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DCSA announces plans to push for electronic bills of lading

The Digital Container Shipping Association (DCSA) has announced a push for the use of electronic bills of lading (eBL) and made a call for collaboration as it estimates a potential $4bn could be saved per annum at a 50 per cent adoption rate by the container shipping industry.

Eliminating paper from the shipping transaction will make every aspect of commercial container shipping better, faster, cheaper, more secure and environmentally friendly, the DCSA states in its latest release online.

There are however, a number of obstacles to obtaining eBL. Lack of standardisation is one issue, but some carriers and solution providers have continued to move forward with proprietary eBL initiatives, albeit at a limited scale, states DCSA.

André Simha, global chief digital & innovation officer for MSC and DCSA chairman recently stated that: “The COVID-19 situation is bringing the core strengths of a standardised eBL to the fore. Cargo in ports cannot be gated out because of paper that is stuck elsewhere due to airfreight delays caused by the pandemic.”

Research shows paper bill processing costs three times as much as eBL processing. In an effort to fully understand the benefit of digitising the BL, DCSA carried out a financial modelling exercise to quantify the potential cost savings for switching from paper BL to eBL. The complexity inherent in using BL means the actual process cost for a single BL can vary widely.

The research found that the total cost of processing paper bills is almost three times that of eBLs. At a global economic growth rate of 2.4 per cent through 2030, as forecasted by the OECD, DCSA estimates that the industry can potentially save more than $4 billion per year if 50 per cent eBL adoption is achieved.

The DCSA states that if the industry starts on standardising eBL now, there is reason to believe a 50 per cent adoption rate is feasible by 2030.

Barriers to adoption

Three major factors drive adoption, but these obstacles are either on track to be resolved or have a path to resolution.

Robust technology – According to the DCSA, achieving acceptance of electronic documentation for something as critical as the bill of lading requires maintaining the integrity and uniqueness of the document as it makes its way along the supply chain. In the past, technological limitations have made this difficult in a digital format, partly due to the negotiable properties of the BL. However, new technologies such as distributed ledger technology (DLT), peer-to-peer and Blockchain offer potential solutions for eliminating the risk of a single catastrophic failure or attack that would compromise the integrity and uniqueness of an eBL.

Acceptance by government authorities, banks and insurers – The DCSA states that concerns over legal enforceability have also been a barrier to widespread adoption of the eBL. Not every government has provisions for an electronic form and many of them require paper. In addition, the lack of industry-standard language and definitions have made it impossible for them to “rubber stamp” an electronic replacement. However, the DCSA states that progress is being made in this area and accelerated as a result of the the COVID-19 crisis.

Open collaboration - For any robust technology, such as blockchain or digital ledger, to safely deliver an eBL from end-to-end, data model and transmission standards need to be in place, says the DCSA. If everyone who touches the eBL is using the same data format and communication standards, it can be transported seamlessly regardless of pre-existing relationships between stakeholders. Digital standards will enable interoperability between all stakeholders, such as system providers, shippers, carriers, banks and regulators. Different parties can be involved in a transaction as long as they have implemented the standards.

Next Steps

This month, DCSA will embark on an initiative to enable the open collaboration necessary for achieving full eBL adoption.

“DCSA’s mission is to drive alignment and digital standardisation to enable transparent, reliable, easy to use, secure and environmentally friendly container transportation services. Digitising documentation, starting with the bill of lading, is key to the simplification and digitisation of global trade” said Thomas Bagge, CEO of DCSA.

“The transformation that has taken place in the airline industry is an example of what’s possible if we work together. The e-AWB is now the norm rather than the exception among air carriers. We invite industry stakeholders to work with us to create standards that will make the eBL maximally useful and relevant for ensuring their goods are delivered safely and seamlessly to their final destination.”

Read more.

