Why blockchain should be global trade’s next port of call

This paper examines the suitability of blockchain and blockchain-based distributed ledger technology (DLT) to the port, harbour and terminal industries. DLT has the potential to drastically change the world of asset transfer, asset movements and security of data movement. Testing of various DLT applications has already started – first in 2009 with the emergence of Bitcoin in the financial services industry, then subsequently in various other fields, including within the supply chain.

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Anyone working in the port, harbour and terminal industries needs to understand the potential impact and implications of blockchain – in business, in respect to government interactions and along the supply chain. The technology has the potential to change the way parties operate and interact along the value chain as well as to open doors for new players. Some intermediaries might be impacted, others may be left out of the game.

What is ‘distributed ledger technology’?

Also known as DLT, this data-sharing system allows for distributed and real-time multi-party tracking, digital “bills of lading” and letters of credit, machine-to-machine interactions, and better visibility of assets and liabilities. Smart contracts, digital wallets and secure digital asset and information transfer could ease maritime operations, unlock new opportunities for all parties and reduce risk. With this, significant amounts of paper could be cut out of processes.

Capturing the potential of DLT and blockchain requires not only an understanding of the technology and its implications for the port, harbour and terminal industries, but also pioneering and collective efforts to develop the applications and a new gold standard in business to jointly bring the traditional industries to the next level.

Blockchain for ports

The port, harbour and terminal business sits at the crossroads of the majority of global trade routes, making the sector one of the key enablers of the global supply chain; however, I believe it can also sit at the crossroads of blockchain.

The supply chain is about processes from design to the extraction of raw materials, to production and the movements and storage of goods down to repurposing, including the related flows of capital and data. The fluidity of flows across the supply chain ecosystem determines time required and cost incurred. In turn, fluidity depends on the seamlessness and integrity of the processes – seamlessness means the least number of steps and the highest level of digitization and automation. Most importantly however, it stands for integrity and authenticity of information as the basis of trust among all parties involved.

Image: IBM

An introduction to blockchain

Blockchain became known as the core technology behind bitcoin – the first decentralized crypto-currency – launched in 2009. Although blockchain has initially been thought about mainly from a financial services perspective, the technology can serve as a basis for many useful applications and manage information far beyond monetary transactions. Blockchain technology is a leapfrog technology intended to reinvent markets. Jeremy Wilson, vice-chairman of Barclays Corporate Banking, said blockchain could even become a new operating system for the planet. That is the level of technology about which we are talking.

Blockchain is a cloud-based kind of global spreadsheet or distributed ledger of transactions. Blockchains run on computers provided by volunteers around the world. Therefore, there is no central database to hack. The blockchain is public and encrypted. Although nothing is unhackable, it is extremely difficult to remove, duplicate, manipulate, tamper or copy records. Therefore, blockchain means that we can collectively trust what happens online.

Blockchain is one type of distributed ledger. But distributed ledger technology (DLT) stands for blockchain-based DLT, and both terms are used simultaneously.

New source of trust

What if information such as the provenance of goods, tariff codes, classification data, import/export data and certificates, manifests and loading lists, customs values, status information, and all other information about goods within the supply chain ecosystem was available for all parties involved at any time and everywhere? Then, the vision of a transparent, secure, paperless supply chain would have become a reality. It is blockchain and DLT that can bring track and-trace, visibility and transparency to the next level.

DLT is suited to logging and monitoring data, such as parts in the automotive supply chain or containers moving in ships, planes and on other transport devises around the world. Today, customers and buyers have limited visibility and, even more so, ability to validate the true value of products and services they wish to purchase.

Lack of transparency along the supply chain causes various concerns, including that the prices paid might be an inaccurate reflection of the true value. On the other hand, limited transparency also causes risks for manufacturers and brands resulting from illicit practices and the environmental impact that comes with certain forms of production.

DLT and blockchain can help to reassure consumers, mitigating and eliminating risks around food security, conflict minerals, counterfeit goods, forced and child labour, corruption and so forth. In the world of DLT, everyone can watch what is happening, whether they’re consumers, business partners, governments or watchdogs.

Pioneering names

There are many pioneers in the field of DLT and blockchain. Provenance, for example, applies DLT to help companies to build trust across the supply chain by making it transparent where products were made, by whom and with what environmental impact. The company BlockVerify also helps companies to fight product counterfeiting.

