Ask the expert: Robin Vega
Question: How can organisations in the sea freight industry use advanced technology to reduce demurrage?
Expert: Robin Vega, Managing director, Cirrus Logistics
Understanding the causes
Reducing demurrage costs is a considerable challenge for most organisations shipping cargo globally. The figures involved are usually substantial, typically US$50,000 per day in the case of Crude and Liquid Natural Gas (LNG) vessels, for example.
However, the causes of delay in the terminals are often obscure and, even if the problem is identified after the event, it is clearly too late to prevent demurrage costs by then.
There are many causes of delays and they can quickly become complex. It may be that the port is simply not designed to handle the throughput now being demanded of it, but there may also be ad hoc constraints, such as terminal maintenance or a temporary shortage of pilots.
There may also be issues further back in the supply chain, with manufacturers failing to have products ready for shipment when the vessel has berthed.
Defining the tool to help
Clearly, this means that to forward plan robustly, terminal managers must also have visibility of supply and storage to mitigate the effects of temporary constraints and to develop a strategic plan in order to enhance future operations.
However, many managers continue to be reliant on spreadsheets, administration databases and their own instincts and, while these have a place, they deliver neither the degree of visibility nor the extent of communications necessary to optimise busy terminal operations and drive down demurrage costs.
Sophisticated and intelligent solutions should relieve managers of the bulk of day-to-day berth scheduling decisions and enable them to focus on assessing ad hoc changes to the berthing plan and helping them make the best long-term decisions.
Since most ports, and the operations within them, involve a number of shareholders and other interested parties, the information delivered by the system must be readily available, in realtime, to various teams possibly located in different time zones.
Modelling your current and future operations
The way in which the plan or proposal is presented has to be easily understood and the system itself has to be relatively simple to use.
In addition, where existing port administration systems exist, the new technology must enable automated communications and integration so as to avoid the double entry of information.
And last, but by no means least, in today's global supply chains, any technology used in one part of the world must be capable of integration with other systems across the globe. In our experience, the way forward lies in advanced modelling and simulation technology.
Companies such as MiRO in Germany, APT in the UK and Qatargas/RasGas in Qatar have been using our SEABERTH scheduling and simulation tool to great effect to increase visibility of current operations and plan for future terminal changes with the overriding objective of reducing demurrage costs.
Achieving team commitment
However compelling the case for modelling and simulation may seem, its deployment must be done with sensitivity.
Company sceptics can be content with the status quo and are sometimes rightly concerned that new technologies will merely soak up valuable time.
This was certainly the experience of APT, a company jointly owned by ConocoPhillips and TOTAL.
Its advice is to introduce such colleagues to the new system gently, encouraging them to see it as an additional tool, rather than a replacement for existing systems.
Instead of rushing into formal training sessions, it is advisable instead to convert people by allowing them to test out a trial model via the safety of their own PC. APT introduced the technology several years ago and is still using an updated version. Two substantial benefits have accrued.
One is the power to communicate effectively with APT's shareholders in realtime, and the other is the sheer visibility of current and potential terminal activity on managers' computer screens, enabling them to better balance costs against throughput and achieve those key reductions in demurrage.
The measurable improvement since SEABERTH was introduced is a two-hour reduction in an average of a 17 hour delay per ship; in other words,
the improvement can be considered as a 12% reduced demurrage.