Dossier

How digitalization combined with artificial intelligence can increase sustainability in global supply chain operations

By Julian Stephens, Technical Development Manager, MJC2

Increasing the efficiency of transportation is key to reducing the impact of trade operations on the environment. To achieve significant results, Customs, border agencies, traders and logistics operators must digitalize their processes and share relevant data. However, such efforts will not bear fruit unless they go hand in hand with the use of computers that are able to exploit vast datasets thanks to innovative algorithms. In this article, MJC2, a company providing scheduling systems and optimization software, explains how the combination of artificial intelligence systems and digitalization is more than just replacing paper by data centres, and how it leads to substantial efficiency improvements in transport.

There has been, in recent years, an increase in the digitalization of business operations and concepts, such as the emergence of Industry 4.0[1] and Digital Twins[2]. Governments, regional and international bodies worldwide have also welcomed and embraced the trend. The WCO too has championed the concept of “Digital Customs,” and organizations such as the European Commission, IATA and the IMO have invested significant resources into e-Freight, Single Windows and other far-reaching initiatives.

This is occurring simultaneously with a resurgence of interest in Artificial Intelligence (AI) – a branch of computer science concerned with building machines capable of performing tasks by processing data, recognizing patterns in the data, and applying rules. In fact, AI is actually helping to accelerate the digitalization of the supply chain, and is creating many opportunities for businesses and logistics operators to innovate, increase agility and reduce any environmental impacts, as well as for regulatory authorities to improve visibility over trade and their enforcement capacities.

Working with industry leaders such as DHL, DPD, Cosco and Kuehne + Nagel, as well as with Customs administrations and other public authorities, MJC2 has developed new AI-driven algorithms and optimization solutions, which address areas such as real-time logistics planning, manufacturing scheduling, supply chain optimization, workforce management, and employee scheduling and rostering. The involvement of Customs in these projects has been vital in terms of identifying opportunities to improve international freight flows, as well as providing the technical knowledge and experience to sense-check the results against real world requirements and constraints.

Collecting such an amount of diverse data is sometimes perceived as extremely expensive for a carrier, but this cost is compensated for many times over by increased efficiency.  These solutions feed on data collected by the carrier from parties involved in a transaction as well as from the vast amount of data generated by sensors and devices installed on trucks, containers and trailers. Sensors detect events such as door opening/closing, temperature/humidity changes, and unexpected movements. Advanced seal technology detects unauthorized access and possible tampering with goods or replacement by counterfeits.

The direct benefit to the shipper is the ability to dynamically route and reschedule shipments in response to anticipated problems with the quality of goods or their ETA, increasing supply chain resilience and reducing costs.

Virtuous circle

Many of these events are of interest to Customs also. Logistics and transport companies may, therefore, consider sharing some information automatically with Customs to increase efficiency in the supply chain. From the Customs perspective, the adoption by carriers of such solutions is beneficial for several reasons. The data they exploit is produced in real time and is of quality, as shippers and other industry operators use the data to feed the AI algorithms to gain efficiency as well as to detect errors and omissions much earlier in the transport process.

So, if at first sight solutions enabling transport and logistics providers to increase agility and fluidity might be expected to present Customs with additional challenges, they can actually lead to significant benefits for Customs and other border control agencies, including access to more and better data for improved risk assessments. For example, complete visibility of the route taken by a truck or container, augmented with a summary of unexpected stops or unusually long dwell times, and supported by high quality shipment information in electronic form, such as the information contained in the manifest and other documents and forms, can save a lot of time.

They also provide greater visibility, which reduces Customs’ workload and allows for better planning of resources to achieve increased efficiency. This in turn leads to faster clearance and reduced costs and lead times that might encourage shippers to switch to greener, but less obvious modes of transport (e.g., rail instead of trucks), and to increase the use of regional/secondary ports and multimodal hubs. Completing the loop, this takes the pressure off main international freight ports and terminals, making Customs and release processes easier to manage in those places.

E-commerce and linehaul networks

A sector where the application of this technology can truly improve logistics operations is e-commerce, as short lead times and fluctuating demands are usually a concern for operators.

Courier companies and postal operators rely on closely synchronised multimodal transport networks: air, rail, linehaul/trunking, and last-mile movements are tightly bound. Linehaul refers to the movement of freight with any mode of transport by land, air or waterway between distant cities. A carrier collects freight from various senders at a given depot. At that depot, freight with common destinations is consolidated into trailers for transport to a sorting facility (hub) or another depot type (e.g., distribution facilities). At a sorting facility, freight coming from different origins is sorted and consolidated again for further transport to its destination. The supporting infrastructure of hubs, depots, tractors, trailers, dockworkers, and drivers is collectively called the Line Haul Network. The freight transportation sector is able to run high volume operations efficiently via such a network.