Everledger assists companies in recording and tracking the movements of diamonds from the mine to the store. Traditionally, buyers rely on paper, which can be changed or tampered. DLT allows the recording and accessing of unchangeable information and history – any time and everywhere. Everledger is one of the first users of IBM’s blockchain platform aimed at the supply chain. IBM’s partnership with Walmart to track lettuce, steaks and snack cakes from farm and factory to the shelves is one of the biggest practical tests to date, while Maersk has teamed up with IBM.

The goal for both is to develop a blockchain solution to help manage and track goods and the paper trail of millions of shipping containers by digitizing the supply chain process to enhance transparency and the highly secure sharing of information among partners – shippers, freight forwarders, ocean carriers, customs authorities, and ports. The solution, which is expected to be available later this year, has the potential to save the global economy billions of dollars.

The whole world of commerce and trade is about to be rethought and redesigned. Barclays reported the first blockchain-based trade-finance deal in September 2016. The process, from issuing to approval of the letter of credit, usually takes between seven and 10 days, but could be reduced to less than four hours. Flexport, a provider of software to manage global trade might one day help businesses to monitor re-order cycles and plan future shipments, which would allow them to instantly replenish their inventory when they run low – even through placing orders from M2M.

Smart contracts and e-wallets

When combined with other advanced technologies, such as the internet of things (IoT) and artificial intelligence, DLT and blockchain unfold their full potential. Combining DLT with IoT allows ships to autonomously contact suppliers and place orders for example when low on energy to schedule cycles to take advantage of electricity prices.

Thanks to DLT, machines can do business with machines. Blockchain brings automation to the next level. Electric vehicles can pay recharging, truck parking, tolls and fuel fees based on smart contracts with a blockchain-enabled digital wallet. E-wallets can also collect fees for equipment-sharing. Smart contracts are agreements between parties stored on a blockchain. Smart contracts work on the basis of standard templates and can, for example, refund deposits and perform instant collection of taxes as well as take over the burden of regulatory reporting.

Paperless and high speed

Putting documents on the blockchain brings significant advantages. Maersk has been participating in a proof of concept, with blockchain expertise from the IT University of Copenhagen, to digitize the bill of lading. Eliminating piles of papers speeds up processing and reduces costs and risks. A shipment of roses from Kenya to Rotterdam can generate a pile of paper 25cm high, for example.

Furthermore, prior to arrival, ships can send digital, autonomous and secure papers, documents and information to port authorities, security departments, customs, terminal operators and all other parties involved in port operations. At the port, artificial intelligence-based tools, such as auto-document verification tools can speed up the processing of the submissions.

Improved security and asset control

Facial recognition technology can improve and accelerate access controls and crew checks in ports and save time and money, while raising the level of security, as DLT contributes the digital identity. Terminal operators and other asset operators can log and monitor assets and devices such as trucks, chassis, scanners and any kind of equipment on the blockchain, which offers in this way attractive cost savings, through security and efficiency gains. Sharing of assets in the port will become safer and easier.

New players, new business

Blockchain-based open and secure platforms can also bring smaller businesses to the port, either to perform tasks in the terminals or as customers operating in the port. They can easily access the port services and connect with others via the digital port platform. Digital peer-to-peer collaboration tools and payments ease doing business.

D-printing facilities operated by ports might offer a new form of safe production and an additional revenue stream. 3-D printing combined with blockchain allows the creation of secure digital memories for each product and each part of the product. The immutable records from the source of the raw materials used, to where and how products were manufactured, to their distribution, maintenance, repair, recall and recycling histories can be a vital component of the new source of trust.

Standardization is crucial

The joint development of standards is critical, whether on industry, national or global level to avoid conflicts between different standards and ensure the optimal outcome. Standardization of blockchain involves terminology, development, deployment and security. In the supply chain and transport industries, the consequences of missing standards are well known. For example, the desired smooth exchange of data – which eases collaboration, allows instant and better responses to disruptions, and drives optimization and security throughout the supply chain – is hampered by the lack of shared data formats and technical transfer options.

In times where many physical products are digitized and almost every physical process is replicated on the digital layer that has largely taken control over the tangible world, cybersecurity has become vital for businesses, governments and the security of our lives. Boards have to take action. Companies need to recruit C-suite experts who take the board onto the journey of cybersecurity – starting with setting the board agenda. The supply chain, logistics and transport industries, including the ports, need to play an active role in the process of standardization and security.

