A NEW report from research and
consulting firm McKinsey & Co says the global port sector has been much
slower to automate than other comparable industries, but that may be changing.
In its report, McKinsey noted
several potential benefits of process automation for container ports, including
safer working conditions, fewer human-related disruptions and more predictable
performance.
The firm cited high up-front costs
and "significant" operational challenges such as poor data quality, a
lack of communication across silos and difficulties with exception management
as the top factors hindering port automation efforts.
"On the face of it, container
ports seem ideal placed to automate," the report said. "The physical
environment is structured and predictable. Many activities are repetitive and
straightforward. They generate vast amounts of readily collected and processed
data. Better still, the value from automation includes not only cost savings
but also performance and safety gains for ports and the companies that do
business there.
"Nonetheless, ports are moving
more slowly than sectors with comparable complexities, in part because the
economics of automating them haven't lived up to expectations."
McKinsey pointed to the mining,
warehousing and automotive manufacturing sectors as examples of industries that
have reduced costs and improved productivity as a result of automation. The
firm estimates early adopters of automation in the mining industry have shaved
as much as 20 per cent off their operating expenses and increased their outputs
by as much as 40 per cent, while warehouse operators have seen a 10 per cent
decline in costs and a 30 per cent rise in productivity.
According to the report, there are
nearly 40 cargo ports around the world using some form of process automation at
a total investment cost of at least $10 billion. McKinsey projects this
spending will accelerate in the near term, with ports and terminal operators
expected to spend another $10 billion to $15 billion in the next five years.
The firm cautioned that it takes
careful planning and management but said those ports that are successful in
their automation efforts can decrease operating expenses 25 per cent to 55 per
cent and increase productivity by 10 to 35 per cent.
Port asset management firms and
transportation providers expect at least half of all greenfield port projects
in the next five years to be semi- or fully automated, while 35 per cent said
the number of automated ports will rise to above seven in ten.
McKinsey estimates that in order to
justify the high cost of an automated greenfield port terminal, expenses would
have to be 25 per cent lower than with a conventional facility or productivity
would have to increase 30 per cent along with a 10 per cent decline in costs.
But according to the report, survey respondents said the reality of terminal
automation tends to fall short of expectations, with operating expenses
generally falling only 15 per cent to 35 per cent and productivity actually
declining 7 per cent to 15 per cent.
Given that the survey also indicated
personnel capabilities, data quality, siloed operations and exception handling
were the biggest impediments to realising the promised cost and productivity
benefits of automation, McKinsey recommended ports "start with a blank
slate" to build automation-ready capabilities, create a collaborative environment
by coordinating and communicating automation efforts across various departments
and stakeholders, test any new systems extensively before putting them into
operation, incorporate external data into automation systems and clearly define
implementation, productivity and cost targets ahead of time.
Source : HKSG.
