Dear guests, Dear colleagues, Dear readers,
On November 30th, 2017, we have held the third edition of the Annual Stakeholders’ Conference. We have been delighted to welcome you all as the overreaching topic we have proposed for discussion this year "Maritime logistic chains and the "perfect storm" is relevant for many industries.
Our particular warm thanks to our 30 speakers from across the global stakeholder network, ranging from representatives of the European Commission to the World Economic Forum and the OECD International Transport Forum who provided differing perspectives on the interdependence of global supply chains and the opportunities and challenges posed by the fourth industrial revolution. They allowed us to measure the importance and potential or real impacts of enabling/impeding regulatory frameworks.
In this regard, several speakers contended that additional regulation needs to be implemented to safeguard competition from distortion, and to ensure European businesses are not hindered from innovating, thus assisting them in remaining dominant global players going forward. Other key thematic areas of discussion, amongst others, included issues accompanying the rise of big data – ‘the new oil’ - and the future of workers, who will increasingly find employment opportunities in skilled positions in an era of automation and digitalisation.
Given the great amount of information and important statement that have been shared by our speakers, we have decided to give you access to an extensive version of the summary of the discussions (click here).
Below this message, you will find a shorter version of the report of the conference as well as links to all speeches and presentations of our speakers.
We hope that you will find both versions of the report interesting and look forward to welcoming you for the fourth edition of the Annual Stakeholders’ Conference end of 2018.
We wish you and your families a happy holiday season and all the best for 2018.
December 7th, 2017
After welcoming speeches from Ms Barbara Schretter, Director of the Representation of the Free State of Bavaria, host of the conference, Mr Gunther Bonz, FEPORT President welcomed guests and expressed the wish that the ‘perfect storm’ is converted into growth for Europe. Concerning FEPORT, the organisation represents a capital-intensive branch of maritime industry which requires flexible frameworks for innovation. The frameworks needed include regulation on taxation and labour and their associated areas. Legislation must not hinder positive change, he stressed. Therefore, he hoped that discussions would raise awareness about the need to ensure that industry and Europe are on the right track.
Mr Young Tae Kim, Secretary General of the International Transport Forum, ITF, OECD, then took the floor for the first opening speech of the morning. He stated he was optimistic there will be increased cooperation between FEPORT and the ITF. Society is now focussed on the fourth industrial revolution and it can be termed an evolution if uncertainties are removed and society is prepared for its impact.
Mr Wolfgang Lehmacher, Head of Supply chain, World Economic Forum, said the title of his presentation was ‘are we ready for the new world?’ To be ready, one must understand what the fourth industrial revolution is. This concerns more than one or two technologies: it is about how this technology is embedded across society. It is about the convergence of technology throughout the biological, physical and technological world. There are now systems living in connected systems, he clarified.
Data is the new oil, he stressed. One who cannot manage data cannot live in a system of systems. He called on governments to ‘get used to the new oil’ and develop systems which can manage large troves of data. Businesses must help policymakers to formulate the right policies. If there is too much ‘Wild West’ the sheriff comes to stop everything and thus there must be cooperation across all sectors when it comes to the fourth industrial revolution. In a decade the world will look very different than it does today, he concluded, and holistic systems thinking needs to be employed to effectively manage the coming disruption.
Mr Henrik Hololei, Director General, DG MOVE, agreed with the previous speaker in terms of the need to address disruption. Global growth was relatively weak last year; however, the global goods trade is projected to increase by an average of 3.3% up to 2030. This is good news for the transport economy, he stated. Three European ports are in the top 20 container ports in the world and almost 4 billion tonnes of cargo pass through European ports each year.
Digitalisation and automation will impact jobs. Adaptability will be required in this regard. New business models will emerge. Certain jobs will be lost, but new ones will be created. There is currently almost an autonomous vehicle in the air; however, the pilot still has a job but works under a different capacity. Digitalisation is a tool which provides more information. Flexible legal and technical frameworks must be developed to allow innovation, he stated.