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  • Digital twins for the maritime sector

    Digitalisation

    By Mikael Lind, Research Institutes of Sweden (RISE), Hanane Becha, UN/CEFACT, Richard T. Watson, University of Georgia, Norbert Kouwenhoven, IBM, and Phanthian Zuesongdham and Ulrich Baldauf, Hamburg Port Authority.

    A digital twin is a dynamic digital representation of an object or a system. It uniquely describes in a binary format a person, product, or environment’s key characteristics and properties and can be rendered in one or more physical or digital spaces.

    Decision making options

    Decision making is the central activity of all organisations, and decision makers use explanatory or causal models either implicitly or explicitly. They decide based on the anticipated effects of their intervention. Decision making is typically improved by open sharing of decision models with colleagues and calibrating them with data. The value of a decision model is often determined by the quality and breadth of data used for creation and calibration. The vast and growing Internet of Things (IoT) will be a key source of real-time data for model building and reality assessment.

    The simplest and most common decision model is based on a measured association among variables in a data set. Methods such as regression and machine learning fit this mould. A more advanced approach is to test interventions prior to implementation, such as with pilot studies and experiments, aimed to validate a causal model before scaling to a larger population. Randomised field experiments have been applied to test key economic principles, and the key proponents were awarded the 2019 Nobel prize in economics. The problem with interventions is that some don’t work and might harm the subjects, such as when testing new drugs, or jeopardise financial sustainability, such as infrastructural investments for a port that are below the intended return. The most rigorous approach to decision making is to build a hi-fidelity mathematical or biochemical model, or digital twin,[1] of the environment of concern and simulate a possible range of interventions. This enables the exploration of counterfactuals, such as what if we did x instead of y. Such models do not physically harm humans or nature and provide a conceptual foundation for decision-making for future sustainable business operations. You can distinguish these three approaches, respectively, as building a theory from data, testing a theory in one or more real settings through interventions, or testing a theory many times using a digital twin to simulate many possible settings. The latter is the least risky and likely to be the most successful.

    Digital twins require the construction of a precise set of equations for each component in the model and the interaction among the components. They also need data for their calibration and operation. As the digital transformation of the maritime sector proceeds, it can also create the data required to calibrate digital twins of the various components of a ship, a port, and other elements of the transport infrastructure such as the goods being transported (as e.g. dry and reefer containers). In many industries, included shipping, there are “emerging opportunities to digitally represent and simulate objects and events prior to decision making”.[2] As more devices become connected, such as a smart container with data generated by diverse use cases (e.g., executed transit time, deviations alerts, and infrastructure utilisation associated to container movements and operations),[3] digital data streams built upon standardised data sharing provide opportunities for real-time representation and simulation of authentic situations. Digital twins will displace simulation models because of the order of magnitude increase in the fidelity of representation of the physical world and their continual recalibration via digital data streams to local conditions and changed circumstances.

    In this article, we elaborate on the key fundamentals of digital twinning followed by how it may improve the decision making of shipping companies, port operators and others in the transport and shipping ecosystem, as well as in developing standards, that support both the integration of transport supply chain operations and the development of digital twins for operational enhancement and strategic planning.

    Digital twins

    A digital twin is a dynamic digital representation of an object or a system describing its characteristics and properties as a set of equations. Complex processes involving a multitude of actors are often difficult decision-making environments that are best modelled digitally prior to action.  A digital twin includes both the hardware to acquire and process data and the software to represent and manipulate these data. Digital twins are more powerful than models and simulations because they leverage digital data streams to bridge the barrier between the physical entity and its representation. This means that digital twin analytics relies on historical data (e.g., a data lake), and real-time digital data streams (e.g., IoT generated data), to analyse possible outcomes (Figure 1). A digital twin is a generic model of a situation that can be tailored to a specific situation by specifying relevant parameters to provide answers to “what happens if …” or “what happens if this does not …” to support decision-making.

     digital twin jul 15

    Figure 1: The components of a digital twin

    A digital twin can be continually calibrated through its entire lifecycle by integrating real time digital data streams.[4] This also means that a model can be continuously refined to so that it converges to a very high-fidelity model of reality.

