State of the Industry Report: Marine Terminal Operations

2024’s marine terminal and port operations industry could best be described as “a tale of two ports.” On one end of the harbor, marine terminal operators (MTO) still face the challenge of overcoming weakened supply chains, labor shortages, volume volatility, and adjusting to weather-related delays like those seen with the Panama Canal drought. On the other end, operators are realizing new efficiencies and better resilience through emerging technologies and data analytics.

Balancing this dichotomy will be crucial moving forward, but the outlook is certainly optimistic — a 2023 market analysis projects a 4.57% CAGR for the industry through the end of the decade. Fortune Business Insights expects marine port services to be valued at $121.61 billion by the end of 2030.

Navigating New Legislation, High-Interest Rates, and Climate-Related Issues at the Panama Canal

Since some of the current challenges facing the industry remain holdovers from COVID-related supply chain and labor issues, the belief that we could finally be seeing the end is phenomenal news on its own. Still, a few rogue waves might emerge, such as the shutdown of the Panama Canal due to drought conditions that began in September.

As of November 3^rd, 2023, the Panama Canal Authority began ramping down daily traffic to just 18 ships per day, which is only about 45% of the full capacity. “The extra money and time traveling through the Suez may add a week to ten days for cargo to arrive, but you know when it will reach its final destination,” said Alan Baer, the CEO of OL USA.

On the financial side, Drewry expects merger and acquisition led growth strategies to be the main growth lever for the world’s largest terminal operators and container shipping lines in 2024. According to the report, shipping volumes increased by only .5% in 2022 (the year of analysis), meaning there is not much room to bring in extra lines or expand operations, so global terminal operators will need to rely on business dealings to increase market share.

Global high-interest rates have also impacted capital expenditure and the opportunity cost of investing funds. Since interest rates will likely remain high in the short term, terminal operators will likely curb investments or, at the very least, make much more strict decisions to not get bogged down in the low rate of return.

Marine terminal operators (MTOs) continue to adjust to new legislation and regulations following the passing of the Ocean Shipping Reform Act (OSRA) and the Marine Transportation Data Initiative (MTDI). Both will likely increase the short-term compliance burden on operators, but benefits should emerge over time.

Among its primary changes, OSRA requires terminals to submit proof of reasonableness for any detention and demurrage (D&D) charges and to staff a compliance officer who’ll ensure adherence with Federal Maritime Commission (FMC) rules. But as processes and technologies adapt, MTOs may find they prefer the new system. They could face a lower administrative burden so long as D&D charges are certified to meet FMC rules, as there should be fewer disagreements with shippers that need resolution.

Similarly, the MTDI will require significantly more data collection, new reporting requirements, and the implementation of new technology systems to aid those efforts. While this will involve investment and affect MTOs costs, many ports remain decades behind the latest capabilities. Replacing legacy systems should result in significantly improved tracking and analytics, helping alleviate some congestion and turn-time challenges common across the industry.

Overall, MTOs and the port operations industry should find themselves looking forward to 2024 favorably. Although there are some notable challenges — ongoing and ahead — analysis has been characterized by forecasts of growth and normalcy, which feel long overdue.

1. Globalization

As the world becomes more globalized, there has been a corresponding increase in the complexity and scope in our world of logistics. Businesses worldwide are expanding, and consumers are no longer satisfied with products manufactured in their backyard. All this demand has led to more and more goods crisscrossing the globe.

However, while demand has grown, port size, infrastructure, and capabilities have not increased correspondingly.

2. Disruptions to the Global Supply Chain

It should come as no surprise that COVID interrupted global supply chains and caused severe port congestion, affecting all aspects of intermodal transportation from maritime to land-based methods.

Over the last three years, maritime trade has performed better than expected, primarily because the pandemic has peaked and ebbed at different times, depending on the country and region. Additionally, regional rebounds in trade have, in part, been sparked by stimulus packages, resulting in increased consumer spending on goods, particularly in e-commerce.

However, while maritime trade has been more successful at keeping up with demand, port and landside carriers cannot say the same. Supply chain bottlenecks have been particularly pronounced in these areas, combined with pandemic-induced restrictions in logistical operations. This has led to less reliable services, longer delays and dwell times, and more congested ports. These hurdles are expected to dissipate as global trade patterns normalize, but the need to build resilience is clearly present.

3. Labor Shortages

Labor shortages have been a severe issue in the global supply chain and logistics network. Whether it’s a shortage of truck drivers or longshore workers, these gaps in the labor pool mean that goods cannot get off ships, onto trucks, and to retailers and consumers on time.

