination of moving assets prevents optimal infrastructure usage.

Port.jpgOne example for these challenges is Europe’s second largest harbor in Hamburg, where trucks spend up to 70% of their time waiting to be dispatched. Covering an area of 7,200 hectares, the Port of Hamburg handles an average of around 10,000 ships and 9 million cargo containers every year – the number of containers has almost doubled in the last ten years. According to economic forecasts, growth is expected to even accelerate in the coming years – the Hamburg Port Authority (HPA) anticipates that the port will be handling 25 million cargo containers by 2025, a dramatic increase of 16 million on today’s figure.

The main challenge facing the port in the coming years will be compensating for a lack of space to expand. “We can’t increase the port’s surface area at all, so we need to look at ways to become more efficient in the space that we have available,” explains Sascha Westermann, Operational IT Traffic Management, at HPA. According to the Hamburg Port Authority development plan to 2025, logistics for components and products and the resources necessary to move them can be enhanced and optimized with real-time insight into orders, location, and transit conditions. Fuel costs can be reduced, routing can be optimized, and wait times for critical and time-sensitive material can be improved.

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This is why HPA, together with partners like SAP and T-Systems, began developing a system that would optimize the port-side traffic flow and thus allow HPA to grow its revenues and cargo turnover rates despite being unable to expand its surface area. The underlying software – SAP Connected Logistics – has been officially launched today as part of SAP Solutions for the Internet of Things. This cloud solution allows hub operators and others to monitor traffic towards and within a hub, and facilitate communication between all involved parties that even don’t necessarily have a direct business relationship.

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Furthermore, it offers lean dispatching capabilities for logistics service providers that don’t have a sophisticated Transportation Management solution in place, respectively integration to the backend for those who have. Finally, the SAP Connected Logistics cloud solution allows easy onboarding and usage with fast time to value and a low TCO for SAP- as well as non-SAP customers.

Connected logistics clearly is a large area, and the logistic hub scenario is just one aspect of it. In combination with proven track & trace technologies, existing solutions to enable a supply chain execution platform, and upcoming machine to machine communication, many more use cases exist. According to this case study published in Information Week, steel company Essar uses the IoT to bring its entire 3,700-vehicle fleet management process online. GPS and RFID systems are used to monitor equipment movement, fuel levels and consumption, and all associated transactions. Annually, Essar is saving 5% on maintenance and 10% on fuel costs.

I fully agree with a recent Gartner report that made one thing clear: “Future supply chains must seamlessly integrate the digital and physical worlds of customers to be competitive.”

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  1. Neetin Datar

    Great blog Guido! Yes, bottlenecks exist at every turn (pun intended) of trade and commerce i.e. in ports, terminals, distribution hubs and the broader logistics network in every country. Hamburg Port Authority success story with SAP Connected Logistics and IoT capabilities is very appealing.

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  2. Umesh Sita

    Great Blog.  Should be posted in a business or logistics journal as well!

    This challenge facing port operations is a global phenomenon and affects effective logistics and business operations throughout the supply chain.

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