Benoit de la Tour, president of terminal operating systems provider Navis, which is extending its reach beyond the terminal, stressed the need to simplify supply chain complexity, noting how the industry is behind in digitalization.
Navis, a leading provider of terminal operating systems (TOS), is extending its reach further along the links of the supply chain.
“Our ambitions at Navis have expanded over time,” Benoit de la Tour, the president of the company, told hundreds of customers in March at Navis World 2017, a four-day conference in San Francisco the company holds every other year.
Benoit de la Tour
“We started with terminals and we are doing that really well, improving terminal operations. But we want to have a bigger share, a bigger play across the whole supply chain,” he said. “We really want to make global trade smarter, safer, and more sustainable for everyone.”
There is a “huge opportunity to simplify the supply chain complexity and transform how efficiently goods are being delivered,” he said. “As compared to many other industries, I think our industry has not been touched yet deeply with digitalization.”
In the past 15 years, international trade has grown from $1 trillion annually and 12 percent of global GDP to $22 trillion and 30 percent of global GDP, noted de la Tour.
Because trade is so multidimensional, with multiple parties – from ocean carriers to ports, terminal operators and other landside service providers – needing to work together to handle a single box, “They need to share the same information to manage the container flow,” he said. “There are lots of dependencies across all participants, and the best plan can be disrupted by any of the parties.
“There is a need to connect with multiple internal systems – like the stowage planning of the TOS – to avoid duplication of work and enable better sharing,” he added. “And there is also a growing need to connect with external sources through cloud services or APIs (application programming interfaces) to bring more value to all stakeholders.”
TOS Powerhouse. Based in Oakland, Calif., Navis is part of the Helsinki, Finland-based cargo handling equipment maker Cargotec, which reported revenues of 3.5 billion euros (U.S. $3.7 billion) in 2016. Cargotec has three major subsidiaries: Kalmar, MacGregor, and Hiab.
The company does not report Navis’ financial results separately, instead rolling them into those of Kalmar, a maker of cargo handling equipment, including the kind found at container terminals – reach stackers, straddle carriers, rubber tired gantry cranes and automatic stacking cranes.
However, Andy Barrons, senior vice president and chief marketing officer at Navis, says Cargotec wants to transition its business to be 40 percent services and software by 2020.
“Obviously Navis plays a critical role in contributing to that goal, so we’re very much the point of focus in terms of building a bigger software business,” he said at the conference.
“If you measure our market share by number of terminal sites, we’re in 316 terminal sites globally. We tend to look at the market size as around 1,200 container terminals, of which 700 or 800 of those terminals are really of significant volume. So from a terminal site perspective, our market share is about 25 percent. In terms of volume going through those terminals, it’s probably nearer to 30-plus percent of container volume flowing through a terminal that’s using our system.”
Navis’ competitors include CyberLogitec of Ridgedale Park, N.J.; Total Soft Bank Co. of Busan, Korea; Tideworks Technology of Seattle, Wash.; and Jade of Christchurch, New Zealand.
In addition, some terminals have their own in-house TOS, but Barrons said Navis has had success in convincing many of them to migrate to its product. Maher Terminals, for example, moved from its own system to a Navis TOS in 2013 and upgraded it last year, and HHLA in Hamburg, Germany, is in the process of moving its three terminals to a Navis system as well.
Waste Management. De la Tour noted that in the past two years, the container shipping industry has been buffeted by change – slower cargo volume growth, the increasing size of vessels, larger carrier alliances, and widespread industry consolidation. Seven of the largest liner companies disappeared through mergers and acquisitions (or are in the process of doing so) and one, South Korea’s Hanjin Shipping, went out of business entirely.
While shippers can do little to control those forces, they can control cost and eliminate waste, he said. And that is a big target. Working in conjunction with consulting firm McKinsey & Co., “We found $17 billion of waste in the supply chain,” de la Tour said.
Barrons says one of the trends impacting Navis’ business is the drive by terminals to automate. To those ends, several have adopted the latest version of Navis’s N4 software, including DP World’s London Gateway, the Long Beach Container Terminal, APM Terminals Maasvlakte 2 in Rotterdam, the Qingdao Qianwan Container Terminal in China, and Victoria International Container Terminal in Melbourne.
At these terminals, instead of having a human driver bringing boxes from the quay crane to stacking cranes in the container yard, robots must be given instructions to do so from the TOS.
Barrons estimates the number of automated terminals will double in the next decade, in part because the time it takes to build and bring them online is shortening.