Change comes with risks and possibilities. Europe is globally competitive in the area of transport and barriers must be broken down to ensure Europe continues to prosper in this sector. Thus, he called on stakeholder to cooperate to amplify Europe’s place in the ‘new world’ which Europe should embrace and seek to proactively shape.
Session 1: Does industry embrace the 4th industrial revolution? How does it face the perfect storm?
Key note speech: Mr Dirk Visser, Senior Consultant, Managing Editor DynaLiners, Dyanmar
Mr Dirk Visser said he wanted to talk about the industrial revolution in action in the area of container terminals. FEPORT members are responsible for the handling of 94% of containers in Europe, he noted. Concerning container cranes, they are becoming larger and larger as ships continue to increase in size. There has been enormous scale development in shipping and terminals have had to follow suit.
On container terminal automation, there is more talk than action taken in practice. Indeed, in the Mediterranean regions there are only five terminals which have a level of automation today. However, remotely controlled cranes are increasingly coming online.
By 2030 Mr Visser predicted there would be five or six worldwide operators in the area of container carriers. He believed innovation was being assisted by the fact that there is limited regulatory frameworks in this field. Robotics and automation are the container industry business model of the future, he concluded.
Testimonials and panel discussion
Firstly, a short video by Rolls Royce on future shore control centres was shown (to see the video click here).
Mr Frank Kho, Vice President, Market Intelligence, Strategy and Development, Kalmar, took the floor to give his remarks. He said a real challenge concerns the rate of change at the moment and that automation is coming. On automation and disruption, Kalmar is seeking to address such challenges posed as larger vessels and impacts on the supply chain. Moreover, he stated the main issue for him pertained to labour and job disruption.
Mr Maurizio Bragagni, CEO, Tratos, said the answer was, and remains education. His company produces cables and these are at the core of the revolution. The cloud is a server which is connected to cables and 90% are under the sea. A major risk concerns the fact that Europe is one of the weakest players in the global system at the moment. For example, 5G has been rolled out in the US.
Europe suffers from monopolies stemming from privatisation; for example, BT in the UK. The supply chain was ‘verticalised’ and this removed competition. Moreover, education means constantly learning, he finished.
Mr Julian Oggel, GM, Novatug, wholeheartedly agreed with previous statements that this revolution concerns people and not machines. It is about making what is already there more efficient. His organisation’s real problem concerns getting ships into and out of ports as quickly as possible. There are five central areas in shipping: scale, speed, safety, sustainability and smartness.
On scale, the container shipping industry has grown by fifteen times since 1968 and an exponential growth rate is being seen in the area of cruise ships. Concerning the transport chain, much of the cost stems from transport and handling costs. With the growth in ship size, the real money is in building larger ports to accommodate larger ships, he stated.
Mr Raphaël Fabian, EU Affairs Officer, Rolls Royce, stated Rolls Royce is facing the revolution across many fronts. On autonomous vessels, he explained they are unmanned vessels. The reality is, autonomy is coming and the question is how to harness the opportunities.
Session 2: What are the new emerging business models? Does the existing regulatory framework support digitalization?
Key note speech: Mr Michael Wax, Co-Founder Freight hub/Box Tech (Digital freight forwarder)
Mr Michael Wax, appearing via live video link, said that today’s ‘storm’ must be contextualised by looking back through history. He stated his company has come up with a holistic platform of track and trace which provides a digital overview for customers. This is a tech-based product which is being expanded through feedback sessions. Efficiency is also ensured due to direct customer feedback, he clarified.
A video by Logit-One concerning control of container information (end to end visibility service) was played. Please find a link to the video here.
Mr Fernando Liesa, Director, ALICE, said ALICE was initiated to focus on medium and long-term visions for logistics. It is designed to clarify opportunities and challenges in this context and will feed into a research and innovation strategy.
According to Mr Fernando Liesa, the potential of platforms must be considered in greater detail and the reality is they will be connected going forward. The question in this regard is who will be managing these platforms. Industry must be active in creating the correct regulatory framework to actively meet the challenges ahead, such as in the areas of skills and sustainability. The key to achieving this is collaboration, he reiterated.
