Sustainable Cities and Ports

by Malcolm Hartwell, NORTON ROSE FULBRIGHT

Captain Malcolm Hartwell, appearing in Africa PORTS & SHIPS maritime news

Rapid urbanisation and population growth are putting huge demands on urban infrastructure and resource needs. Managing this growth sustainably is one of the most significant issues of our generation. Global trends of urbanisation, digitisation and disruption affect both companies and individuals. Integrated city solutions, together with emerging business models such as the circular economy and sustainability, will transform the way shipping lines, ports and businesses conduct their affairs.

Currently 3.5 billion people, 50% of the world’s population, live in cities. By 2050 the number of city dwellers will have doubled to about 7 billion which will be 70% of the world’s population. There are now 21 mega-cities with over 10 million inhabitants. By 2030 this number will have grown to 30 mega-cities with four of them in Africa (one of which will be Johannesburg).

The value of the world’s existing infrastructure is US$50 trillion and the demand for further infrastructure over the next 15 years will exceed US$90 trillion. Current infrastructure spending, concentrated in middle-income countries, is only 50% of the demand. Half of that spending comes from private investment.

Various megacities will develop in Africa. It is clear from our global client surveys that developed economies view Africa, with its resources and underdeveloped infrastructure, as a continent to invest in for the future. This creates enormous opportunities and challenges.

There is transformative, sustainable investment and then there is investment purely for returns. Given the massive changes forecast in the way in which cities are going to develop and the way in which ports are going to have to be integrated into every aspect of city planning, we are of the view that the government, private sector and the regulators need to ensure that the investment we attract is the former and not the latter.

Growing populations, increasing urbanisation and a need for sustainable development are driving change in the way cities and related infrastructure, including ports, are planned and developed. City planning is evolving on the back of rapid technological changes from a series of unconnected projects to an interconnected, integrated system that incorporates transport, energy, utilities, power, buildings, cloud computing and peoples’ needs. Ports are the entry and end point in the system and integral to the supply of goods in and out of the city. They need to evolve as trade and cargo volumes to and from the city continue to grow.

Transport developments

Increasing competition and the increasing size of vessels will transform the efficient ports of today into the massive hub ports of tomorrow.

The effect is that only those cities and ports that are future-ready will be able to realise their full potential. This requires the integration of smart technology with infrastructure and assets. For ports, this includes:

  • Creating a maritime information network, perhaps based on a cloud-based collaboration system, where data is secure but accessible and shared for integration of port systems and agents;
  • Sharing of cargo information in real-time to create efficiencies and improved safety and security;
  • Smart analysis on productivity and costs;
  • Performance-monitoring and predictive maintenance;
  • Improved resource allocations and greater flexibility; and
  • Automating vessels, equipment, terminals, trains and operational processes to improve efficiencies and safety.                                                                                                                                   Insofar as sustainability is concerned, technology allows port infrastructure in the maritime sector to contribute to climate change solutions. Monitoring and inspection of port infrastructure assets through smart sensors and drones will help reduce waste and increase efficiency. Digitisation and the Internet of Things (IoT) will help ports to manage resources in a sustainable and cost effective manner. They will be able to eliminate waste and create more integrated and efficient solutions – perhaps even recycle waste to produce energy.Intelligent transport systems such as autonomous vehicles, vessels and equipment, will reduce carbon emissions and help achieve energy targets.

    Circular economy

    Today’s industrial programme of take, make and dispose relies on large quantities of cheap, easily accessible materials, energy and labour and has generated an unprecedented level of growth. However, increased price volatility, supply chain risks and growing pressure on resources requires a rethink of this process. Adopting a circular economy has benefits. A circular economy is one that is restorative and regenerative by design and aims to keeps products, components and materials at their highest utility and value at all times.

    It is driven by the following factors:

  • The current economy is wasteful. In Europe, material recycling and waste-based energy recovery captures only 5% of the original raw material value. The average car is parked 92% of the time, 31% of food is wasted and the average office is used only 35 to 50% of the time even during working hours;
  • The current linear system exposes users to volatile resource prices and supply disruption. The last decade has seen the highest price volatility for metals and agricultural output of other decade for which prices are available;
  • Resources are distributed unequally. The EU imports six times as much materials and natural resources as it exports. Japan imports a very large percentage of its energy needs;
  • Our natural systems are degrading due to global warming, loss of biodiversity, land degradation and ocean pollution;
  • Regulators are increasingly targeting price negative external factors. Climate change laws have increased by two thirds in the last few years. Carbon pricing is implemented or scheduled in almost 60 countries, states and regions. Landfill taxes are increasing everywhere;
  • The Internet of Things is now coming online and being deployed at scale. IoT is everywhere.

