INSIGHT OCTOBER 2016

THE INTERNET OF THINGS IN TRANSPORTATION

PORT OF HAMBURG CASE STUDY
The rise of the internet since the early 1990s has sensors; better connectivity allows for fast transfer
completely revolutionized modern society and has of large quantities of data; centralized cloud storing
had profound changes on the way we live and the and data analytics lower the threshold to big data
way we work. Scientists and leaders of industry management, and extended battery life allows
agree that we are now at the dawning of a new more physical objects to be connected. No wonder
technological revolution: the Internet of Things enterprise IoT deployments have grown by more
(IoT). than 400% since 2012i, with businesses in the likes
of Cisco, GE, IBM, Samsung, Google, Intel, Oracle
IoT basically consists of adding sensing and
making IoT investment a priority through R&D and
communication capabilities to a wide range of
the acquisitions of IoT start-ups. Continuous
physical objects and connecting these objects to
innovation is further being driven by the
each other over the internet so that they can
democratization of R&D financing through models
monitor their environment, report their status,
such as Kickstarter and Indiegogo, and peer-to-peer
receive instructions, and even take action based on
learning through open source electronic
the information they receive. Thus, any object can
prototyping (such as Arduino). So far, we are only at
theoretically be turned into a source of information
the beginning of the IoT revolution. The number of
about that object. Using big analytics then reveals
smart devices connected to the internet is expected
new meaningful information and insights on how
to rise exponentially to anywhere between 24 and
these physical objects work and interact, which in
50 billion in 2020, with computers, smartphones
turn allows us to improve their functioning.
and tablets representing only 17 per cent of this
Furthermore, machine to machine (M2M)
figure (and the rest being all other physical objects
communication between devices combined with
like clothing, furniture, automobiles, home utilities,
cross-platform data analytics allows these devices
etc.).ii iii
to interact with each other, much like humans have
been interacting over the internet during the past
decade.

In this Insight Paper Sia Partners explores the role of

IoT in the sector of transportation and logistics,
which is one of the early adopters of the technology.
More specifically, the benefits, challenges, and
lessons of IoT implementation in the industry are
detailed in a case study on IoT in the Port of
Hamburg.
Transport sector leading the way
Of the estimated €16,8 trillion value at stake in IoT
over the next decade, roughly one tenth of that
value is attributed to IoT in transportation and
logistics.iv The sector is currently at the forefront of
implementing IoT technologies, and has been quick
to adopt it. This because innovation is a necessity to
stay ahead, to increase bottom-line, and maintain
to customer loyalty in this typically low-margin
fragmented industry. IoT is perfect for meeting the
The Rise of IoT need of increased supply chain transparency and
rapid decision making in widely distributed
The sector has enjoyed a strong market demand for
networks.
innovative digital solutions, aided by an ever
increasing technologic adaptiveness of modern IoT in transportation started with track-and-trace
society, high availability of resources and falling GPS technology to track shipments, and was further
tech costs. This has led to rapid technological advanced with the introduction of RFID. Nowadays,
advancement in the form of more diverse and IoT technologies can be seen across the entire
efficient technologies: increased sensor quality logistics value chain including warehousing, freight
means extended sensing capabilities in ever smaller transportation, and last mile delivery.

