Rob Zuidwijk: Ports as interfaces of responsible global supply chains

A seaport is not only an interface between land and sea, but also an interface between different production locations, markets, and geopolitical regions. Beneficial cargo owners that wish to transport their goods worldwide depend on the capabilities of seaports to provide seamless transport and logistics. At the same time, there are other stakeholders, including authorities and non-governmental organizations, that have a keen interest in the workings of global supply chains. Seaports can define their role as interface in facilitating trade and logistics that is efficient, safe and secure, and responsible.

Role of seaports in global supply chains
Business, in its continuing strive for efficiency and customer value creation, has globalized its operations and markets. Seaports and maritime operators have developed their role as facilitator by offering very efficient and highly standardized transportation and logistics services.

However, seaports not only act as logistics interface between land and sea, but are also gateways to markets. Supervisory authorities that protect these markets, such as Customs and Food Safety Agencies, scrutinize import shipments that cross borders by profiling the cargo. With millions of containers passing through major sea ports on a yearly basis, this is a daunting task. Risk analysis therefore progressively relies on digital systems that make use of supply chain data. This is needed to detect illegitimate trade associated with drugs trafficking and counterfeit, for example, but it also helps to detect goods that do not comply with environmental or social regulations, such as the Corporate Sustainability Reporting Directive.

Impact of geopolitical events
Several geopolitical developments have negatively affected global trade and logistics in various ways. Impacts of violent conflicts include disablement of production facilities, and blockage of trade corridors. Other impacts are important shifts in trade caused by sanctions and economic conflicts that are triggered by geopolitical tensions. Global supply chains are vulnerable to such disruptive events, of which the impacts may be difficult to identify, let alone anticipated. Important reason for that is the lack of visibility in supply chains: It is not uncommon for a manufacturing firm in a supply chain not to know its indirect upstream supplier base. So, if supply gets disrupted upstream, the downstream firm may not immediately realize it will be affected, as it is unaware of its dependency on that particular source.

Focal firms, such as product brands and retailers, seek to be in control of their supply chains. Example measures are near-shoring and friend-shoring, where suppliers are selected that are closer by or where sourcing is less likely to be affected by geopolitical tensions. Focal firms may also choose to redesign their product assortments in such a way that they become less dependent on scarce raw materials or components with uncertain supply.

Supply chain complexities
Global supply chain risks remain elusive due to complexities. An important driver of complexity is the size and structure of the supplier network. Each of the buyer-supplier relationships in the network by itself introduces complexities, where proper supplier management creates competitive advantage. Also the dynamics of business processes involved introduce complexities. These complexities hinder the effectiveness of (digital) tools in establishing supply chain visibility. For instance, Blockchain enabled tracking and tracing solutions may fail miserably when product from various sources is mixed at a processing stage, or when the number of suppliers is extremely large, as is the case in many agricultural commodity supply chains. So, focal firms either need to reduce the complexities of their supply chains or develop visibility systems that address those complexities properly.

The road ahead
Ports have an important role to play in this matter. On first sight, the scale of port and maritime operations, in which many thousands of supply chains are involved, may seem to render such role infeasible. However, involvement in such a rich ensemble of supply chains also offers opportunities. Port operators and shipping liners that operate globally have started to explore these opportunities and seek ‘customer intimacy’ with beneficial cargo owners.

A potent mix of information technologies and business concepts that enable differentiation in port and maritime services tailored to individual supply chain needs seems the way forward. The aggregate of data associated with trade and logistics through a main port presents opportunities to learn patterns that help identify and verify product origins, supply chain sourcing opportunities, and various supply chain complexities and risks. Such data is not freely available and access will need to be earned by providing services that transform data into business value.