As a technology analyst, I follow many trends, and my days could easily be filled focusing on any one of 5G, AI and IoT. Each is transformative in its own way, and the possibilities really open up when applying all three in combination. In September, I was fortunate to be part of a media tour that included a site visit to the Port of Tianjin, the sixth largest such facility in China.
For many, the world of logistics may seem dull, but it’s the heartbeat of our economy, and the Tianjin Port Group (TPG) operation is arguably the world’s most advanced smart port facility. In many ways, it’s the ultimate showcase for these three technologies - both in isolation and in aggregate – and there was nothing dull about seeing it up close and in-person.
The orchestration across 5G, AI and IoT is truly impressive, especially at this scale, and TPG is clearly at the leading edge for Industry 4.0 applications. To better understand why, I’m going to break down the role each technology plays in creating a level of automation the world has never seen before.
The role of 5G
First and foremost, 5G is about taking connectivity to the next level – more connected devices, and more people being connected with faster speeds and lower costs. The endgame of hyper-connectivity will have to wait until 6G, but 5G is really the breakthrough in mobile evolution that takes us into digital transformation. 4G has been with us a long time, but it never envisioned the mobile-centric world we’re heading to, where data is the business driver, not voice.
5G is central to the smart port story simply because it’s mobile. In smaller spaces like factories, 5G is transformative by untethering operations and opening up new ways of doing things. With ports, the problem set is different since all the moving parts are too large to be tethered, so the need instead is to provide high-speed coverage over a large area to support the overall operations. 4G can do that too, but not with the throughput needed for IoT and complex automation.
Another important aspect of 5G is reduced latency compared to 4G. Faster throughput enables more advanced real-time capabilities, which are critical for the movement of containers, both via autonomous vehicles and automated gantry cranes at portside. Aside from these machine-to-machine examples, low latency allows the humans in control centers to monitor all this automation across the entire operation.
Beyond this, however, 5G is also driving a very different type of connectivity that makes TPG an even more compelling story. Aside from enabling technological connectivity across people and devices, 5G in this scenario is also driving supply chain connectivity. In today’s highly-integrated global economy, most trade is based on overseas shipping routes, making efficient port operations a vital link in commercial supply chains.
Moving bits and bytes across global wireless networks is one thing, but for supply chain, 5G connectivity is about moving much bigger packets – containers – from port to port, across global trading routes. Consider that TPG trades with over 800 ports across some 200 countries, it’s not hard to see how this type of port-to-port connectivity can have a major impact on global supply chains.
The role of AI
As logistics operations go, shipping ports would be among the most challenging to automate. Aside from the size and weight of containers, the process of getting each one loaded in the right sequence at the right time is mind-boggling, especially with today’s super-sized cargo ships. Then double it when offloading at the receiving port. Time is always of the essence for shipping, and errors can be costly at any point in the process.
Data is the oxygen that drives AI, and considering the massive scale of operations like TPG, this is a prime use case scenario. At every step of the process, data is being generated constantly, and only with AI can it be harnessed, both for intelligent logistics, and for real-time orchestration to keep things moving seamlessly.
To be fair, ports have always operated this way, but they lacked the technology needed for automation. Only recently has AI become mature enough to be deployed at this scale, and while the track record at TPG is short, it’s clearly performing at a high level.
The most visible example is the use of Intelligent Guided Vehicles (IGV). TPG has a fleet of 76 L4 autonomous vehicles that move with ballet-like precision, shuttling containers from docklands to the gantry cranes that maneuver them off the vehicle on to the ship – all without a human in sight.
Aside from the sheer number of IGVs running 24/7 in constant motion, the L4 designation speaks to how capable AI has made them. As defined by the Society of Automotive Engineers (SAE), there are six levels of autonomous driving, starting with L0 – no automation – to L5. While L5 may be the highest level – meaning fully autonomous and able to drive anywhere under all weather conditions - the technology is not yet mature enough for that, at least on a commercial basis.
