In 2006, I made this presentation at UNCTAD on Information and communications technologies (ICTs). I thought I would post it now, as many of the same issues from 15 years ago remain relevant today.
Supporting the growth of international trade requires providing safe and secure borders that do not overly burden shipments moving through those same facilities. First, the world is becoming more integrated through telecommunications and transportation: a topic expressed through many UNCTAD documents over the past few years. This interdependency between regions indicates the growing need to improve the facilities that handle trade and information exchanges. I will try to discuss ICT in the context of the four broad areas: Infrastructure, Information, Institutional, and Intangibles.
Generally, this is the first area people consider when handling international trade. It is the most important – without facilities to receive and work cargos, trade will be impossible. We can point to many facilities throughout the world that are underutilized for several reasons. One of these failures involves understanding location – trade facilitation usually involves a three-mile section in a three thousand mile movement. Carriers and shippers benefit when the goods move – there are no “roadblocks”. Significant delays can occur at transactional points, borders, and ports. There is a disconnect regarding using a facility and developing a facility for future use. There are problems with planning for infrastructure – generally, it involves a “lumpy” large-scale investment or incremental improvements to an existing structure. This “either/or” investment approach underlines the fact that infrastructure improvements require the spending of real funds – funds generally secured by either the public sector planning process or private sector investment. The need exists to service growing traffic, but physical constraints may limit expanding existing terminals quickly to handle unexpected cargo growth. This inability to move funding to improve physical capacity raises concerns that existing border crossings or ports\terminals may become practically obsolete before becoming physically outdated as the larger ships and operational changes leave facilities and networks unable to service surging demand.
Regarding ICT, this can result in additional challenges – such as the size and location of offices, the ability to maintain the facility once developed, and the roads and other networks that support the facility. Improving system performance may become a problem in the United States. According to a survey done by the Federal Highway Administration seven years ago, the worst roads on the national highway system were the small connector roads linking ports. Intelligent Transportation Systems and driver notifications can improve operational patterns in a facility or on local roads. Also, the Federal Highway Administration conducted several studies to develop simulation models of border crossings and performance measurements for operational improvement. Other studies sought to examine the travel time associated with specific border facilities. Finally, I worked with Transport Canada and the American Trucking Research Institution on using satellite technology to develop travel time measures for trucks. By understanding the nature of traffic around a port or border crossing, one can create a systems approach that would allow greater driver notification beyond movement to the first checkpoint to the entire system.
This area has seen some exciting changes in the past few years. Telecommunications and computer technologies have resulted in people expecting data and information to be available on a real-time basis. The private sector shippers and carriers have developed this information not to share with local ports and border crossings but to capture benefits from controlling costs and inventories. Furthermore, the development of 3rd party logistics firms and the resulting integration of shippers and carriers in shipment decisions have resulted in additional operational gains while adding more complexity to the system.
At the same time, the development of automated customs manifest and shipper notifications has been developing. In the U.S., the movement to a single Automated Manifest system has been a tedious process, given the coordination that involves over 70 agencies on data regarding international shipments.
Operational information sharing between the public and private sectors remains a growing need. In Southern California, the Pier Pass system has successfully reduced truck delays at container ports. Along the U.S. – Canadian border, expedited shipments are now available to shippers and carriers approved by U.S. Customs. Several electronic tracking options should be considered to improve the productivity of the navigation system. For inland ports, the Smartlock system, being evaluated by the Port of Pittsburgh, utilizes Geographical Positioning Systems to locate representative points on the towboats and barges. By using GPS technology, a pilot could move a barge through a lock or channel, even during times of limited visibility.
In the developed world, we are moving from the age of expansive infrastructure construction to the age of maintenance and institutional partnerships. In some regards, developing countries have jumped over the developed world in seeing ways to build public-private partnerships to improve trade facilitation. But in both cases, the institutional barrier to implementing changes to ports and border crossings exist. There are no single entities responsible for freight movements at ports and borders. At what level should the private sector discussion occur: at the port, the drayage operator, the shipper, or the carrier? What is the public sector role: is it defined by the port, customs authorities, local departments of transportation, and other federal or state agencies? Each group needs information on activities at the port or border crossing in some areas but at different time frames and scales. For example, the private sector is examining events within the context of a few days – such as securing the necessary documents or the trucks to move the cargo to or from a border crossing. The public sector responds to goods already in transition or very long-range planning activities. Although standard features exist, the specific information needed for these different levels is not the same.