According to Barrons, it is not so much the cost of labor that is driving interest in automating terminals, but the increased size of ships calling these facilities. This is especially true in Europe and Asia, where ports regularly receive ultra-large containerships in the 13,000-TEU to 18,000-TEU range.
Proper Planning. One of Navis’ first steps outside of the terminal business was the December 2014 creation of XVELA, an independent division within its larger software business.
XVELA has developed a software platform that allows terminal operators and shipping companies to collaborate on stowage planning.
Robert Inchausti, a co-founder and chief technology officer at XVELA, said the company is “focused on the inefficiencies around stowage planning, the execution of what’s happening to the ship and how changes to those plans affect the supply chain down the road. The goal is to add as much visibility so that people can take advantage of the very dynamic and fluid nature of operations.”
The first step in that process was to create a terminal library. The idea being that that ships should know what to expect in terms of port facilities – the number of available cranes, for example – when they arrive at a terminal. A similar library was built for ships, along with an electronic data interchange (EDI) “engine” that could read and write data from multiple parties with APIs that work with or without EDI. This allows carriers to share information with vessel sharing alliance partners, while ensuring the security of system so that only the appropriate data is shared and only with the appropriate parties.
XVELA has conducted a number of pilot projects with ocean carriers and terminal operators to get feedback on the system, as well as to give customers “a sense of how much value they could expect to get as we built the solution,” said Inchausti. “We’re at the point where we can start moving toward our production environment with both carriers and terminals.”
The company has already brought one regional shipping company online using the system and is beginning to have commercial discussions with other carriers and terminals.
In January of 2016, Cargotec acquired German technology and service company INTERSCHALT, which provides software for cargo and fleet management, data voyage recorder systems, and maintenance, repair and retrofit services for bridge navigation and communication equipment.
Now known as Navis Carrier Solutions, the company provides software and loading computers that are used by a ship’s crew to determine how a vessel will perform under certain loading conditions and sea conditions.
Navis StowMan, a leading stowage planning product, is used by 25 percent of current container vessels, and the Navis MACS3 onboard loading computer is used by about 65 percent of the global containership fleet, according to the company.
The loading computers provide the captain and crew with the weight and location not only of the cargo that is stowed on the ship, but of ballast and fuel as well. This information is critical for the vessels to maintain stability, determine how much cargo can be accepted, and even how containers need to be lashed on board.
Core Critical Data. Navis Carrier Solutions also sells a product called Bluetracker. Customized for each vessel, it consists of sensors and hardware installed on board ships that can automatically track of all sorts of data generated by the ships as they move between ports – navigation data, such as the position, course, and speed of a ship; data about fuel consumption and power generation from its main and auxiliary engines, as well as power consumption by reefer containers and pumps; and environmental data about wind and waves.
According to Henrik Alfke, head of research and development fleet at Navis Carrier Solutions, this data can then be used to optimize vessel operations and maximize fuel economy, a critical function, as fuel accounts for 70 percent of the operating costs for a typical containership. For a 12,000-TEU ship sailing at 22 knots for 250 days a year, for example, the bunker fuel bill alone amounts to around $80 million each year.
And because fuel consumption increases by a power of three as speed increases, a one-knot difference can completely wipe out a vessel’s profit margin, Alfke said.
Inchausti notes that this information gathered on board a ship can be useful to terminals and carriers in determining, for example, whether it will make the next port of call at the originally estimated time once underway.
In addition to the need for better collaboration between carriers and terminals, he said there can be other factors that contribute to the inefficiencies that exist today. Harbor pilots, for example, may not be aware that a ship is running late or early, or a company that supplies chassis might benefit from better information about how many containers are being discharged.
“So we really want to provide that core critical information to all the key relevant parties,” he said.
Barrons said that with the wider deployment of mega container ships, there is some expectation that feeders may become more important and ship networks may start to look more like the hub-and-spoke networks of airlines. But as vessel sizes increase, so too does the complexity of a single terminal operation, which further increases the need for close collaboration across all supply chain stakeholders.
“As we shift to hub-and-spoke, and we have a mega vessel coming in to a terminal, and those boxes have to make a lot of connections to many other vessels or barges or rail or trucks, then it becomes even more important to know when that vessel is actually arriving and when those boxes are actually being discharged,” he said.
Navis has developed optimization software for its terminal operating system and “we’re developing that for vessel stowage,” said Barrons. “Those tools essentially help accelerate decisions, accelerate the planning process and try to optimize the plan itself.”