Uber of the seas?

Kim Wikström, Partner & CEO

The new emission regulations within the shipping sector have created a need to renew the logistics chain in the Baltic Sea. Could an Uber of the seas type of concept be the answer?

Finland’s unique geographical position has throughout history produced significant innovations related to marine technology and some of these innovations have led to global success. Wärtsilä’s, Cargotec’s and ABB’s port and marine-technologies are excellent examples of this.

Finland is the best testbed for global scalability

On a global scale, logistics and energy are the largest sectors in terms of investment, and these sectors play a vital role in improving Finland’s international competitiveness. On the other hand, the logistics and energy sectors are also large producers of greenhouse gases, enabling new innovation opportunities for Finnish clean-tech companies. In the EU, Finland is considered a pioneer in marine engineering. The arctic conditions during the winter months combined with Finland’s need to ensure competitive logistics due to the country’s geographical location enable an ideal testing environment. 

PBI collaborates with the Laboratory of Industrial Management at Åbo Akademi University who is heading an extensive global research and development project focused on developing an increasingly efficient system for short sea shipping and the associated on-land logistics. The goal is ambitious as the starting point is to modernize not only technical systems in complete logistical chains, but also organize and lead them in conjunction with managing the information flows. 

Within the project, a new methodology is under development in which the earning model for the transport and energy industries is being redefined. The result of the development work is a new industrial ecosystem with enhanced productivity and profitability as a result of Finnish technical, organizational and financial innovations. Simply put, current logistics solutions are not efficient and as an example, the low utilization rates and long port calls within marine logistics prove that the current way of organizing the logistics chain is inevitably outdated and in need of reform. 

The central reason for the industry’s inefficiency are the organizational bottlenecks, which have developed throughout the years preventing information flow. At worst, 16-19 different organizations are involved in the export and import of a foreign trade cargo from the shipments point of origin to its final destination. This in turn causes delays and costs specifically in terms of information flow. The large number of involved actors also complicates the implementation of new technologies as an improvement in the efficiency of the value chain can threaten the existence of several of the intermediaries currently involved in the value chain. 

It is about shared economy

We utilize our resources in new ways and the transparency of information enables an increasingly efficient use of capital through ideas from share economy. The California-based company Uber which has recently revolutionized the taxi business can be mentioned as an example. We no longer compete with predetermined information, instead it is automated (digitalized) and is freely available whilst constantly enhancing productivity. In transportation chains this implies that the production planning and warehousing in production facilities becomes more effective, the utilization rates of trucks and ships rise and the time spent in ports and terminals decreases to a fraction of the levels we see today.  

These changes are based on four primary innovations: ICT solutions for integrated dynamic production- and logistics planning, technology innovations in warehousing-, transport- and loading systems, shipbuilding- and operation alliances and a new Public-Private Partnership- financing model. In the new system freight costs are lowered by 25-35 percent as a result of higher utilization. The saving potential in turn is significant, specifically for industrial companies producing steel coils, cement, burnt lime used in the paper industry, paper, pulp etc. In addition, increasingly efficient operations also lead to decreased carbon dioxide emissions by 20-30%. 

*The text is a modification from a blog that was posted in Turun Sanomat 24.10

Wolf Virkki