Testimonials and panel discussion
Mr Xavier Woodward, DP World London Gateway supply chain center, said that safety is key to their model, he stressed. Fatalities take place in the industry each year and he wanted to see solutions reducing this figure to zero. Concerning their business model, it is akin to a Formula-1 pitstop for ships and trucks. Therefore, efficiency and speed are critical. This is where automation comes into play. Moreover, productivity needs to be increased as ships have gotten larger. Each container is tracked and he compared the port to a multi-dimension game of Tetris. Finally, reliability is also essential, he concluded.
Mr Francisco Blanquer, Business & Innovation Business Manager, TerminalLink, echoed that automation is coming. However, the regulation is not yet in place.
A big change has now been seen in the area of e-companies. Autonomous equipment has become a service and not an asset. Port authorities grant licences in order to ensure a service for the community. The main problem is that there is not enough regulation where data is concerned. Moreover, there is not enough education and training on data.
Mr Sandro Santamato, Head of Unit for Maritime and Logistics, DG MOVE, contended that the revolution is about systems. Facilitating the acceptance of these electronic documents is one aspect the Commission is working on. Their stance is also to try and ensure the systems are futureproof. It is the first step to allowing the market to provide solutions. The other big proposal is on modifying legislation on the maritime sea window. The Commission is seeking harmonisation in this context, he finished.
Ms Susanne Aigner, Head of Unit, DG TAXUD, echoing earlier statements, she said people are still integral to the whole process of making difficult decisions which a machine may not be able to make. She finished by noting there are four challenges the customs side is facing: data quality; data processing; data protection and data confidentiality; and data connectivity.
Mr Mark Scheerlinck, Business Development Manager of Logit-One, stated it was clear the industry was changing. However, people are the still the drivers of this change. He stated he was working hard on strengthening supply chains and the freight trade of tomorrow was not the freight trade of today. Moreover, more regulation will be required and he stressed he was looking forward to more legislation being introduced.
Session 3: How are the other regions of the world addressing the challenges of the 4th Industrial Revolution? What is the role of regulators and policy makers in those countries in supporting industry’s efforts?
Key note speech: Mr Wiebe Schipper, Associate Director Land Transport & Logistics Operations, Supply Chain Europe, LyondellBasell
Mr Wiebe Schipper took the floor to give his keynote speech. He noted the company he represents is relatively young and is relatively unheard of as it is not a business to consumer Company. The Global headquarters is in Houston and the European headquarters is located in Rotterdam. Concerning their supply chain, he said it is global with varying regional focuses. They use a lot of ports and these serve as important nodes in the supply chain. An important geographical area for their operations in Europe is found in the Rhineland.
On the theme of the ‘perfect storm,’ Mr Schipper said the stars have aligned for automation and digitalisation to increase capacity and efficiency in the industry. In this regard, he highlighted the role initiatives such as self-driving trucks could play. Restrictions to growth must be removed, he stressed. Trade facilitation needs to be promoted, particularly in light of Brexit as their organisation has two plants in the UK.
Concluding, Mr Schipper stated the key words were ‘sustainability, infrastructure, trade, and digitalisation and automation’.
Testimonials and panel discussion between global actors
Mr Michael Dempsey, Vice President, Container and Port Solutions, ORBCOMM Company stated the industry today is ‘dumb, dark and disconnected.’ Thus, information is not being shared adequately. As such, the Internet of Things (IoT) can assist in sharing information. Concerning regulation, he advised not to underestimate how quickly legal framework can change the industry. For example, strict California shipping codes resulted in companies upgrading overnight to avoid fines.
20 billion devices will be connected by 2020 in the IoT. Installing the IoT on cargo results in greater visibility. Today, of 1.65 million refrigerated containers, only about 320,000 use tracking devices.
Mr Maxence Eyraud, Responsible for Digitalization, Group, CMA CGM, said he represented a global company. Digitalisation was set as a key strategy one year ago and he expressed hope it would bring value added to the company and to the industry as a whole. Furthermore, the company decided digital capabilities would have to be built. Now, on all the projects being rolled out, digitalisation allows for the leveraging of different kinds of assets.
