ITC explores innovation in freight technology
How will new technologies improve freight transport and supply chains?
Freight transport is essential to the functioning of the UK economy, and its volume and value continue to grow. At the same time, our supply chains have become increasingly complex and time sensitive, and will need to be robust at a time when the UK faces significant new challenges in these chains as a result of its Brexit policy. Can new technologies help the industry address these issues, and lead to improved efficiencies for freight movements and our supply chains?
To debate this important topic the ITC was delighted to welcome a distinguished panel of industry experts to our Spring Discussion Evening held on 17th April 2018 to explain how innovative technology holds the potential to improve the movement of goods. The panel included James Cooper, Chief Executive of Associated British Ports; Stephen McGlennan, Chief Executive of Hybrid Air Vehicles; Charles Carter, Senior Technologist at Transport Systems Catapult; and Patrick Mulhall, Managing Director of Pallite. The discussion was chaired by ITC Commissioner Nicholas Finney OBE, and attended by over 60 leading figures from the freight and transport worlds.
How new technologies will reshape freight and supply chains – Key issues raised by the speakers:
- James Cooper provided a major seaport operator’s perspective on new technologies. He explained that container shipping was an efficient way of transporting cargo despite low profit margins. Sea Ports had made great advances in productivity and the efficient handling of container shipments over the past two decades. At Southampton Container Terminal crane rates had achieved a 74% increase in productivity in the last 15 years, he explained. The rapid rise in the size of container ships had placed considerable stress on the processing of cargo, since it resulted in larger but fewer vessel calls. However, this had also encouraged the upgrading of the logistics capacity at ports, smart processing for customs clearance, high-tech quayside crane operations, and increased supply chain visibility and monitoring. The CNS Community System used at Southampton for customs clearance, he explained, had increased efficiency. In the future, further technological advances were likely to improve port operations including developments such as autonomous tug ships and the platooning of autonomous trucks.
- Stephen McGlennan explained the opportunities that hybrid airships offered. He introduced the Airlander aircraft which comprised a helium filled body with auxiliary wing and tail surfaces. This offered the possibility for relatively low-cost, low-emissions flight with long endurance and heavy lifting capabilities, he explained. Due to the ability for vertical take-off and landing from any level surface, it was particularly suitable for transport in remote areas or in congested zones such as urban seafronts. These abilities had attracted the attention of the military sector, for instance to ship machinery and supplies to remote areas of operation, and other global companies developing hybrid air vehicles were looking at cargo capacities of well over 60 tons. Cargo handling on Airlander vehicles could be made feasible through support rails in the payload module, and offered the opportunity for drive-on of large vehicles. Although freight costs per ton were greater than for conventional road and rail transport, it would be significantly cheaper than the costs using existing freight aircraft, or for road freight on ice or unsealed roads. Although Airlander was presently focused on the luxury passenger market where margins were highest, research had shown that such hybrid aircraft could potentially support 3.8% of the global freight market by 2032.
- Patrick Mulhall gave an overview of how new pallet designs offered the opportunity for greater efficiency. He explained that the global pallet market was rapidly growing, but that timber pallets were environmentally problematic due to their weight and supply shortages of suitable timber. This was contributing towards inefficiencies in transport, particularly air freight, as well as in warehousing. Pallite’s range of paper-based pallets were lightweight and durable, helping to address some of these issues by reducing the costs of transportation and fuel consumption. The Pallite concept also allowed for a range of different sizes of pallet and container boxes which could better serve various kinds of cargo and save space. These advantages, together with the flexibility to double-stack, could also improve the efficiency of space utilisation in warehouses. In addition to the new pallet technology, Patrick also proposed operational ideas such as ‘pallet pooling’ systems to reduce costs and increase efficiency.
- Charles Carter introduced how blockchain technology could improve supply chain efficiency. He explained that blockchain technology was a form of Distributed Ledger Technology, which could maintain transparent ledgers to verify material and asset transactions with minimal third-party involvement. The features of blockchain helped to enable smart contracts, better tracing and auditing of processes, and removed the need for intermediaries. As a result, it had strong applicability for use in supply chain operations, increasing efficiency by reducing costs, improving the integrity of data, and fostering collaboration even in the absence of commercial trust. This was forged because consensus and validation is required by members in the chain to add data on the shared network. The National Maritime Single Window System being developed could potentially take advantage of these opportunities in shipping, but the UK needed to avoid falling behind in implementing this technology, since other countries are driving forward and Maersk, Samsung and IBM were already using blockchain in their supply chain processes.
Key themes raised in the discussion
- Greater collaboration will be crucial for efficiency: Some guests noted that the greatest efficiency savings in freight movements could happen through better collaboration. Some operators saw their supply chains as a USP and a commercial advantage not to be shared, but it was suggested that use of a neutral, trusted third party to handle shared data would address these concerns. Blockchain technology, in particular, should encourage greater transparency and co-operation in freight and logistics. The use of databases could also help to better track delivery locations and improve route optimisation, and the ELUPEG initiative was already promoting collaboration to improve supply chain efficiencies in Europe. It was also observed that freight was not homogenous and therefore the innovations that would be necessary to improve efficiency were likely to be disparate: there is no single technological magic bullet to reach this end.
- Technology can help to increase supply chain efficiency across borders: Delegates discussed how new technologies could help to improve freight movements across borders. Automated clearances and digitisation of processes would help, although it should be remembered that some cargos, such as manufactures, were more suitable for certain systems than others would be such as agricultural goods and livestock. Collapsible containers were also suggested as a way to improve the efficiency of international shipping movements.
- New technology can help to address ‘last mile’ issues: A number of guests pointed to the possibilities that new technologies offered for improving the last mile of deliveries. Autonomous robots and vehicles could be used to handle this part of the process, and it was noted that Amazon was already researching airborne warehouses for use with drone deliveries. It would be important, some suggested, to ensure that the last mile was an integrated part of the full supply chain. The opportunities that were arising for 24-hour delivery services, through innovations such as quiet delivery cages, would help to alleviate the problem of workplace deliveries during congested times of the day in urban areas such as London.
- What will be the role for Government and policy makers? A key discussion centered on the public policy issues arising from these new technologies. Some guests acknowledged that Government intervention could play an important role in changing behaviours and encouraging the adoption of new and more efficient technologies. This was particularly so when these aided other policy goals, such as cleaner urban air or the reduction of carbon emissions. In addition, legislation could potentially be used to encourage sharing and collaboration in the industry. More information was needed, however, on the social costs of new tech. Some also observed that legislation was a blunt instrument and could cause unintended negative consequences.