    Standards to support digital twins

    Traditionally, we have used data modelling to surface that core component within a standard and to ensure compatibility across standards. This has been followed by efforts of defining standardised interfaces for communication, so-called APIs (Application Protocol Interfaces). Now, we need to recognise that data have a dual role: transaction processing and data analytics, such as that facilitated by a digital twin. Thus, a digital twin is another use case that needs to be supported by standardised digital data streams using standardised APIs. We need to redesign business processes to support the generation of IoT derived data necessary for digital twin creation and operation, so that they become powerful tools for risk management analysis and mitigation, as well as effective decision making aids  To prepare for the era of digital twins, standardisation bodies, such as UN/CEFACT, GS1, WCO, and DCSA have developed various building blocks in support of the digital twin concept, namely the UN/CEFACT Smart Container data model and the DCSA IoT connectivity infrastructure. Extra standards are still needed to build and deploy fully the digital twins. Standards need to serve both the transactions of today and the digital twins of the future. Three areas of operations are now discussed for which maritime sector digital twins would serve as an important foundation for strategic and operational decision-making to enable ecological and financial sustainable maritime transport.

    Examples of digital twin use cases for the maritime sector

    Digital twinning is an acknowledged opportunity for maritime sector improvement. “There is no doubt that the digital twin is the future. Being able to predict potential dangers and create the optimum design, will enhance safety and operation greatly. With the element of the unknown significantly limited, the digital twin concept can help the shipping industry make better use of digitalization and move to a new era”.[5] Three areas that will likely benefit from digital twins are fleet optimisation, port optimisation, end-to-end supply chain optimisation and increasing key stakeholders’ situational awareness, which we now elaborate upon.

    Fleet optimisation

    Typically, a shipping company serves multiple clients at the same time, and clients may use different shipping companies simultaneously. Thus, a shipping company needs to maintain and gain in competitiveness by optimising its fleet in terms of ships and their cargo carrying capacity. This need for sensitivity analysis could be served by a digital twin based on historical, ongoing, and predictions of business transactions. This digital twin could form the basis of strategic decision-making by testing a variety of scenarios for trade patterns and shipping fleets.

    Furthermore, a digital twin for fleet optimisation could also enhance operational decision-making under diverse contextual factors, such as weather conditions that create atypical situations, and various options need to be rapidly reviewed.

    Port and terminal optimisation

    Port efficiency relies on balancing demand and supply in a flexible way and integration within the entire transport system.[6] A port is dependent of a continuous inbound and outbound flow of cargo and passengers arriving and departing from the port by different means of transport. For strategic planning, a port and its partners need to capture historical, ongoing, and predicted future trade in a digital twin. Such a model should incorporate the different parameters and relationships that port decision-makers should include in their strategic decisions, such as investment in infrastructure,  port design, and terminal capacity. Typically, questions that such a model should address are how many berths are needed for the port need to meet punctuality goals, or how much yard space is needed to allow for different customers to store their cargo as it moves between transport services, either shipping or other modes.

    A digital twin, fed by multiple data streams of real-time data and historical databases, is also an operational planning tool for the coordination and synchronisation of port operations.[7] It could be an essential foundation for virtual arrival processes and green steaming[8] and for the hinterland window to support efficient use of trucks, trains, and infrastructure for diverse needs.

    Situational awareness: short and long term

    Cargo owners, transport buyers, and end-customers seek enhanced visibility and predictability on the state of the transport of goods in their movement from origin to destination. To enhance situational awareness for these groups, it is feasible to consider a parallel linking of relevant digital twins so that the repercussions of a delay in one stage can be thoroughly analysed, adjustments made, and situational awareness updated. In addition, connected digital twins are a tool for investigating the coordinated development of infrastructure investments across a web of ports that frequently interact so that key stakeholders also gain long-term situational awareness. This allows them to collaboratively make decision to serve the common goals of the eco-system like minimising emission in ports. Understanding a complex interacting world is increasingly beyond the cognitive capabilities of humans, and we must build and use high-fidelity models of that world that enable them to perceive the state of the present and the future.