Data is at the core of the digital transition, he stressed. In addition, his organisation has digital representatives across the globe in order to keep up with developments worldwide. He remarked the most difficult projects are where collaboration is involved. While valuable, it can be challenging to create value and projects for the industry across sectors. However, he concluded by expressing hope that collaboration would increase going forward.
Mr Jens Roemer, Managing Director, a.hartrodt, traditionally, the freight forwarder has been the architect of the global supply chain. They also act as contractual carriers and this becomes important when it comes to digitalisation. Data is the oil of the future, he reiterated.
However, to digitalise, one must know their processes. The processes are the same globally and he said his role was to identify the mounds of data they are sitting on. Regarding the supply chain, the party who pays the freight is the customer. The industry will have to respect and watch the developments carefully, he stated. In terms of their data control, they employ one data base across 60 countries they work in. Summarising, Mr Roemer said there will be more opportunities than threats for freight forwarders going forward.
Mr Cameron Thorpe, Chief Executive Officer, DCT Gdansk SA, said that terminals are far from the cutting edge of latest data developments. He noted his industry was still excited about the third revolution: automation. In terms of changes in the industry, automated terminals, are becoming more and more mainstream; this technology is happening where the original drivers for change are not necessarily present, such as a recent example seen in Indonesia. Therefore, it is clear that industries and countries can leap-frog forward by harnessing the fourth industrial revolution.
Mr Thorpe underlined European terminals are at the forefront concerning smart technology and smart solutions. In addition, China has stated its aim to be at the head of this revolution; they are also the investors and the innovators and sometimes it can take a collection of democracies longer to find consensus on an issue. Moreover, a lot of shipping lines and forwarders have a global spread, whereas ports such as Gdansk do not have the same global reach. In terms of benchmarks, only one European country is in the top 10 worldwide when it comes to internet speed. Thus, issues pertaining to infrastructure and networks need to be addressed, he concluded.
Mr Soeren Jakobsen, Trade Affairs Officer, DG TRADE, DG TRADE looks into how it can support the internal market’s standards outside Europe. This often entails securing multi-modal activities and many elements of the internal market are strong compared to other regions of the world.
Moreover, the balance between being open and protectionism has made the EU vulnerable in some instances. President Juncker has spoken of a screening mechanism for non-EU companies wishing to invest in sensitive areas of European industry. The idea is to counter investments in critical infrastructure that must be protected. Member States have a lot of problems applying the instruments they have and thus there is a need for an enhanced framework, he highlighted.
Session 4: How are EU regulators and policy makers supporting EU companies’ efforts to remain competitive? Is there a need to adapt existing EU legislation? How to instore a global playing field?
Key note speech: Mr August Braakman, SG of European Maritime Law Organization
Mr August Braakman took the floor and stated it was his task to talk about the effects digitalisation may have on the shipping industry. The ‘perfect storm’ is characterised by a powerful concurrence of two factors: firstly, the encroachment of regional and global ecommerce players on traditional maritime logistics business; and secondly, the digitalisation of this industry, which is provoking a move from supply chain models to commodity-driven logistics solutions. These two factors are the result of the ever-increasing impact of the high-technology industry (HTI) and the use of business intelligence and analytics (BI&A) systems, he underlined.
On vertical integration, it is undertaken because it improves the quality of door-to-door services. Moreover, one must take a holistic approach to examine what impact the distortion of competition on one part of the logistics chain will have on the entire line. In addition, financial participation by governments in ports has decreased rapidly.
Mr Braakman stated the tools at the EU’s disposal to react are obsolete. They will not suffice to give assurance to companies that operate in the container and marine service industry.
Concluding, he took the view that the above developments, and in particular the constant and extremely rapid pace of change in HTI and thereby in BI&A systems, pose a huge challenge for the Commission to guarantee fair and undistorted competition in the markets of the maritime shipping industry. The Commission has an obligation to act, Mr Braakman finished.