Towards a digital future

Blockchain offers the opportunity to create a global platform of performance and trust; however, scaling the technology still requires overcoming some hurdles. First, blockchain protocol(s) used to secure the ledger of global trade and manufacturers must be trusted by all users. Technical capabilities to handle very large transaction volumes need to be enhanced and the costs of maintaining the protocol need to be lowered.

Gateways to bringing on board ordinary companies and individuals into the M2M economy are also required. The liability model of business conducted on the blockchain will need to be reviewed as the appropriate treatment of liability may differ from current models. Last but not least, standard skills are required to easily and smoothly interface with legacy systems to overcome concerns and doubts of the conservative forces in business and government. Collective effort and engagement is required to make DLT and blockchain the new gold standard in business.

Independently from the time to realization, the final shape, form of the distributed ledger and blockchain technology, ports, harbours and terminals might significantly benefit just from exploring this central tool of the digital economy. Alone, the knowledge gathered and new relations built along the road – for example, with fintech and other tech companies – should justify the industries’ effort.

 

This article was originally published at Port Technology and republished at the World Economic Forum Agenda.

Working smarter – innovative port solutions

The world’s most innovative ports are using ‘smart’ solutions to improve revenue sustainability, explains CVA’s Wolfgang Lehmacher

Every professionally run company aspires for value creation through revenue increase, new growth engines, cost reduction, heightened efficiency and sustainability.

In the constant search to boost profits they continuously seek a competitive advantage through product and behaviour differentiation, an aim increasingly compatible with carbon footprint reduction and other green initiatives.

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In terms of their general aims and ambitions ports are not at all different to any other business.

Managers seek to maximise strengths and minimise weaknesses. But the unique position of ports as facilitators of global and regional trade and often also as integral parts of cityscapes, makes the simultaneous improvement of efficiency, revenues and environmental performance even more desirable.

Meeting these varied goals, opening new markets and securing the long-term viability of ports and the employees, traders, cities and areas that rely on them in a rapidly evolving global economy can be driven via the application of smart thinking and processes. In this sense, smart stands for different and responsible behaviour enabled by new, at best holistic, concepts and modern technology.

Ports must be efficient enough to fit into the modern world, and into modern global and just-in-time supply chains. This can mean customers need multi-modal interconnectivity with a port’s hinterland, or with a certain geographic region or even an entire economy.

 

Trend setter

The smart concept can be rolled out so ports can become the pivotal point of a region. This can be as the core part of a bonded logistics park as we have seen in Yantian, China, for example.

More efficient container yards, better rail access and taking steps to ensure full integration with regional and national transportation plans are just some of the smart moves port businesses and local governments can examine to ensure they are offering the services and facilities their customers – businesses and people – need. And that they are offering them where they are needed.

Many port customers also have increasingly sophisticated niche requirements. A smart solution could mean the port supplying special temperature-controlled storage, handling and personnel for cold chain products such as pharmaceuticals and food stuffs. Or it could mean facilitating sea-air onward shipments options for cargoes that need to be shipped at least part of their journey as air freight, a solution that involves close cooperation by port managers with customs, quarantine, airports, forwarders and airlines.

Customer shareholders and the port’s own management – particularly for ports near cities – may need increasingly to prove show their sustainability, which can mean implementing green port solutions to meet stringent noise, water and air quality standards. Shippers and other port users and stakeholders need not only to be reassured, but need jointly to reassure civil society that adequate risk mitigation and security procedures are in place to ensure business continuity and safety for humans and the environment.

Indeed, there is no reason why ports cannot manage the total water cycle not only in relation to ships docked in port, but also in relation to the surrounding community through better ballast water treatment, desalination of sea water, water purification for potable water etc.

 

Healing hands

Ports could also act as facilitators of medical services. At present most commercial and passenger vessels have their own medical services, often entirely disconnected from global medical ecosystems. If someone gets sick or ill on board, instantaneous connection with medical doctors located off-site via a ‘virtual clinic or hospital’ could speed diagnosis and better enable preparation of the correct medical treatment before the vessel arrives at port and the patient is whisked to a local hospital.

For a port manager, all of these customer and stakeholder demands can easily be viewed as a regulatory burden, or an unnecessary drain on finite resources. Smart managers should instead view them as opportunities, opportunities that can sustain a port business over the long-term. Professional port managers should determine the smartest ways of meeting these changing requirements to maximise returns within budget restrictions. The world’s leading port managers are already grasping this truth.

