The Fourth Industrial Revolution and the future of ports

Changes from one era to the next happen when mega trends converge at the same time. We have seen this before, when ocean-going trading ships enlarged the horizon and traders discovered new cultures, when widespread railway networks allowed steam engine technology to distribute to remote areas, when new fuel techniques allowed automobiles and airplanes to move people faster and further than ever before.

Now we are witnessing how ever-evolving technology is distributed at the speed of light via the internet. What it tells us is that people have a persistent drive to explore unknown territories, whether they are new continents, new technologies or new methods of communication.

Port cities have played a pivotal role in each of the previous Industrial Revolutions. What does the Fourth Industrial Revolution mean to port cities around the world, and what should they do reap its rewards?

Historically, technologies have developed in geographically favorable locations, often where land meets water. Port cities have always been at the crossroads of change. Traders embarked on wooden sailing ships in Amsterdam to explore new trading routes. London flourished by the power of its steam mills in the 18th and 19th century, and New York and Rotterdam were the world’s largest ports during the 20th century. Ports have thrived because all Industrial Revolutions up until now relied on the trade of raw materials: coal and iron ore since the 18th century, whereas oil and gas were added to the commodity mix since from the late 19th century. It’s still the case today that the world’s largest ports float on oil.

The fourth industrial revolution differs from the previous big leaps in history because of the speed at which it unfolds, its omnipresence in society and a systems change in the way people live, move, work and communicate.

The shift to a new era goes hand in hand with an imminent change in the energy mix. Fossil fuels are under pressure for at least three reasons: fossil fuels are running out sooner rather than later, new technologies will make alternative renewable energy sources cheaper, and commitment to climate change goals will drive the change.

The current dominant logic is based on linear thinking. For business, government and society the challenge is to break through the existing paradigm that goods reach the highest value at the point of (first) sale, and are then depreciated to zero over the product’s lifespan. From an accounting perspective, this all makes sense, but this linear thinking has taken us away from our true nature, and the circle of life. We have forgotten to progress through reflective cycles of learning and turn experience into wisdom, and wisdom into value.

Ports are traditionally seen as a node in the transport chain. There is an implicit linearity in this. If ports are serious in their attempt to be sustainable, this challenge cannot be approached through linear thinking alone, but also through circular thinking. Let us illustrate circular thinking with a few examples. Ship arrival processes can be approached as a circular process. Ships calling the port will be received on the basis of community circles. Ship’s agents, terminals, harbor coordination center, vessel traffic managers, tug masters and pilots join in a communication circle as soon as a ship is in reach. Same principles can be applied on a shipment level. This way of circular communication speeds up the ship turnaround time as information flows circular instead of sequential.

In circular chains cradle-to-cradle products, rather than a linear ‘produce-to-waste’ principle, necessitate the need for cooperation within the circular chain. Also on the software side, there are companies who position themselves as the information mediary and make origin information of product components readily available to all companies in the circle. This transparency is vital for cradle-to-cradle products. Why circular chains are so interesting for ports is because goods and assets like ships come, go and return back to ports multiple times. This puts ports are on the main arteries of circular chains.

What do we need to do to adopt circular thinking? Quite paradoxically, we need the same change agents that shaped capitalism in the First Industrial Revolution: entrepreneurs.

Entrepreneurs by their nature hunt their fortune in unknown territories, searching for new applications and market niches. The most unexplored value of this new era lies in renewables: energy, waste, water, biomass, and alternative ways to extend a product’s life cycle.

When adopting circular thinking, waste becomes equal to value, while depositing waste, eroding the earth’s natural resources and degrading assets become equivalent to loss. Already there are entrepreneurs who see a market in the circular economy in this way.

Ports which are accommodating these startups through incubator centers bring employment and add to a more sustainable economy. Some port cities, like Amsterdam and Rotterdam, are stimulating the emergence of innovation circles, places where people bring expertise together around thorny problems and turn them into business challenges.

These port communities have realised that for circular thinking, one needs entrepreneurial spirits. Such circular thinking is the force can turn entrepreneurs into the true heroes of the Fourth Industrial Revolution.

Originally published at mauricejansen.wordpress.com, and on Medium as part of the World Economic Forum’s essay contest for Davos 2016. The shortlist will be announced later this week. 

Author: Maurice Jansen, Visiting Researcher, Erasmus University Rotterdam

Image: The MV Maersk Mc-Kinney Moller, the world’s biggest container ship, arrives at the harbour of Rotterdam August 16, 2013. REUTERS/Michael Kooren