Panel Discussion between representatives of the industry and EU institutions
Mr Jan Hoffmann, Chief, Trade Logistics Branch, UNCTAD, stated his organisation’s task was to provide a global, neutral overview. From the annual analysis, developing countries are no longer just exporters of raw materials but they are now importers of high value goods. The forecast is that there will be a 3.2% growth in seaborne trade between 2017-2022. On the specialisation of different countries, nations are beginning to specialise in certain segments. For example, ship building that takes place in Europe concerns highly specialised vessels such as cruise ships.
Moderator Mr Christophe Tytgat spoke about free trade agreements (FTAs) and said it seems there are interesting tools available. China is extremely ambitious and open about it. The new Silk Road is part of this and he asked what is being done from the Commission’s side about this. Moreover, should this be seen as an opportunity or a threat?
Mr Laurent Bardon, Policy Officer, DG TRADE, replied by saying China’s goals are not based on the EU’s free trade principles. Moreover, China is not necessarily opening up to foreign companies operating in China and many projects financed by China abroad are carried out by Chinese companies. Therefore, one cannot say there is a level playing field in place. Russia has also taken protective steps and the Commission is trying to engage in bilateral dialogue to address issues as they arise. Furthermore, the EU is looking into defining a strategy for connectivity in Asia and discussion has begun with Member States in this regard. The aim is to promote transparency and free trade.
Moderator Mr Christophe Tytgat remarked terms heard today were more than just ‘buzz words’. He then asked the question: is European legislation on port security still fit for purpose?
Mr Christian Dupont, Deputy Head of Unit for Maritime Security, DG MOVE, said shipping is a global business and operators represented here have interests that are not always the same as ship owners’ interests. Thus, a forum must be promoted where everyone can work and talk together. When it comes to prevention against cybersecurity attacks, the first reaction by the maritime sector were statements that the maritime sector was immune. However, he questioned if this was really the case.
Moderator Mr Christophe Tytgat said an observation he had heard previously was that European rules are perfect for the internal market but are not fit for global trade. He asked Mr Rivero’s take on this.
Mr Eduardo Martinez Rivero, Head of Unit, DG COMP, noted the rules on competition were written in 1957, but they are adaptable. They are being applied to companies that did not exist in 1957, let alone 15 years ago. Competition is about creating efficiency and competition enforcement is about ensuring that the economy can work because the operators win on their merits and not due to a protectionist or monopolistic stance.
Mr Rivero, taking the example of payments, stated an infrastructure is required to make payments from a phone, for example. Everybody wants to present their product to the customer and this is competition; it avoids bottlenecks. As such, there is regulation designed to tackle dominant positions.
He said the Commission had always distinguished between vertical and horizontal consolidation. A big problem can arise when few vertical silos are the result. Competition is also about preventing a ‘race to the bottom’. Moreover, there is a general block exemption regulation, keeping in line with the motto, ‘big on big, small on small,’ he concluded.
Moderator Mr Christophe Tytgat then asked if the Commission is doing enough to boost the European maritime industry on a global level.
MEP Pavel Telička (ALDE, CZ), TRAN Committee, stated he would be inspired by what Mr Hoffman had shown in his slides. Connectivity, security and fair competition going forward are key. He questioned if it was not high time that a review of the maritime strategy be carried out. Competitors cannot be stopped, such as in the case of the Silk Road initiative. Europe must look at how it can expand its connectivity. In addition, bilateral agreements need to safeguard competition, he stressed. Getting this right is key and it could enable European enterprises to compete at the highest level on a global level. Finishing, he called for a more strategic approach and reiterated the importance of ensuring safeguard measures.
Moderator Mr Christophe Tytgat agreed that a holistic maritime strategy is required. It must boost the competitiveness of all segments of the maritime industry. As such, he asked Mr Ferber what his take on this possible strategy is.
MEP Markus Ferber (EPP, DE), ECON Committee, stated the Commission should not be blamed for doing its job; it was created to oversee the internal market. Moreover, it is mainly Member States that are members of international organisations and the Commission often only has observer status. Thus, he asked if this stance was strengthening or weakening Europe. Moreover, there must be a level playing field and an environment conducive to economic growth.