I hate stating the obvious –ports and borders are geographic entities. They cannot respond quickly to changing national or local policies and can not simply move to take advantage of opportunities. For example, in the early 1990s, California decided to remove the tax exception for bunker fuels. This tax led to a dramatic loss of bunker business and changed costs associated with charter movements along the west coast. Although the tax was later repealed, the industry adjusted to alternative sourcing options, resulting in a loss of revenue to the bunkering industry.
Furthermore, the potential challenge of locally active participation by other groups concerning current and future use of specific facilities may change a facility’s competitive position. While trade facilitation seeks to improve cargo movement through a facility, in some cases, local groups have sought to reduce traffic because of concerns over externalities such as traffic congestion, noise, and air emissions. This potential disruption from other local or national policies should be considered, especially if addressing security concerns may offset improving ICT.
Port and border crossing planners and operators must not assume that building a facility will guarantee its success. Other factors outside of the ICT framework can shape the ultimate success of a gateway facility. In the past, transportation was associated with production decisions, while networks developed around production and consumption regions. In the new global business paradigm, low-cost technology and flexile production and logistics support have changed investment in plant and equipment from a more long-term framework to simply being five to seven-year assets. With the potential for rapid turnovers in production locations and operations, the importance of linking transportation and economic growth remains even more critical.
In this new global network, transportation is geographically blind. Ports and borders are now interchangeable links in the system, not a separate component of transportation activity. An example involves the U.S. West Coast. In 2003, failed labor negotiations led to a coastal shutdown along the U.S. West Coast. Since then, shippers are becoming increasingly concerned about controlling transportation costs and system reliability. If a shipper feels that one port range is too crowded or that problems exist, that shipper may switch to either another carrier or port for some or all shipments.
While not necessarily an ICT function, the Corps of Engineers is developing a suite of products to examine the interchange between national and international policy, national planning, and specific operational and planning models. The Navigation Economic Technology System (NETS) seeks to explain how the system relates to itself. One of these tools is the development of the Regional Routing Model, which aims to develop an economic model of multiport relationships either within a national context or within specific trade corridors. Other tools include a global grain model of trade flows that can be used for policy analysis and simulation models for harbors and inland navigation. The NETS program will release these tools into the public domain once they are completed and hopefully show the interaction with freight facilities and the need for nations to consider these facilities in the context of other policies.
Tech Transference to Developing Countries
In viewing developing countries’ infrastructure needs from some distance, the potential exists for transference to the developing countries under certain circumstances. These considerations include recognizing that the developing world does not have the same infrastructure and institutions as in developing countries, which means the level of funding or coordination is much different. We should not necessarily hold developing countries accountable to the same standard of operational activity within a short time once a technology transference occurs. Finally, the developed world needs to approach the developing countries as peers and commit to long-term training and personnel development.
Improving transportation means so much more than it did fifty, twenty, or even ten years ago, incorporating concerns over flexibility, improving operations, and positioning for handling uncertain traffic forecasts. Ports and borders must be more accountable to the carriers, shippers, and other groups. New approaches that balance infrastructure, information, and institutional changes may be necessary to ensure that trade remains a critical component to sustain economic growth. Generally, these discussions on needs tend to focus on the “infrastructure” question. How do we build the system, and what do we need to spend to make it work? These questions are essential to answer, but the most significant gap may remain the intangible: changing how people comprehend the value of borders and ports and how to improve capacity both now and in the future.
When I gave this speech, I was so nerovus I rattled off too fast, leaving the interputers behind. But as a few things, such as the NETS program, have stopped, the work on integration, modeling and technology has continued. It will be interesting to revisit this speech in another 15 years to see what changed!