In the port of Sydney in Australia, for example, various actions have been taken to illustrate just how important the port takes its green credentials. This has seen the installation of leakage proof technology, improved supervision of dangerous goods, waste reduction initiatives and a collection system for flushed water.

On the US West Coast, the ports of Los Angeles and Long Beach have been leading the way in reducing emissions by both trucks and vessels, while in Germany the port of Hamburg has introduced railcars with noise-reducing ‘whispering brakes’. These efforts benefit both the local community and customers keen to demonstrate their embrace of carbon footprint reduction initiatives while also differentiating each port’s product.

The port of Antwerp has embraced many of these smart ambitions to establish its position as one of the world’s leading ports. Rail, waterway, pipeline and road connections guarantee hinterland transport options, while the port’s future-oriented energy policy includes a biomass power station and wind turbine.

In Sweden, the city port of Stockholm has taken the green and sustainable end goal a step further and is differentiating itself in a highly competitive market by pledging to become fossil-fuel free by 2030. The Royal Seaport project will see systems installed that carefully manage and preserve energy across the port using an automated grid to improve asset utilisation and a cold ironing solution that will enable vessels to plug into the local grid while at dock.

As well as appealing to port users, city planners and regulators, many of these measures can help grow revenues and reduce costs in the long-term by minimising at the same time the environmental burden, for example in the area of energy consumption and safety at work.

The lesson from the world’s leading ports is simple: Smart strategic actions can help port managers thrive in an ever changing world.

Wolfgang Lehmacher is partner and managing director (Greater China & India) at CVA, a global strategy business.

Image: Pavel Kavalenkau, Bildagentur: 123RF

This article was originally published on 12 February 2013 in Port Strategy.

Infrastructure and Logistics – Prerequisites for Sustainable Growth

A country’s prosperity, and with it its economic and social development, depends to a large degree on the level of productivity of its logistics sector. Today’s economies are unthinkable without the value and supply chains that modern logistics make possible. And there can be no long-term peace without prosperity, as the turmoil in Egypt or the economic endeavours of emerging nations demonstrate. More and more governments are coming to recognise the importance of logistics as an important growth factor and thus are attempting to improve the performance of their logistics sectors. An efficient infrastructure is a prerequisite for efficient logistic platforms, since run-down streets, ineffective seaports, one-track railways, or a lack of freight airports impede the smooth movements of materials and goods and thus economic growth. Therefore, it is vitally important in particular for emerging economies such as the BRIC nations, as well as for developed industrial nations like Germany, to make investments in infrastructure. They are necessary in order to be able to handle increasing trade volumes and to secure or improve the country’s competitive position as a business location. In view of increasing transparency, as well as mega-trends like climate change and the increasing scarcity of resources, the topic of sustainability is also gaining in importance.

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The BRIC nations, Brazil, Russia, India, and China plan significant investments in infrastructure, and business, politics, and society will have to develop new ways of thinking about logistics.

This whitepaper has been published at Transport Intelligence on 8 August 2013.

Brazil: Major investments required to ensure further economic development

With around two million kilometres of roadways, Brazil has the second largest road network in the world. However, only about 200,000 kilometres are asphalt roads, and the streets are often in terrible conditions. Together with the highly outdated railway tracks and inadequate airports, this means that Brazil’s transport infrastructure is the biggest obstacle to economic growth and prosperity. That is the reason why, in 2012, the Brazilian government decided to make major investments in the infrastructure. One such measure was that the government granted concessions to private investors who will lay and operate up to 10,000 kilometres of railway track and build around 7,500 kilometres of roads.

The fact that about 60% of the transport volume is moved by road underlines the importance of these measures. In addition, new intermodal hubs will reduce road traffic in economic and logistics centres like Rio de Janeiro and other major cities (“Brasiliens 66-Mrd.-Dollar-Programm,” Financial Times Deutschland, August 15, 2012).

Furthermore, the country faces challenges in the area of rail transportation, since the system works significantly below American or European standards and network density. The 29,000 kilometre long network is centred on the states of São Paulo, Minas Gerais, Rio de Janeiro, and Rio Grande do Sul. Some of the tracks are in deplorable conditions and the fact that the Brazilian system uses differing gauges also complicates operations. As a result, the Brazilian railways carry only about 25% of the country’s total cargo volume. Investments in a number of freight railway lines are intended to improve this situation. Further improvements are expected from the new East-West and the new North-South link.