Shipments surge on certain days of the week and during seasonal peak periods. Bottlenecks at main terminals and hubs are common, creating huge costs for operators, while putting Customs and security authorities under increasing pressure.

Logistics providers that have digitalized their processes can drive additional efficiencies by using AI to optimize their operation, and can, in addition, share evolving movement schedules with Customs in real time, allowing forward planning of activity to be adapted and refined.

For example, an operator moving freight to and from an airport can use MJC²’s real-time logistics optimization software to plan and optimize truck and driver movements to and from an airport. Optimization of load fills and minimizing empty running and wasted driver hours can lead to massive operational cost savings.

If a company has screening facilities at its main hub and has a fleet management system with connected devices gathering data on the location and operation of vehicles in real time, AI algorithms can be used to detect suspicious activity such as stopping at an unexpected location, or deviating from an expected route for no apparent reason. Such tracking information, and corresponding alerts, can be communicated automatically to a Customs system and form part of a risk assessment procedure. This allows Customs to consider fast-tracking shipments that have been screened and are being transported securely between “trusted” locations, in other words locations considered as fulfilling certain security criteria. This in turn allows the logistics operator to run more efficiently, reducing costs and any environmental impact.

De-stressed logistics

Containerized freight operations, although not subject to quite the same time constraints as the express courier industry, are still under considerable pressure in terms of customer service expectations and environmental impact considerations.

Synchromodality is a relatively new concept, referring to the dynamic re-routing of freight through a multimodal network in response to operational issues such as delays, congestion, and evolving customer requirements.

MJC²’s synchromodal logistics software uses optimization algorithms, analysing data from various parties as well as real-time datafeeds along the supply chain, to plan the route of each shipment based on the current state of the network. The benefits to the shipper and logistics operator are obvious: reduced costs and environmental footprint while increasing reliability.

Customs operations can also significantly benefit, and in keeping with the theme of this article, there is a mutual win-win to be achieved by stakeholders collaborating with one another. Synchromodality requires quality electronic data to be shared between shippers and logistics operators. All parties have an interest in providing high quality data as the resulting savings easily outweigh the cost of capturing this data, as long as the integrity and quality of the data is ensured.

From the Customs perspective, this is the ideal scenario – accurate, timely information on the type of freight, where it has come from, the route it has taken, and its planned onward movement/destination. Furthermore, the synchromodal algorithms actively balance the flow of freight, smoothing the peaks and troughs through terminals and transport links to achieve more reliable transit times. This means the Customs workload is similarly balanced and more predictable.

This in turn allows Customs to offer a benefit to the logistics company, in terms of faster clearance of goods and to consider the corridors used by the company as “trusted trade lanes,” the integrity of which can be validated through the availability of real-time tracking data that is used by the synchromodal algorithms.

Work-life balance and sustainability

So far, the focus has been on sustainability from the environmental perspective. However, a growing concern for the logistics industry is the challenge of recruiting and retaining their workforce. Again, the combination of AI and digitalization helps tackle this issue.

The MJC² solution increases the intrinsic efficiency of the workforce through better forward planning and dynamic re-planning, based on demand. For example, an air cargo handler can use the real-time cargo handling optimization system to optimize the flow of freight through the handling process (unloading, documents, screening, loading, etc.), maximizing the use of equipment, warehouse space and people to deliver good service to the airline while reducing operational costs.

This results in a more balanced workload for employees, with less need for long hours or unplanned overtime. The same principle applies to all aspects of the supply chain, including Customs-related activities. Demand led rostering, i.e. scheduling employee shifts according to the workload, is becoming increasingly important, but can only be achieved with good visibility of demand, and appreciation of the regulations and processes that need to be followed, both of which result from synchromodality.

Conclusions

Trade operations generate emissions of greenhouse gases through the transportation of goods. Even more crucially than the mode of transport and the mileage covered, the environmental impact of goods transport depends largely on the performance of the logistics system. Improving logistics flows is, therefore, important not only to reduce companies’ costs, but also to reduce the impact of trade on the environment.

This requires both digitalization of processes and the use of AI. Indeed, if collection of quality dematerialized information is key, from an operational perspective there is a danger of personnel becoming overwhelmed with information. The use of AI systems is, therefore, needed by logistics operators to optimize business. By enabling and catalyzing the capture and sharing of electronic data on transactions, AI systems also open doors to enforcement agencies, which could leverage the systems to monitor operations and receive alerts when suspicious or exceptional events are identified.

More Information
info@mjc2.com
www.mjc2.com

 

[1] The concept of Industry 4.0 refers to the widespread integration of information and communication technologies that converge the physical and digital environments of industrial manufacturing.

[2]  A Digital Twin is a virtual model of a service process or product. Components that use sensors to gather data on real-time status, working condition, or position are integrated with a physical item. The components are connected to a cloud-based system that receives and processes data that sensors monitor. This input can then be analysed.