These shortages don’t just affect supply chain speed. According to one survey of US Chamber of Commerce leaders, 90% believe that labor shortages are limiting their area’s economic growth. Part of the reason why terminals struggle to find consistent labor is due to increased sickness among existing staff.

In addition, the increase in workers leaving their positions during the Great Resignation has also had a huge impact. Job resignations are up 23% over pre-pandemic levels, as workers are quitting their jobs at historic rates to take advantage of the ongoing demand for labor.

4. Limited Terminal Space and Poor Container Management

Yard space is a limited resource, and the land around major ports is tasked in various ways. The businesses that support and benefit from port activity also end up competing with the port for surrounding land. These spatial limitations can complicate expansion and modernization efforts. But more immediately, they cause congestion both within the port and outside of it.

Externally, industrial expansion by other players in the area can cause congestion in the transportation infrastructure surrounding a port. When this happens, the flow of goods into and out of the terminal slows and negatively impacts the rest of the port’s operations. Even if the port expands its cargo handling capacity, its ability to process freight is limited by the capacity of the external infrastructure.

Due to limited capacity, terminals often have to stack full containers deep, preventing yard operators from efficiently storing and managing them. Storing empty containers also adds to the issue by taking up space until they’re ready to be reused. Boston Consulting Group estimates the costs related to repositioning empty containers hover around $20 billion per year across the entire industry.

5. Turn Times

Turn times are a huge factor in port congestion, although what qualifies as a reasonable turn time can vary significantly depending on the region or country.

They are a central KPI for any terminal, with every operator increasingly aware of their own numbers. While processing fewer ships and working with more technology can decrease turn times, there are many other factors at play. An accumulation of multiple minor delays can easily contribute to longer turn times, causing ongoing inefficiencies that create a domino effect of larger operational delays.

What Does the Future of Marine Terminal Operations Look Like?

COVID has accelerated a trend in technological advancement that was present before the pandemic and is expected to continue to have an outsized impact on maritime trade and transport.

These technological advancements and innovations include:

Advanced analytics
Communications technology
Onboard sensors
Port-call optimization
Blockchain integration
Big data
Integration with autonomous ships and vehicles

While global concern surrounding COVID subsides, the increasing use of these technological innovations has also had a huge impact. In addition to helping unsnarl congestion and cutting down on turn times, this technology actively helps to increase a terminal or port’s resiliency.

Here are a few common types of port technology solutions that can be put to work within your port.

Aerial view of a shipping container yard.

Automated Stacking Cranes (ASCs)

For ports to achieve maximum stacking density and loading/unloading capacity, they will need to utilize automated stacking cranes, which are designed to be extremely space and resource-efficient. These cranes load, stack, and unload more efficiently than any other solution using digital cameras and other automated sensors.

These represent the forefront of port automation, a real-world example of where the industry is going. ASC systems are capable of loading and unloading containers at the fastest speeds possible. They have also been able to achieve optimal container density. Paired with automated shuttle carriers, this system can run autonomously, saving money and labor while dramatically increasing safety.

Automated Gate Systems (AGS)

Automated gate systems (AGSs) have become widespread because of the enormous benefits they provide to terminal operators and workers. They work through the use of electronic documentation, which is provided before picking up or dropping off at the terminal. This helps to improve processing times and reduces the risk of unexpected errors.

In addition to reducing the risk of errors, these automated gate systems provide additional validation for people and equipment, helping improve terminal-wide safety and security. Plus, the integration with other mobile technologies can assist in demand planning and prediction, simplifying gate access and equipment usage.

Real-Time and Historical Data Analysis

One of the most important initiatives for terminals has been modernizing its data strategy and infrastructure to support both immediate decision-making and long-term reviews or forecasting. This requires a complementary combination of real-time and historical data across integrated systems. Gartner projects most new business systems will incorporate these capabilities as of this year.

Leveraging your data and these tools is especially important for MTOs, given the continually changing nature of logistics operations (e.g., vessel GPS locations, changing ERDs, cargo flow mapping). Scheduling and location tracking are critical for maintaining the resource, space, and labor availability necessary to ensure quick turn times and keep port congestion at manageable levels.

With real-time data, terminals can adapt as changing circumstances demand. Events occurring throughout port and terminal facilities trigger notifications for operators, which keep them current with the latest, most accurate updates and provide early warnings that help mitigate potential issues. The data also synchronizes across all integrated systems to prevent ill-informed decision-making.