Sia Partners | INSIGHT | THE INTERNET OF THINGS IN TRANSPORTATION

PORT OF HAMBURG CASE STUDY| October 2016| 2
 IoT in the Port of Hamburg Smart Port Logistics
One institution in transportation leading the way in Smart Port Infrastructure
incorporating IoT is the Port of Hamburg. As one of
the busiest ports in Europe (along with Rotterdam As an investment in smart port infrastructure, the
and Antwerp), modernizing through technological HPA is embedding sensors and communicative
innovation is vital to the Hamburg port to maintain capacities in the port’s main tangible assets. This
business growth and its international includes smart lighting, which illuminates only those
competitiveness while minimizing the port’s areas necessary, based on motion detection, which
externalities on the city’s inhabitants. The port is a saves energy costs. Even further, lighting could in
major economic driver for the region and the
the future automatically be adjusted so that extra
country. It comprises about one-tenth of the total
emphasis is placed on specific objects or locations
area of Hamburg city, has over 260 thousand jobs
that require attention during an activity, fed by an
dependent on it in Germany, and generates over
€750 million in yearly tax revenue for the city of intelligent system which knows exactly what type of
Hamburg.v The port handles the usual product mix activity is taking place.
of containers and bulk cargo (dry and liquid), both
Sensors monitoring the use of assets (e.g. trucks,
of which see a continuously steady increase in
cranes, carriers, roads, etc.) and infrastructure (e.g.
volume. Containers passing through it are expected
to rise from 8 million in 2010 to 25 million in 2025, roads, parking lots, warehouse storage rooms, etc.)
and total cargo handled from 121 million tons in identify recurring underused capacity and allow for
2010 to 296 million tons in 2025.vi The port is also making adaptations to optimize utilization by e.g.
an important node for the tourism industry as per relocating assets or rerouting goods flows. Smart
year around 500 thousand cruise passengers arrive storage systems with temperature, humidity,
and leave from there.vii ventilation, and barometric pressure sensing ability
in warehouses or containers can detect the needs of
The expected rise in traffic means that annual the cargo they contain and adjust these factors to
handling capacity must be upgraded, but space increase product quality and decrease cargo
limitation due to the location of the port in the heart damage. Cameras, opening sensors, and heat
of Hamburg city means that this capacity increase
detection sensors along with alarm systems on the
must be derived mostly from a volume-adequate
other prevent theft, and provide solid input for
increase of productivity. At the same time, the
planning security improvements.
negative externalities (e.g. traffic congestion,
pollution, and road safety) caused by the seaport’s The life-cycles of port assets and infrastructure are
activities on the lives of local citizens must be extended, and the likelihood of defects that
minimized, as well as the environmental impact of
influence normal port activity is drastically reduced
the port. In summary, the goal is to create a more
due to smart maintenance systems. Smart
efficient, safe, and low-cost port environment.
maintenance systems track the usage and wear-
The strategic and operational plan detailing all and-tear of fixed assets, and can pre-emptively
ongoing and future projects aimed at achieving this detect damages and malfunctions, saving
goal are specified in the 2025 Port Development tremendous costs on reparation, replacements, and
Plan issued in 2012 by the Hamburg Port Authority mitigation in case of a breakdown. They also extend
(i.e. the entity in charge of strategic planning, the life-cycles of port assets and infrastructure, and
management, and governance of the seaport; reduce the likelihood of defects that would disturb
henceforth “HPA”). The report contains a detailing the normal flow of activity in the port.
of many non IT-related schemes that will aim to
modernize and upgrade port infrastructure, and Finally, smart energy management is also a priority
introduce green practices (e.g. renewable energy) in in moving towards a greener port, with Hamburg
the port. Further, it also details the planned port accounting for over 40% of Hamburg’s total
evolution towards a smart port, on which work energy consumption. As part of this plan, certain
started in 2011. This smart port consists mainly of key infrastructure is equipped with smart meters
three smart logistics pillars: Smart port that can monitor and control energy use by
infrastructure, intelligent traffic flows and adjusting factors like temperature, pressure,
intelligent trade flows.viii
electric drivers, etc. Smart energy efficiency
systems should allow the port to save a yearly
amount of 12 thousand tons CO2.ix

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PORT OF HAMBURG CASE STUDY| October 2016| 3
Traffic Management System Trade flows management
Over 40,000 truck trips strongly impact Hamburg Thanks to automatic radar identification and RFID,
port and city daily.x Managing this flow of traffic is port authorities know at all times what is moving
an important task to keep the port attractive for around in the port, what the origin and destination
business and the city attractive for its inhabitants. are of goods, what the expected delivery times are,
Starting in 2011 the Hamburg port authority placed and what port services need to be deployed for
300 sensors on roads and bridges to track and proper handling (i.e. how to load and unload cargo).
manage the roadway traffic in the port. These Data mining allows for the optimization of not only
provide the Port Road Management Center cargo routing, but also material handling schedules
continuous updates on the status of bridges (i.e. to minimize handling time. This information is
open/closed) and traffic throughout the port. This shared with all parties involved in the movement of
data allows the traffic management system to make the goods through an integrated cargo information
efficient decisions on directing traffic flows to platform. Status sensors on cranes, pallet loaders,
optimize routs, and therefore minimize congestion etc. help determining optimal asset use. Thanks to
and transit time for all customers. Traffic lights can GPS and geo-referencing, pick-up services or
be adapted accordingly and digital road signs warehouses can automatically be alerted of delays
currently communicate proposed directions, and to readjust delivery or inbound schedules, and
currently HPA is working on directly suppling this adapt handling requirements (e.g. for sensitive or
information to the drivers’ smartphones or on- perishable goods); and status sensors on cranes,
board computers. Similarly, parking pallet loaders, etc. The same technologies along
recommendations, which are made based on with intelligent visual inspection also aid in reducing
continuous parking space monitoring, allow all port the amount of physical checks needed at custom
visitors to find parking with ease. Automatic radar control points, which in turn reduces labor costs and
identification of ships and speed detection even time at customs.
imply that the traffic management can be done
using not only the as-is status of bridges, but also Partnership Structure
the to-be status, which optimizes traffic even
For the development of the smart port, HPA has
further in accordance with predicted delays. Thus,
worked with a large variety of partners. A first
bridges can be planned to open and close just in
important partner is the city of Hamburg. The smart
time, and open only as much as needed for the ship
port development runs parallel with the IoT
to pass, and this same information is used for the
development in the city of Hamburg, which is
routing of traffic. Mining of aggregated data over a
currently moving to the smart city model by
longer time period then allows the Port Road
implementing e.g. smart lighting, bridges, parking
Management Center to improve journey time
lots, etc. Since the port is in the middle of Hamburg
predictions, and plan future traffic infrastructure
city and outgoing as well as inbound traffic to some
investments or modifications to further optimize
extent pass through the outer city streets, it makes
traffic flow. The Nautical Control Center on the
sense for the city and port’s traffic systems to be
other hand is the entity charged with the
aligned and communicate. Besides direct
management of water traffic. Sensor-collected
involvement in the smart port, the city and state of
information on the conditions of the River Elbe, and
Hamburg as well as the Federal Ministry of
the vessel traffic on port waters is continuously fed
Transport, Building and Urban Development of
to the center, which can in turn share this
course also play a pivotal role to the port’s
information with all vessels to assure smooth sailing
economic viability through the maintenance and
on its waters. Lastly, the Rail Supervision
expansion of inland transport infrastructure, and
Headquarters similarly manage the rail transport.
the expansion and modernization of industrial parks
Initially, road, rail and water IoT traffic systems were outside the port area.
developed and implemented separately. Currently,
Besides public partnerships, HPA has also formed a
HPA is moving towards an intermodal traffic center
range of private partnerships with technology
by integrating these systems and allowing for data
providers for the development of the smart port, to
interchange and feedback loops between them, as
allow fully integrated customized solutions to be
the different transport modes obviously interact
built. HPA’s main IT solutions providers are Cisco,
with each other and cannot be seen as stand-alone.
SAP, and Deutsche Telekom.

