The OMEGA Centre Seminar Series was launched in January 2009 to focus on topics related to the planning, appraisal and delivery of mega infrastructure projects and their impacts on development. The seminar programme is hosted by the OMEGA Centre at the Bartlett School of Planning, University College London (UCL) to provide a platform to present findings of recently completed and on-going infrastructure projects globally, and to engage with a wide audience from academia, applied research and praxis. Speakers cover a variety of aspects of mega infrastructure project developments with a view to encouraging cross-disciplinary collaboration and knowledge transfer.
Wolfgang Lehmacher, sometime Director and Head of Supply Chain and Transport Industries, World Economic Forum, Geneva, presented in this seminar an overview for the non-specialist of the current digital transformation in the ports and transport logistics industry world-wide, reflecting for illustrative purposes on the potential application of blockchain technology to megaprojects as part of the Belt and Road Initiative (BRI), and the international construction industry specialising in megaprojects. (Blockchain technologies may be defined as a decentralized, distributed ledger that records the provenance of a digital asset employing, for example, digital currencies. Such currencies, as in the case of Bitcoin, permits the recording of transactions on a distributed ledger across a network of stakeholder users).
He gave an overview of how ports and the related transport logistics industry have seen several revolutions globally since the mid-twentieth century, referring firstly to the expansion in international trade and the rise of the container; then to the specialisation and consolidation that subsequently took place with the emergence of express delivery services, third/fourth party logistics providers, and the associated ‘track and trace’ systems and then the current revolution in logistics practices (Logistics 4.0). This covers synchronized and integrated platforms for certain activities; namely: the emerging systems of integration of suppliers, the ‘internet of things’, digital logistics marketplaces (5PL), and warehouse automation and automated port terminals. He predicted that Logistics 5.0 will see even more intelligent and automated systems, with data and artificial intelligence supporting further automation and decentralization of value chains, and networks of connected vehicles and sustainable platform logistics (6PL). He thought that a major implication for infrastructure trade hubs such as ports, is that they can establish themselves as digital ports (i.e., control points of regional e-commerce) to complement the physical operations on the site.
Lehmacher explained how various technologies are transforming transactions for importing and exporting world-wide, as witnessed in the case of the use of Optical character recognition (OCR), Artificial intelligence (AI), advanced analytics (AA), Robotic process automation (RPA), the Internet of things (IoT), and Distributed ledger technology (DLT). Part of this revolution, in his view, is the emerging use of blockchain technology in goods logistics, offering a new form of decentralization and collaboration, by making it possible to build decentralized solutions with a security level that matches centralized technologies.
He emphasized that blockchain is a nascent technology requiring operational development as well as business confidence and trust. Three possibilities were presented: Blockchain-based letters of credit for transactions to export/import goods; The World Economic Forum’s suggestions for a new shared digital Global Trade Identity (GTID) which could reduce trade barriers through competitively, commercially and politically neutral interoperability infrastructures, enabling a reliable and efficient identity management system on a global level; and A Platform System for global shipping which could connect the entire supply chain ecosystem (including shipping information) into end-to-end supply chain visibility and automated paperwork.
In a megaproject context, he gave the example of the BRI which includes both the land-based Silk Road Economic Belt (from Western Europe to China) and the Maritime Silk Road (via the Mediterranean, Red Sea, and Indian Ocean) and illustrated how digital transformation of logistics could support a different realization of outcomes. He explained that the aims of BRI are not only to promote the connectivity of Asian, European and African continents and their adjacent seas, but also to establish and strengthen partnerships among the countries along the Belt and Road by setting up connectivity networks and looking to (notionally at least), how these may be balanced against aims of sustainable development. Despite progress being made in related infrastructure projects (e.g. development of China-Europe cargo trains, construction of forty new airports or expanded airports, forty plus energy projects in progress, including power stations, oil and gas transportation networks, telecommunication systems) he pointed to the fact that barriers remain. He considered, for example, that the speed of goods transactions could be improved by state-of-the-art handling technology and supply chain management systems, and that inefficient customs clearance procedures could be improved with the help of introducing standardized customs clearance processes and robotics process automation. Time and cost of manual goods handling could be helped by automating loading and unloading, and the scattered and unstructured information on goods shipment could be enhanced by real-time tracking through distributed ledger technology. It is here, he emphasized, that the introduction of blockchain technologies potential had special value.
In the case of the construction industry, especially the construction of megaprojects, Lehmacher suggested that blockchain offers possibilities for the delivery of more efficient and smarter project management and implementation. Large capital projects, which he suggested typically cost 80% more than budgeted and typically run late, offer particular opportunities. These include introducing:
a reputation ledger that tracks subcontractors’ deliverables to identify reliable parties;
a shared project management dashboard to better manage workflow in fragmented construction supply chains;
smart contracts that identify accountabilities and trigger milestone-based payments;
a distributed ledger system that keeps an end-to-end chronicle of the construction process to record building inputs and assets, including warranties and maintenance; and
blockchain-enabled apps that track materials, testing, and results against building codes and standards to streamline inspections.
He thought that the current slow take-up of such applications in the construction industry reflects major barriers that need to be addressed. These include:
the low capitalization and low profitability of construction industry project costs;
blockchain technology developments (a blockchain ledger relies on its nodes but if the nodes are inundated with data they may become slow); and
the issue of the volume of transactions that take place in a construction project (which will place a huge burden on a distributed-ledger system, unless some combination of blockchain and database is adopted).
For the management and implementation of megaprojects, he thought that these barriers are even more formidable, with scaling-up a major barrier.
The presentation ended with a set of recommendations for national/international promotion of Industry 4.0. This he broadly defined as the trend towards automation and data exchange in manufacturing technologies and processes. It includes cyber-physical systems (CPS), the internet of things (IoT), industrial internet of things (IIOT), cloud computing, cognitive computing and artificial intelligence. The concept fosters what has been called a ‘smart factory’ involving:
the introduction of an integrated 4.0 strategy;
the standardisation of projects;
the digitisation of programmes for traditional industries;
the introduction of innovation programmes and perhaps subsidies for small and médium-sized industries (SMEs);
communication and alignment across government agencies; and
inclusion of the private sector in 4.0 strategy development.
Linking back to the presentation, these recommendations (which include the possibilities for using the potentials of blockchain technology) are highly relevant for sector-specific application in the ports and logistics industry and megaproject port developments.
The full presentation slides are available on the OMEGA Centre website: http://www.omegacentre.bartlett.ucl.ac.uk/wp-content/uploads/2020/02/UCL_4IRTechnologyInConstruction_2019-11-20-2-web.pdf.
Bartlett School of Planning, University College London, UK
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