    Benefits of the circular economy include:

  • The developed world (where growth is relatively stagnant) sees the circular economy as an opportunity to grow their GDP aggressively with estimates ranging between 11%-27% for Europe compared to 4%-15 % by 2030 and 2050 respectively in the current development scenario;
  • The developed economies also see this as an opportunity for employment at the more sophisticated end of the cycle. We should not allow these jobs to migrate or be created in developed economies when we have the opportunity and hopefully funding to create those jobs in Africa;
  • The environmental effects of the circular economy are far less harmful than the current linear approach. Insofar as the reduced emissions, primary material consumption, preservation of land and improved land productivity and a reduction in waste generation is concerned;
  • For companies the opportunity lies in greater profits. This is particularly in the fast moving consumer goods market. The circular economy will reduce volatility and provide greater security of supply and a new demand for business services;
  • In ports, the circular economy would see more efficient use of space and property, increased recycling, far more intelligent use of autonomous systems in ships, terminals and transport and the use of transport and surveillance drones and intelligent monitoring systems with resultant efficiencies;
  • In Columbus, Ohio, they have committed themselves to ridding the city of privately-driven vehicles by 2030. This in turn means houses, business and streets will not need designated parking spaces. The same vehicles that will act as public transport during the day will act as retail and commercial delivery vehicles by night.

    Framework in South Africa

    The development of sustainable cities and ports takes place against the backdrop of the integrated urban development framework. This is a policy initiative of the Government and co-ordinated by the Department of Co-operative Governance and Traditional Affairs. The framework intends to foster a shared understanding across government and society about how best to manage urbanisation and achieve the goals of economic development, job creation and improved living conditions.

    The framework’s key publication comments: “The 21st century is the urban century. It is important that we put in place mechanisms to respond to this urbanisation trend in a way that helps us to reap the benefits of urbanisation while minimising the impacts of badly managed urbanisation”. The framework’s principles are echoed in the National Development Plan which aims to eliminate poverty and reduce inequality by 2030.

    From a ports perspective, any development takes place against the backdrop of Operation Phakisa.

    The Rockefeller Foundation supports an initiative known as the 100 Resilient Cities, one of which is Durban. Others in Africa include Cape Town, Addis Ababa, Dakar, Lagos and Nairobi. This initiative is designed to study and report on the cities that are successful in responding to the challenges of urbanisation.

    Ports of wonder

    The drivers for the ports of the future are going to be bigger vessels, broader carrier alliances, container capacity consolidation and larger hub and spoke networks. These will change costs and the way profits are generated from operations. In response to these drivers, ports have to question how they going to manage increased investment along with demands for improved productivity and higher levels of service.

    The current linear approach to development means simply increasing the size and scale of everything. Improving productivity will, however, require significant investment in new technology and changes in the way it is used. Port operators of the future will be managing far more IT than in the past. In doing so, they will leverage cloud-based networks to connect with far more shipping and resource partners. This is in order to process huge amounts of data to improve the planning, control and execution of the operations.

    In the port of the future, transhipment hubs will play a critical role. We have already seen the development of hub-and-spoke networks and these are going to continue. In addition, those ports are going to be a critical part of the overall system to move containers between the different modes of transport including feeder vessels, rail and road.

    Carrier vessel networks will use advanced connected systems which provide flexibility and visibility across the entire vessel and port networks. Advanced tools will integrate vessel terminal and port data to help carriers and terminals optimise the assets utilisation and reliability.

    Automatic processing of cargo information will provide transparent container movement and efficiency and allow for notification and to identify opportunities for improvement.

    In the port of the future vessels will be constantly and reliably connected to the internet and can be automatically routed and controlled to increase sailing performance and vessel utilisation while managing for conditions that affect sailing in cargo handling performance such as trim, weather and lashing.

    Of the total port stay, currently 62% is accounted for by terminal operations and the remaining 38% is spent waiting for vessel services, berthing and steaming in and out. This time could be significantly reduced.

    This will require a productivity quantum leap at container terminals. Computing power should assist with real time decision making. New technology and interfaces will help address bottlenecks and congestions before they impact performance. Carriers, alliances, ports and inland transport operators can share data for vessel and stowage planning.

    We share the view that Africa is the place for investors for the foreseeable future.

    We have massive infrastructure needs across the continent. South Africa is ideally placed with its existing port infrastructure and intellectual capacity to be the leading hub into Africa and to be a leader and investor in ports in the rest of Africa since Africa hopefully will need more than one major hub at its bottom end.

    Despite recent developments in the US, Europe and the Middle East, globalisation seems to be the only strategy by which humans and the world will develop and survive. We need to be competitive and invest heavily in capacity and assets. There has to be a move towards holistic planning of ports and sustainable cities.

    The investment horizon for projects of this nature is not five or ten but 50 years. Norton Rose Fulbright is the only legal member of the long-term investment council based in Paris which is looking into investments in excess of 20 year assets.

  •  By Malcolm Hartwell, Director and Master Mariner, Norton Rose Fulbright
    July 2017
    Norton Rose Fulbright South Africa Inc