The seaports are Brazil’s most important interface to world markets. Insufficient cargo handling capacities, too shallow channels, and poor rail and road connections are major disadvantages. Inadequate parking space for trucks in the ports and poorly qualified employees are further factors causing challenges to shippers and logistics companies alike. Government support and private investments are necessary to bring the Brazilian ports up to world standards and to ensure Brazil’s competitive position in world trade.
Russia: WTO accession leads to investments in the transportation and logistics infrastructure.

Russia, which has further opened to world trade with its accession to the World Trade

Organization (WTO), now needs to step up its investments in infrastructure. Sub-optimal roads regularly cause transport delays and breakdowns. According to Germany Trade Invest (GTAI), rundown streets cost Russia 9% of its economic potential. Of course, the influence of the climate and its effects on the road system are not to be underestimated. Specific investments are being made with the goal of increasing the number of multi-lane highways, which currently account for only 8% of the roads in Russia (Umann, Ullrich: Russland tätigt umfangreiche Infrastrukturinvestitionen).

Some of the large-scale projects in this area include the construction of new motorways, like the link between Moscow and St. Petersburg, the development of the M4 motorway into a multi-lane highway from Moscow to Dzhubga, and investments in the M1 as one of Russia’s most important routes. The M1 links the Russian capital to Western Europe and is also part of the Asian Highway network. This project was initiated in 1959 to improve the road system in Asia and involves collaboration among 32 Asian states and the United Nations (ESCAP). Road construction is being fostered at the communal level, as well. The city administration in Moscow is planning to invest more than €24bn in modernisation by 2017.

Russia’s rail network is another major construction project. Because of the sheer size of the country, railways play an important role for both passenger and freight transportation. The Trans-Siberian Railway and the Baikal-Amur main route between Siberia and the Khabarovsk region, as well as numerous secondary lines, ensure that the country has well-developed east-west connections. Thanks to these, cargo only takes 16 days to get from Busan to Helsinki, compared to 47 days on the sea route. Rail connections have gained further importance since Russia joined the WTO. Consequently, the government decided to invest in two high-speed lines: Moscow-St. Petersburg and Moscow-Yekaterinburg.

The freight lines to and from the major seaports are also being improved. For valid reasons: goods like crude oil and petroleum products are exported via the ports in St. Petersburg, Kaliningrad, Novorossiysk, Sochi, Vladivostok, Nakhodka, Magadan, and Petropavlovsk-Kamchatskiy. The (North) Atlantic port of Murmansk, which is kept ice-free all winter, is also a major export hub. Ocean transport accounts for a total of 85% of Russia’s foreign trade. Inland waterway transport is also carrying increasing tonnage and showed a growth rate of 20% in 2011. Seaports are the focal point of expenditures in the area of port development, which is intended to reduce dependency on cargo handling capacities in the Ukrainian and Baltic States’ seaports. In addition, investments are being made in the ports of Taman, Tuapse, and Novorossiysk, as well as Olya.

India – Massive investments in infrastructure are needed for progress towards an industrialised economy

India is well on the way to becoming an advanced economy, but the road is still a bumpy one. The subcontinent is already one of the leading nations for chemical production. At €76bn, its sales volume in chemicals ranks number eight worldwide and is ahead of Italy and Great Britain. It is expected that India will be able to improve this position even more in the future. According to experts, India will be one of the major growth markets for the global chemical industry. Well-trained employees are a major advantage, but high costs for raw materials and energy, as well as low productivity, are the challenges that India is facing. However, it is India’s infrastructure which is the key bottleneck on its way to becoming an economic leader, since it is responsible for high transport costs and regular delays in exporting goods and products (“Indiens Chemieindustrie schafft Anschluss an die Weltspitze,” Chemanager, January 16, 2012; http://www.chemanager-online.com/news-opinions/nachrichten/indiens-chemieindustrie-schafft-anschluss-die-weltspitze). Almost all transport modes are affected. Investment is needed in roads, railways, air traffic, and shipping.

