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Intelligent Cargo and Intelligent Network Port Logistics Chain Project

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Intelligent Cargo and Intelligent Network Port Logistics Chain Project PUBLIC VERSION Intelligent Cargo and Intelligent Network Port Logistics Chain Project Final Report This report was funded by the U.S. Trade and Development Agency (USTDA), an agency of the U.S. Government. The opinions, findings, conclusions, or recommendations expressed in this document are those of the author(s) and do not necessarily represent the official position or policies of USTDA. USTDA makes no representation about, nor does it accept responsibility for, the accuracy or completeness of the information contained in this report. Unisys Imagine it. Done. PUBLIC VERSION Mailing and Delivery Address: 1000 Wilson Boulevard, Suite 1600, Arlington, VA 22209-3901 Phone: 703–875–4357 • Fax: 703–875–4009 • Web site: www.ustda.gov • email: [email protected] The U.S. Trade and Development Agency The U.S. Trade and Development Agency (USTDA) advances economic development and U.S. commercial interests in developing and middle income countries. The agency funds various forms of technical assistance, early investment analysis, training, orientation visits and business workshops that support the development of a modern infrastructure and a fair and open trading environment. USTDA’s strategic use of foreign assistance funds to support sound investment policy and decision-making in host countries creates an enabling environment for trade, investment and sustainable economic development. Operating at the nexus of foreign policy and commerce, USTDA is uniquely positioned to work with U.S. firms and host countries in achieving the agency’s trade and development goals. In carrying out its mission, USTDA gives emphasis to economic sectors that may benefit from U.S. exports of goods and services. 2 This material cannot be reproduced, re‐distributed or published without prior written permission from USTDA, Unisys or SEP 1000 Wilson Boulevard • Suite 1600 • Arlington, VA 22209-3901 Phone: 703–875–4357 • Fax 703–875–4009 • Web site: www.ustda.gov • email: [email protected] Table of Contents 1 INTRODUCTION .................................................................................................................... 4 2 INTELLIGENT PORT AND LOGISTICS CHAIN ........................................................ 7 2.1 Phase 1 ‐ Establishing the Logistics Chain Baseline ............................................................................... 7 2.2 Phase 2 ‐ Defining the Intelligent Cargo and Intelligent Network Logistics Chain ............................... 145 2.3 Phase 3 ‐ Assessing the Impact of an Intelligent Cargo and Intelligent Network Port Logistics Chain .. 195 2.4 Phase 4 ‐ Development of an Implementation Strategy .................................................................... 269 3 SUMMARY ............................................................................................................................. 319 3 This material cannot be reproduced, re‐distributed or published without prior written permission from USTDA, Unisys or SEP 1 Introduction 21st century changes in the business environment contributed to the development of logistics chain networks. As an outcome of this globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors define optimized management practices. Technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination between the members of the logistics chain network, particularly government agencies with trans-border responsibilities. For the government agencies responsible for border management and cargo clearance, these new logistics chains require container/ cargo tracking because there is no single stakeholder who is responsible for the container, the cargo inside the container, its movement, and the border clearance process. This leads to ownership confusion, inefficiency, and human error along the logistics chain. Because current efforts in container transport are heavily based on manual labor, transit time is lost, errors are abundant with containers being frequently misplaced or misdirected, and security is limited. Because of this dependence on human intervention, these government agencies’ resources are being stressed and the costs are rising for industries that are already realizing substantial price pressure and low profit margins. Increasing labor costs and the lack of sufficient government human resources have helped to fuel capital investment in machinery and other means to automate and optimize the container transport process. The recent concern about terrorism has brought awareness as well as increasing desire for tracking and securing containerized cargo. A terrorist attack could bring containerized trade to a grinding halt, resulting in billions of dollars in losses. Since the logistics chain is comprised of many stakeholders working together, it is difficult to establish responsibility for containerized goods which leads to further problems in establishing security. Containers with tracking devices would be cleared at a much faster rate than traditional cargo. This would mitigate the problems associated with a terrorist attack. Brasil enacted legislation in September, 2007 to create the Secretaria Especial de Portos, to develop policies and projects to support the development of the maritime port sector, which is responsible for handling more than 90% of Brasilian international trade cargo. Brasil recognizes the need to promote the modernization of its infrastructure and the streamlining of its operational procedures in order to facilitate the free flow of trade, reduce the stress on its own resources and reduce the costs to the private sector. At the same time, consideration must also be given to the requirements of international trade security to protect the world’s economic lifelines from illegal actions, human smuggling, theft, and terrorist activities. As the Secretary General of the World Customs Organization, Kunio Mikuriya has said, “Security and facilitation are two sides of the same coin”. The accomplishment of these objectives mandates improvements in information sharing and the elimination of institutional barriers that serve to impede the free flow of trade. The development of new procedural measures and state-of-the-art management technologies will serve to overcome these obstacles and assure the continued and responsible growth of trade between countries. 4 This material cannot be reproduced, re‐distributed or published without prior written permission from USTDA, Unisys or SEP In early 2008, the US Trade and Development Agency (USTDA) funded a desk study to review the potential for secure supply chain technologies in Brasil. Of Brasil’s 34 principal ports, 16 have significant container handling operations. The Government continues to invest in and provide incentives for continued expansion not only in the major ports but for more remote areas as well. To further improve efficiency, the Secretaria Especial do Portos has proposed development of “intelligent cargo” and “intelligent networks.” Under the provisions of the contract with SEP, the Unisys Team is directed to provide SEP with the technical assistance required to formulate decisions regarding an Intelligent Cargo and Intelligent Network Port Logistics Chain (ICNCP). The project phases and requirements for each phase are summarized below: Figure: ICNCP Project Phases and Deliverables Phase 1: Establishing the Logistics Chain Baseline It is recognized that reaching a new destination first requires the traveler to know where he is starting from. The essential goal in Phase 1 was to fully understand the current processes in effect in Brasil’s ports. This required that all relevant information be collected and closely studied. The results of Phase 1 were delivered to SEP in March 2010. Phase 2: Defining the Intelligent Cargo and Intelligent Network Logistics Chain The Unisys team reviewed and evaluated the current state-of-the-art in cargo monitoring technologies with both commercial and security applications. This assessment also evaluated the suitability of these systems for application in the Brasilian port logistics chain. An important component of this review was to identify best practices in intelligent cargo and logistics 5 This material cannot be reproduced, re‐distributed or published without prior written permission from USTDA, Unisys or SEP networks keying on monitoring capabilities and information sharing as well as data integration, data timeliness, and data reliability. The results of Phase 2 were delivered to SEP in May 2010. Phase 3: Assessing the Impact of an Intelligent Cargo and Intelligent Network Port Logistics Chain The Unisys team identified and assessed the potential impacts of implementing an intelligent port logistics chain which included focusing on infrastructure impacts, human resources, technology transfer, and productivity, and employment. Environmental impacts were reviewed to identify possible positive or negative impacts, considering possible mitigation efforts. Potential funding alternatives were examined for both public and private financing of an intelligent port logistics chain. A high level cost-benefit analysis was conducted as well as possible US and non- US sources of goods and services supplies for the project were identified. The results of Phase 2 were delivered to SEP in October 2010. Phase 4: Development of an Implementation Strategy The Unisys Team
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