21st Century Megaproject Port Development & Logistics: Prospects & problems in the use of blockchain

By omega centre on Oct 14

21st Century Megaproject Port Development & Logistics: Prospects & problems in the use of blockchain

November 20, 2019 17:30

21st Century Megaproject Port Development & Logistics: Prospects & problems in the use of blockchain

Wolfgang Lehmacher, Sometime Director & Head of Supply Chain and Transport Industries, World Economic Forum, Geneva

Date: 20th November 2019
Time: 5.30pm
Venue: Room LG01 Central House

14 Upper Woburn Place, London WC1H 0NN
Directions: http://www.ucl.ac.uk/maps/

All are welcome and participation is free.  People wishing to attend are required to reserve a place through Eventbrite

Summary of the Talk

This covered the current digital transformation in the ports and logistics industry including the potential of blockchain technology, the megaproject example of the Belt and Road Initiative, and blockchain potential in the construction industry including megaprojects.

He explained how the ports and logistics industry has seen several revolutions since the mid 20thC, firstly international trade expansion and the rise of the container; then specialisation and consolidation with emergence of express delivery services, 3rd/4th party logistics providers and track and trace; and currently Logistics 4.0 with synchronized and integrated platforms for certain activities; integration of suppliers, Internet of things systems, digital logistics marketplaces (5PL), warehouse automation and automated port terminals. Logistics 5.0 will see even more intelligent and automated systems, with data and artificial intelligence supporting further automation and decentralization of value chains, and networks of connected vehicles and sustainable platform logistics (6PL).

A major implication for ports development is that physical trade hubs such as ports, can establish themselves as digital ports – control points of regional e-commerce – as well as the physical operations on the site.

Various technologies are transforming transactions for importing and exporting, such as Optical character recognition (OCR), Artificial intelligence (AI), advanced analytics (AA) Robotic process automation (RPA), Internet of things (IoT), and Distributed ledger technology (DLT).  Part of this revolution is the emerging use of blockchain technology in goods logistics, offering a new form of decentralization and collaboration, by making it possible to build decentralized solutions with a security level that matches centralized technologies.

However, blockchain is a nascent technology requiring operational development, and business confidence and trust. Three possibilities were presented: (1) Blockchain-based letters of credit for transactions to export/import goods; (2) The World Economic Forum’s suggestions for a new shared digital Global Trade Identity (GTID) which could reduce trade barriers through competitively, commercially and politically neutral interoperability infrastructures, enabling a reliable and efficient identity management system on a global level; and (3) A Platform System for global shipping which could connect the entire supply chain ecosystem including shipping information, end-to-end supply chain visibility, and automated paperwork.

In a megaproject context, the example of the Belt and Road Initiative (both the land-based Silk Road Economic Belt from Western Europe to China, and the Maritime Silk Road via the Mediterranean, Red Sea, and Indian Ocean) illustrates how digital transformation of logistics could support realisation. The BRI aims to promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up connectivity networks, and realize balanced and sustainable development. Despite progress in infrastructure projects (China-Europe cargo trains, 40 new airports built or expanded, 40+ projects in progress including power station, oil and gas transportation, telecommunications) barriers remain. Speed of goods transactions could be improved by state-of-the-art handling

technology and supply chain management systems. Inefficient customs clearance procedures could be improved standardized customs clearance processes and robotics process automation. Time and cost of manual goods handling could helped by automating loading and unloading. Scattered and unstructured information on goods shipment needs real-time tracking through distributed ledger technology.

In the construction project field, blockchain offers possibilities for more efficient and smarter project management and implementation. Large capital projects typically cost 80% more than budgeted and run 20 months late. Possible applications include a reputation ledger that tracks subcontractors’ deliverables to identify reliable subcontractors; a shared project management dashboard to better manage workflow in fragmented construction supply chains;  smart contracts that identify accountabilities and trigger milestone-based payments; a distributed ledger system that keeps an end-to-end chronicle of the construction process to record building inputs and assets, including warranties and maintenance; and  blockchain-enabled apps that track materials, testing, and results against building codes and standards to streamline inspections.

The current slow take-up of such technology in the construction industry reflects major barriers to address, low capitalisation and low profitability of the industry, project costs, technology (a blockchain ledger relies on its nodes but if the nodes are inundated with data they may become slow) and the volume of transactions that take place on a construction project will place a huge burden on a distributed-ledger system unless some combination of blockchain and database is adopted.

For the management and implementation of megaprojects, these barriers are even more formidable, with scaling-up a major barrier.

The presentation ended with a set of recommendations for national/ international promotion of Industry 4.0 generally: an integrated 4.0 strategy, strandardisation projects, digitisation programmes for traditional industries, innovation programmes and perhaps subsidies for SMEs, technology centres to support SMEs, communication and alignment across ministries, and inclusion of the private sector in 4.0 strategy development.

Download: Presentation Slides

omega centre

Top