Around 70% of India’s cargo is transported by road, some of it under very difficult conditions. Only about half of the approximately 3.3 million kilometres of roads are asphalted. The National Highways, which account for 65,000 kilometres and connect the major cities, generally only have two lanes and some of them are in terrible shape. In addition, the more than 130,000 kilometres of State Highways do not have unified standards. In the poorer states of India some of these are only one-lane roads.
The railways handle the other 30% of India’s cargo transport. With a total of 64,000 kilometres of track, India’s rail network is the second largest worldwide, following China. However, outdated technology and a low level of electrification, as well as four different gauges of track, prevent efficient use of the Indian rail system. Investments are planned in electrification, double-track main lines, conversion of metre gauge to broad gauge tracks, and modernisation of the technical equipment.

At the same time, the Subcontinent needs to invest in water and power supply. Power blackouts and gaps in the water supply are still common throughout large parts of the country – with all the negative economic consequences. Without electricity, production is impossible, completion of products is delayed, and thus agreed deadlines and contractual obligations cannot be fulfilled. This all leads to losses, in some cases even to contractual penalties. This is one of the key reasons why manufacturing has only been able to contribute a relatively small share to India’s economic growth thus far.

The Indian government is well aware of these circumstances and therefore has announced that it is aiming to spend a total of a trillion US dollars on infrastructure development. A major part, but not all, of this package has been included in the five-year plan for 2012-2017.

China – need for sophistication in logistics in the world’s second largest economy

China has set the goal of putting €124bn into road, highway, and airport construction (“China pumpt Milliarden in die Infrastruktur”, Financial Times Deutschland, September 7, 2012). This budget will cover the costs of up to 30 infrastructure projects that will ensure economic growth and social prosperity. Thirteen highways and ten city street projects, as well as five seaport projects are planned. In addition, two inland waterways are to be improved.

While China’s urban areas have traffic systems that are up to European standards, in the more remote regions of the country, which covers over 9,571,302 square kilometres, transportation is often still below par. Furthermore, cargo volumes have been increasing rapidly over the last years. For example, freight haulage by the railways grew from 535 billion metric ton-kilometres in 1978 to 2,482 billion metric ton- kilometres in 2008. This represented a major challenge for the Chinese rail network and led to transportation bottlenecks. Therefore, the government began setting rail transport contingents. The planned 4+4 PDL rail grid, which is made up of high-speed rail corridors, is intended to bring relief. China’s high- speed rail network, with a total length of 50,000 kilometres, aims primarily at speeding up passenger travel, but along some stretches mixed use with freight trains is possible.

Further infrastructure projects include new long-distance corridors in the west, upgrading existing single- track lines throughout the nationwide network, and the provision of additional capacity for freight transport. Among other things, the current coal transport routes will be improved and further corridors added. In addition, a new 16,000 kilometre long container train network will be constructed.

The Chinese government recognised the importance of infrastructure for the country’s prosperity early on and has made it an integral part of economic growth packages. With its centralised planning, China was able to implement infrastructural programmes quickly and extensively and thus set up the prerequisites that enabled the country to catch up with the leading economic powers in the world. However, logistics expertise in China is still under-developed. Therefore, entrepreneurs like Jack Ma, the founder of the e- commerce giant Alibaba, have been investing in logistics development and are intensifying their efforts to bring China up to world-class standards in logistics, as well. Otherwise, companies like Alibaba will struggle in certain areas to continue growing at the targeted pace.

Germany: increasing investments in maintenance and sustainability

The industrial nations are also showing increasing needs for investments in the infrastructure. In Germany, for example, numerous bridges and roads are in bad repair and need to be renovated. Therefore, the Federal Parliament’s Finance Committee approved an addition of €750m to the transportation budget in 2013.

This sum will be invested primarily in the number one mode of transport, roads. But this will not only benefit cars and trucks; at least €10m are to be invested in bicycle paths along federal highways. All in all, the budget will provide €570m for investments in the road networks.

In comparison, the €40m dedicated to the railways seem marginal and this money is to go to a new noise control package. Another €25m is available for railways that do not belong to the federally owned system. This is the first time that the independent railways will benefit from such stimulus. Another €140m will be invested in waterways, bridges, locks, and dams.

A fresh look at logistics and infrastructures

Many countries throughout the world are making significant investments in infrastructure. However, this alone is insufficient. In view of the global mega trends, such as worldwide population growth, mass mobilisation, scarcity of resources and land, climate change and the increasing awareness of environmental impacts, continuing globalisation, tightly integrated and thus increasingly complex and risky supply chains, it is essential that we re-think logistics infrastructures and systems. Infrastructure and logistics planning, both at domestic and international level, needs to be grounded in a comprehensive understanding of the economy and society, and the logistics sector must increasingly live up to its role as a key enabler for growth and prosperity.