    Optimisation of container flows in the end-to-end supply chain

    Recently, smart containers supporting IoT connectivity standards for have been introduced.[9] There are numerous use cases for smart containers that overcome some of the pain points that the transport industry experiences. The data streams generated by smart containers are a valuable input for fleet optimisation, port and terminal optimisation, and situational awareness as elaborated previously. Containers pass through many transport hubs and are managed by different carriers (of the same and different type) in the end-to-end supply chain. As a result, data generated by connected containers is a very valuable source for data for digital twins, whether retrieved from a data lake or handled real-time as a data stream.

    A digital twin for supply chain optimisation will provide transport buyers and coordinators opportunities to optimise the choice of transport mode and route for serving their clients. This should strengthen their strategic relationship to transport producers, such as carriers and transshipment hubs. Furthermore, a digital twin will be a basis for optimising the flow of empty containers. Connected containers are an electronic necessity for "smart" supply chains[10]  and an essential building block for digital twins of supply chains.

    Final words: Standardising for digital twinning

    A digital twin is constructed by generic mathematical representations of many components (e.g., a container crane, a container, the machine of a ship, and a bollard) and their relationship with other components (e.g., a container crane unloading a container ship, the utilisation of a berth for a visiting  ships).

    These generic representations are parameterised so they can be tailored to specific circumstances, such as the unloading speed of a crane given its position, the position of a container on a ship, and the prediction of berth slots occupied by visiting ships.

    Those groups with deep knowledge of each component, such as crane manufacturers, port infrastructure designers, and ship designers, need to develop, or advise on development of, a standard model of their component. Standardised digital models of all components in the shipping industry is the next wave of standardisation if the industry is to achieve higher levels of capital productivity through analytics based operational and strategic decision making. The physical instances of all components need to have embedded sensors that generate standardised data stream to calibrate their associated digital model. Current operation and future needs can be both guided by digital twins provided the maritime industry cooperates to standardise digital data streams and models of digital components.

    References

    [1] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [2] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [3] UNECE (2020) Trade Facilitation White Paper on Smart Containers: Real-time Smart Container data for supply chain excellence, Geneva

    [4] Pigni, F., Watson, R. T., & Piccoli, G. (202). Digital Twins: Representing the Future. Working paper. University of Georgia.

    [5] https://safety4sea.com/cm-the-digital-twin-concept-explained/

    [6] Becha H., Lind M., Simha A., Bottin F. (2020) Smart ports: On the move to becoming global logistics information exchange hubs, Smart Maritime Network, 20/4-2020 (https://smartmaritimenetwork.com/2020/04/20/smart-ports-on-the-move-to-become-global-logistics-information-exchange-hubs/)

    [7] Lind M., Bjørn-Andersen N., Ward R., Watson R.T., Bergmann M., Andersen T. (2018) Synchronization for Port Effectiveness, Ed. 79, pp. 82-84, Port Technology Journal (http://www.porttechnology.org)

    [8] Watson R.T., Holm H., Lind M. (2015) Green Steaming: A Methodology for Estimating Carbon Emissions Avoided, Thirty Sixth International Conference on Information Systems, Fort Worth 2015

    [9] https://dcsa.org/dcsa-establishes-iot-standards-for-container-connectivity/

    [10] Becha H., Frazier T., Voorspuij J, and Schröder M., (2020) Standardized Container IoT is Key for "Smart" Supply Chains, The Maritime Executive, 27/05-2020 https://www.maritime-executive.com/editorials/standardized-iot-for-containers-is-the-key-for-smart-supply-chains-1

    To find out more about the authors, please click here.

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