But as valuable as real-time data is for terminals, historical data is just as crucial. This is because real-time data primarily helps you react in the moment, but it won’t help you compile reports on past performance or build future projects for long-term business decisions. Historical data often contributes to more granular analysis and better big-picture insights (e.g., cargo flow over time, causes of persistent bottlenecks).

Although they support different workflows and track different KPIs, both real-time and historical data is essential for marine terminal operations. Marine terminals should ensure that all systems they consider implementing will support both to provide comprehensive operational views they can use to create new efficiencies and support methods.

Digital Twin Technology

Lately, we’ve seen a boom in edge-device networking and telemetrics in terminal yards. 5G creates the network for smart ports of the future and allows for data collection on a grand scale. Digital twin technology enables port operators to utilize all of that data to run highly detailed 3D simulations of port activity to improve decision-making, solve complex problems, and increase data-driven predictive planning.

In essence, the technology maps the output from a massively-interconnected network of IoT sensors to a virtual version of the port. These sensors feed data from a myriad of real-time port activities into the simulated port, allowing the virtual copy to behave in a manner similar to the real thing. With the simulated port, operators can run virtualized scenarios that wouldn’t be feasible in the real world, gaining valuable insight into possible and future port operations.

The Port of Rotterdam is currently planning a digital twin that will track ship movements, weather data, infrastructure movement, and more to help the port reach its goal of being a fully automated port by 2030. The Port of Hamburg is working on its own digital twin with the purpose of exploring novel efficiency and environmental gains.

Digital twin technology allows for unlimited experimentation using real-world data without the need for actual equipment moves and labor. It’s a virtual port laboratory, and as data quality and quantity improve, so will the results of these experiments.

Comprehensive Terminal Operating Systems (TOS)

At the heart of all this technology lies the comprehensive terminal operating system (TOS). This is an end-to-end terminal management solution that optimizes productivity and improves planning. It does this by providing complete visibility and control of cargo at the gate, in the yard, and on vessels or rail cars, resulting in faster, more efficient cargo processing.

With so much going on in terminals today, terminal managers need support that can enhance their current operations and help provide more resiliency in the future. This industry is continually changing, and the demand for accurate, real-time information is only growing. The TOS helps terminal operators use data to inform their operational decisions, allowing them to stay competitive now and into the future.

Tideworks’ Marine Terminal Solutions

Not sure where to look for intuitive, easy-to-use terminal solutions? Tideworks has a full suite of these tools to help make your operations easier.

Mainsail 10: Flexible and Comprehensive Marine TOS

Mainsail 10 can improve turn times and efficiency by providing terminal operators more control over inventory management to maintain a healthy bottom line. It does this by generating better, more granular data for analytics and reporting, empowering terminal operators to make more informed data-driven decisions across the board.

Want a more detailed description? Check out this link.

Spinnaker: Marine Terminal Planning

Spinnaker is Tideworks' sophisticated vessel, rail, and yard graphical planning solution. It helps to automate container handling, establish a better yard strategy, and more. It also allows terminal operators to visualize how their space is being used within the yard, vessel, and rail.

These capabilities will enable them to make a plan of what’s onboard down to a single container and then use the integrated tools to map each container to an optimal position in the yard.

Read on: Learn how Tideworks lets you standardize your operations across multiple sites.

Traffic Control: Equipment Control and Dispatch System

Traffic Control™ is a dynamic equipment dispatch system that helps optimize the operation of your terminal’s container handling equipment. This smart system replaces radio communication and paper instructions with accurate, real-time, electronic dispatching of work orders, ensuring your plans are executed efficiently and quickly every time.

From there, it helps integrate every piece of terminal equipment with algorithms that can optimize every move and help improve equipment and process automation.

Tideworks Insight®: Data Platform

This modern terminal platform helps users better understand what’s happening at their terminal. Using operational metrics available in a single, self-service dashboard, Tideworks’ clients can make informed, timely decisions that give them a leg up on their competition and increase stakeholder satisfaction.

Terminal View: Data Visualization

There are so many variables that contribute to the challenges terminals around the globe are experiencing. To solve these challenges, it’s time to invest in smart terminal systems and a dedicated support team that can provide more significant insights into your terminal operations and processes.

Tideworks’ marine terminal solutions provide various solutions that can be used on their own or integrated together to offer even more insights.

Let Tideworks’ Suite of Terminal Operating Solutions Work for You

There are so many variables that contribute to the challenges terminals around the globe are experiencing. To solve these challenges it’s time to invest in smart tools, terminal systems, and a dedicated support team that can alleviate backlogs through features that provide more significant insights into your terminal operations and processes.