We need to develop fresh ways of thinking which can help ensure that transport and handling hubs contribute to the growth and prosperity of individual countries, regions and the world economy. Concepts are required which not only promote economic growth, but also help improve the common good. Concepts are needed that not only serve individual interests, but also aim at maximising value for the entire system. Development of clear local competitive advantages and of services that increase productivity and improve business conditions for manufacturers and logistics service providers alike must go hand in hand with measures to ensure sustainability.

Modern seaports can serve as an example for the way infrastructure can be shaped in future. Ports have to be viewed from a global perspective and as an integral part of the region; which has to be considered in the planning process. The starting point is a clear understanding of what all the stakeholders expect and need. For example, ports are expected to provide a broad range of services starting with warehouse capacity for all kinds of goods including dangerous cargo, foodstuffs and other temperature-sensitive goods, as well as container leasing, repair, and cleaning, up to comprehensive security plans on-site. These reduce the risk of theft as well as potential terrorist activities. Environmentally sound disposal of oily wastes, ships’ waste water, or solid waste and chemicals is also an essential part of a modern port’s range of services, as are noise reduction measures and traffic safety systems that ensure safe and efficient waterside and landside operations in the port. In an increasingly transparent world, there will be rising demand for competitiveness and sustainability. The concept of a smart seaport pays attention to sustainability, while at the same time increasing productivity through the use of state-of-the-art technology, embedded in a holistic concept. Such ideas can also be applied to other areas, for instance inland ports and airports, as well.

Those responsible can make good use of the digital interconnections between the economy and society in implementing these and other added value services. For example, real-time data on ship movements can be leveraged to coordinate landside processes more efficiently. When docking and unloading times are known well in advance, logistics service providers can optimally plan and schedule their operations so as to reduce costs and optimise the utilisation of resources. Increasing digitalisation in logistics and the continuing spread of RFID makes processes more efficient and safe, since containers, pallets, and wire mesh containers can be tracked worldwide, thus boosting productivity and security. Furthermore, it is possible to simulate alternative contingency plans. In this way, service providers can find optimal solutions and respond quickly in case of unexpected events such as accidents or natural disasters.

In order to put such concepts into practice, it is necessary to have a high-performance infrastructure and also transverse platforms that are often developed and implemented not by just one stakeholder, but by collaboration among diverse stakeholders. Modern logistics concepts often require not just foresight and openness to change, but also the ability to cooperate with various stakeholders. Many companies and governments will have to shift their way of thinking and acting away from concentrating on competition and differentiation towards looking for common interests and joint activities.

Facilitating continuous dialog with stakeholders

Large parts of the population in general will have to change their ways of thinking as well since they often over-emphasise the negative aspects of infrastructure and logistics projects. The most common arguments that logistics facilities and service providers face involve concerns such as high land consumption, increased traffic, more noise pollution, and environmental impact. Such worries are often fed by a lack of knowledge or by uncertainty. Many citizens and local residents do not consider the whole picture. People tend to focus on isolated issues, neglecting the economic and social benefits and advantages of the overall system. Large parts of the public often oversee that the area-wide supply of food and other goods would be impossible without warehouses and commercial traffic. Modern life needs logistics systems, which at the same time benefit the community and have very limited negative impact. In order to raise the understanding and acceptance throughout the population and to avoid resistance and failure of logistics projects, the logistics sector has to facilitate a continuous dialogue with all relevant stakeholders. In this light, it is important to take concerns seriously and to inform the public continuously about respective measures for risk mitigation and about the importance of logistics for the economy and society. The connections between logistics and economic and social welfare need to be stressed constantly.

This can be achieved if technological, environmental, and social aspects of logistics are integrated into national, regional, and global strategies. These need to be grounded in appropriate regulatory frameworks and developed by the logistics industry. Thus, the logistics industry must develop master plans for its sector and contribute to area development initiatives. These plans should aim at creating holistic logistics systems that are embedded in macro-economic strategies. The logistics concepts and plans must respond to the concerns of all stakeholders and at the same time provide efficient supply chain solutions and systems for businesses and the population as a whole.