Sia Partners | INSIGHT | THE INTERNET OF THINGS IN TRANSPORTATION

PORT OF HAMBURG CASE STUDY| October 2016| 4
Smart Port Challenges benefit of the change, and learn how to work within
the new system. Prototype testing with small-
Below we list some of the main challenges HPA has technology integrations that can offer an insight
had with the implementation of IoT in the port. into the functionality and benefits for example have
proven to be an effective strategy to deal with this
Heterogeneous technologies
issue.
Creating a smart network of things that interact
with each other requires the integration of many Best Practices
different technologies proprietary to different
As well as alerting us to some of the challenges of
business processes, different actors in the logistical
IoT, Hamburg’s smart port presents a useful case to
chain, and even different parts of the world. The
extract a few important lessons for the industry.
large disparities in data types, as well as the
Firstly, key to developing a cohesive IoT system is an
different types of equipment, operating systems,
inclusive stakeholder approach that incorporates
and technological standards pose a great challenge
the requirements of all stakeholders affected by the
for centralized data management and interchange.
business change (i.e. shippers; trucking, rail, and
In order to resolve this issue, HPA’s IT providers
ocean carriers; customs authorities; terminals;
need to continuously work on the development of a
contract warehouses; parking providers; port
uniform central intelligence system, that is able to
officials; city of Hamburg, industrial companies
communicate with all connected devices in a
across the port; citizens; etc.). IoT projects are
common language. Key here is focusing on a
typically long-term investments, but this must be
modular approach and open technology standards,
done right from the start with the reengineering of
which enable the platform to continuously add new
business processes. First step is identifying the main
modules that can be integrated within the existing
business need which the IoT system should adhere
system. It is because of this that HPA’s technologic
to, followed by a detailing of the to-be business
partnership structure consists of a limited number
process, and then an operational analysis for
of providers who provide multi-dimensional
identification of the main technological
services over a long servicing period.
requirements. Cross-functional teams are
Fear for transparency especially useful here to consider the full range of
business requirements, IT-elements, and the
The IoT is a technology dependent on the free flow regulatory environment, and provide an end-to-end
of data from smart devices to a central platform view. As it is unlikely that a single vendor can supply
that coordinates the aggregation, analysis, and all the elements necessary for a seamless IoT
interchange of this data. However, many competing solution, a strong partnership structure must be
firms pass through Hamburg’s port, and they are developed with dedicated professionals, as well as
often very hesitant to share information with a with public institutions. Proper change
central authority that will aggregate this management is also critical to gain the support of all
information with that of competitors. Therefore, stakeholders, alleviate transparency issues, and
HPA has had to invest heavily in not only providing make sure all concerned actors properly adopt the
a secure data management system that only shares new technologic adaptations. Finally, a flexible
relevant data with the concerning parties through modular approach must be a priority to allow
an encrypted approach, backed up by project oriented development of IoT to evolve into
confidentiality agreements, but also a fully integrated system with cross-platform
communicating this clearly to these same operability, which encompasses all heterogeneous
companies. business processes (verticals and horizontals),
parties, technologies, and modes of transport to the
Business process reengineering (BPR)
same network. This requires special attention to the
IoT requires not just the adoption of a new early development of standards and protocols
technology, but the rethinking and reengineering of regarding the characteristics of the sensors, the
entire business processes linked to it. This poses an format of the collected data, etc. The end goal
obvious challenge, which requires much time and should be to create a cross-functional extended
effort to get right, along with input and feedback supply chain view that begins with a shipment from
from all stakeholders. Proper change management another port and can extend to inbound truck
here is also critical to get the stakeholders to see the drivers hundreds of kilometres outside of the port.