Creating a level playing field for ports was a very difficult approach which is why it took four attempts in this regard, he noted. Furthermore, there must be acceptable level playing fields concerning issues such as state and private owned harbours and there are many similar challenges.
Ms Lamia Kerdjoudj-Belkaid, Secretary General of FEPORT, the Federation of European Private Port Companies and Terminals, stated her wrap up could not possibly reflect all that had been discussed on the day. However, she hoped to highlight some of the main points which had been evoked.
Mr Kim’s opening message was that there will be an evolution and not a revolution if the industry acts fast. Mr Lehmacher stated data is the new oil and is at the heart of the digitalisation. In addition, Mr Hololei noted the Commission was actively encouraging the move towards digitalisation and that the environmental goals must be worked towards under any strategies adopted. The aim in this regard is zero emissions by 2050, an objective FEPORT supports.
Additionally, Ms Kerdjoudj-Belkaid noted that during the morning sessions, it was stated automation is coming and Europe needs to be ahead of the wave. The human element will remain crucial for a successful future. Moreover, workers must be reabsorbed into the labour market. Collaboration was also stressed and the transport sector is composed of industries that need to work together.
During the afternoon session, speakers held that innovation must be embraced by industries and digitalisation is not the only area that needs support; investment in physical infrastructure, for example, is also required.
In the last session, the scene was set for the future. EU regulators are doing a lot already, but more will need to be done and this is a discussion to be continued.
Furthermore, Ms Kerdjoudj-Belkaid said the discussions went far beyond digitalisation and touched on an array of areas, such as the impact on people, issues relating to data, automation, and collaboration.
The videos also took participants on a journey to the future. Concluding, she asked if it was not in society’s hands to ensure the fourth industrial revolution brings wellbeing to humanity.
Ms Maja Bakran, Deputy Director General DG MOVE, recalled some of the main elements Mr Hololei had highlighted in his speech in the morning. Areas Europe needs to work towards include lower emissions and embracing digitalisation. Moreover, Europe must cut the administrative burdens and increase multi-modalities.
On TEN-T, guidelines do consider infrastructure in a flexible manner. This new approach enables innovate approaches, such as removing bottlenecks and thus enhancing ports and hinterland connections. There are hundreds of projects under TEN-T, including 30 priority projects, and the core network should be completed by 2030.
Concerning Horizon 2020, it is key to innovation and providing for the ports of the future. It is important to look forward to the next MFF, she stated. Europe is entering uncharted waters in this regard, but she stressed the Commission would like to see a reinforced CEF in order to finish the TEN-T network. Emerging priority funding must also be secured. The Commission is always looking for opportunities to increase funding.
Concluding, she underlined great progress was made in 2017 and in 2018 the focus will be put on multi-modality. Stakeholders must work together to achieve results.
Ms Julia Bergstein, Counsellor for Transport, Permanent Representation of Estonia to the EU, stated digitalisation and the development of the EU single market were clear priority areas for the Estonian Presidency. Nothing is agreed until everything is agreed, she said, and the Council conclusions on transport have yet to be fully endorsed. The goal was to have a forward-looking set of conclusions and she believed they had delivered in that regard. Innovation and digitalisation of transport logistics are a key driver in connecting Europe.
Concerning economic growth, digitalisation can create jobs and can save up to 20-40% on transport investments due to increased productivity. Digital services are cheaper than other services, such as paper and printing. Digitised data exchanges can also help to achieve progress on ‘digital by default’ and ‘once only’ submission for information and digital certifications for ships must be promoted.
Concluding, she thanked industry for being supportive of this transitional process.
Mr Gunther Bonz, FEPORT President, stated Europe is in the midst of the fourth industrial revolution. In 1975, the largest companies included Texaco, GM and Ford. Today, the largest companies include Apple, Microsoft and Lenovo. The company worldwide with the highest research and development budget this year was Amazon with over $17 billion. This shows society is firmly in the fourth revolution. Finishing, Mr Bonz thanked participants and speakers and said he was already looking forward to next year’s conference already.
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