Ports transformation is happening and now is the time to accelerate change

Recent freight numbers have served up a reality check for the sector, suggesting supply-chain volatility will take longer to unwind than initially hoped.

Flinders Port Holdings chief executive Stewart Lammin. ‘The future of physical port operations lies in greater integration as part of the supply chain. Our ports can drive supply-chain efficiencies within Australia.’ Picture: Tricia Watkinson

With freight congestion appearing to ease in May and June, flickers of light seemed to be appearing at the end of the tunnel for port operators. And after peaking at a Covid pandemic high in December 2021, the Federal Reserve Bank of New York’s global supply chain pressure index (GSCPI) has been in gradual decline through 2022.

But recent freight numbers from Australia and the US have served up a reality check for the sector, suggesting supply-chain volatility will take longer to unwind than initially hoped. At North American ports, a bellwether for the state of global freight shipping, the backlog of container vessels waiting at sea has gone up by 66 per cent over the past seven weeks, according to Marine Insight.

For port operators, this mixed bag of data defines the environment we are now operating in. Supply-chain volatility is the new normal. For ports in Australia, we also have to accept that we are in many ways removed from the economic drivers.

So, what can we do?

We can either sit back and be buffeted by these forces, or we can get ahead of them. Ports in Australia have an opportunity to use this current volatility as a trigger to accelerate transformation. We can’t dictate global shipping schedules, but we can make Australia more attractive as a freight destination and become more resilient.

A container ship at Flinders’ Port Adelaide. ‘For Flinders Port Holdings in South Australia, our focus is on transforming in alignment with our workforce, which has delivered superbly during Covid, and making them part of this process.’

By modernising the physical and digital architecture of our ports, we can speed up turnaround times for ships and also pre-empt and manage external volatility. By working with other infrastructure operators, we can streamline supply chains to and from our ports – making the import and export process for Australian businesses quicker and more cost-effective, softening the impact of global supply-chain disruption.

This won’t happen overnight, but there are encouraging signs emerging and port operators are starting to make significant inroads into this efficiency lag. Within the business, we are deploying a range of tech and data-backed solutions to rapidly speed up ship turnaround times. Internally, this ranges from using “digital twins’’ to better utilise straddle carriers, to using artificial intelligence to predict and manage container storage, placement and transportation.

Externally we are using predictive analytics to better anticipate trade flows and manage increasingly challenging shipping schedules. It is also important to recognise that more automation doesn’t mean fewer jobs, it means different jobs. The outlook is different across the country, but for Flinders Port Holdings in South Australia our focus is on transforming in alignment with our workforce, which has delivered superbly during Covid, and making them part of this process.

Beyond the virtual, the future of physical port operations lies in greater integration as part of the supply chain. Our ports can drive supply-chain efficiencies within Australia. Integrating warehousing, logistics and transport solutions for Australian exporters won’t solve the problems they’re facing selling into global markets, but it will have a major impact and lighten the logistical burden many are facing.

As we await the imminent publication of the federal government’s Productivity Commission draft report, there must be an acknowledgment that the industry in some areas needs to go through a transformation. But it is wrong to assume Australian ports are simply passive observers of the supply chain crunch the world is witnessing. Virtual, physical and commercial innovation is happening – we just need to accelerate it.

Stewart Lammin is Flinders Port Holdings chief executive.