L4 – High Driving Automation – is in commercial use now, and is fairly advanced. These vehicles are self-driving, and when problems arise with the operating system, they can be addressed without human intervention. A key difference from L5 is that these vehicles are geo-fenced, and can only operate within that specified area.
Shipping ports are ideal autonomous vehicle scenarios, since all the driving is within a restricted space, the vehicles operate at low speed, and the terrain is on flat ground. Being fully automated, IVGs can sense each other, whereby collisions hardly ever occur. Since there are no people walking about, there is practically zero risk of any mishaps involving workers, so there’s a safety element to AI as well. It’s worth noting here that 5G’s low latency also plays a role in making IVGs very safe for smart port operations.
The role of IoT
Since TPG is so highly automated, IoT really is about “things” here. During our visit, we didn’t see any people around the loading area while watching all this, making for an eerie scene of what industrial automation really looks like. The main form of human involvement at TPG would be monitoring operations from a control room, but we didn’t have access to that. The only sounds were the whir of engines and gears, and the clanging of cranes picking up and moving container up and on to the ship.
The amount of data involved to make all this run is beyond human comprehension, which is why “things” must be fully automated for this to really work. You can’t just partially automate to get the transformative benefit from these underlying technologies. IoT needs 5G to connect every “thing” across a wide area, and it needs AI to manage all the data flowing over the mobile network – in real time.
It’s worth noting at this point that other technologies like optical networks and data security are integral to making this a smart port, so my analysis is not comprehensive for what technology partners like Huawei have provided to TPG. When it comes to Industry 4.0, IoT is really the overall solution that carriers and vendors are selling, supported by various underlying technologies such as 5G and AI.
For TPG, IoT represents an interconnected network of sensors and operating systems that orchestrates real-time data flows across the entire facility with minimal involvement from humans. 5G provides the essential connectivity among all the “things” that drive operations, and AI provides the intelligence to streamline the movement of containers safely, reliably, and accurately. Ideally, this level of automation should reduce both operational costs, and the time required to load/unload ships.
The rest of the story
All forms of new technology entail risk, and TPG is no exception. Shipping ports operate on a massive scale with massive costs to match, so the prospect of automation is very appealing. These modern technologies are expensive, however, and the financing costs for TPG were upward of one billion USD. As such, there is both financial and technology risk, and being a publicly-traded company, there needs to be a payoff, both for improved efficiency and lower operating costs.
Their smart port deployment is less than two years old, but they have not realized the full set of benefits that are possible. As our tour guide explained, while one might expect major savings in labor costs, only about 60 jobs were impacted. We also learned that the turnaround time to load and unload cargo isn’t yet much faster than before, so the efficiency benefit of automation hasn’t yet borne out. Undoubtedly, that will need to change, and it will be interesting to revisit things a year or so from now. That said, other benefits are being realized, such as having a safer environment, and reduced carbon emission.
In that regard, this deployment has been very helpful in make TPG a more green, sustainable operation. This is another IoT use case, where the naturally windy port lands power onsite turbines. Not only does this get them closer to a zero-carbon footprint, but they’re producing some of their own power, and have reduced energy consumption by 17%.
In terms of hard dollar benefits, the results so far for TPG appear mixed. With so few jobs being reduced, along with managing the financing costs to invest in this new technology, the economic return to date is likely below expectations. Conversely, the savings on energy consumption are providing an ongoing positive return.
But the rest of story is undeniably exciting, and the risk of getting a positive cost/benefit outcome is just part of the equation when investing in such transformative technologies. AI, by its nature is self-learning and always improving, and there should be little doubt that the bigger picture aspirations for TPG will be fulfilled in due time – namely a more profitable operation, driven by these new technologies. Your business won’t likely need automation at this scale, but if it can pay off for TPG, it will most certainly pay off for you.
As Principal of J Arnold & Associates, Jon is an independent research analyst providing thought leadership and go-to-market counsel with a focus on the business-level impact of disruptive communications technologies. JAA works primarily with vendors and service providers to educate their customers on the value of these technologies and to accelerate the adoption of their offerings.
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