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PORT OF HAMBURG CASE STUDY| October 2016| 5
 preventing collisions, signalization of fatigue, etc.)
Conclusion and workers (e.g. connected forklift to prevent
The Internet of Things is indeed the “next big thing” collisions). Nevertheless, much of the potential of
to take over the world of business in the next IoT is currently still beyond our imagination, and
coming decades, as we will witness the rise of smart only time will tell how this technologic evolution will
homes, smart factories, smart cities to what shape itself.
futurists call the “smart planet”. Business IoT
However large the benefits of IoT might be, the road
solutions will be widely adapted in manufacturing,
to getting there is not without challenges. For one,
agriculture, healthcare, infrastructure, mobility,
there are many blind spots we do not yet see. Public
warehousing, retail, energy, communications,
policy around the topic is also lagging, which leads
transportation, and beyond.
to uncertainties for many businesses. Technical
On a personal, IoT can help us to save time, increase issues are a major hurdle to be overcome (e.g.
our health, comfort, convenience, safety, and constraints on the number of available IP addresses
knowledge, as well as raise our productivity and for connected devices, inter-operability between
increase our customer experience for many heterogeneous technologies), and for IoT
services. It can support environmental sustainability technologies to really take off, they will need to be
by saving resources and energy, while decreasing highly functional: i.e. robust, and easy to install,
waste. In business, it presents the opportunity to configure and use (e.g. “plug-and-play”). Security
increased knowledge, which in turns leads to better and privacy are major issues, as connecting things
and faster decision making, more efficient business to the internet opens possibilities to gain
processes, and the identification of new value unauthorized access and control to those things, as
sources. IoT is also the next step towards large scale well as valuable information theft. Thus,
automation, especially when combined with cybersecurity will be an integral part of every IoT
machine learning. It can bring forth significant cost project. Finally, despite falling tech-costs, one
savings by e.g. eliminating redundancies (e.g. empty cannot underestimate the costs related to all the
miles) and waste, improving asset efficiency (e.g. hardware, software, security, design, data¬ flows,
platooning xi ) and expanding life cycles, and supporting infrastructure (e.g. data storage, &
maximizing asset utilization. It also allows analytics), business process reengineering, and
businesses to better identify opportunities and change management.
anticipate threats, and completely reimagines the
The case study of the Hamburg smart port has
control they can exert over their assets. In
proven that given the right approach, investing in
transportation, IoT can help to fulfil orders right (i.e.
IoT will yield results. Already, carriers and logistic
right products, time, place, quantity, quality), can
providers are noticing a fall in their time spent in the
decrease lead times and generally makes supply
port thanks to the increased operational efficiency.
chains more flexible and adaptable. It can help
Finally, given the indispensable role that the
avoid stock-outs through improved real-time
internet has come to occupy in our personal lives
information on inventory levels in combination with
and in business in its short existence, a future where
automatic replenishment, and anticipatory
things communicate and interact online just as we
shipping. It can also increase the safety of drivers
do now is not as far off as some might think.
(e.g. assisted driving or automated driving

Port of Antwerp’s NxtPort Initiative xii xiii

The Port of Hamburg is obviously not the only global port with large-scale data management and IoT plans. Among others,
Rotterdam started investing heavily in information exchange systems and a centralized data communications platform in
2009 through its Portbase initiative. Antwerp is also stepping up its game to increase the efficiency of nautical and hinterland
port logistics through the recently announced creation of a digital data interchange platform, named NxtPort. Currently in
project phase and driven by Flemish sector organization Alfaport VOKA, the aim is to create a financially self-sustaining data-
commercialization company that will gather, centralize, store, analyze and exchange data from a wide variety of logistic actors
in the port (i.e. shipping agents, freight agents, warehousing, customs, etc.), and thus create windfall profits through its data
insights for each of these players. The project is currently being initiated with four applications that are meant to test and
prove the added value of NxtPort: predicted ship arrival times, container weights signalization, digital transport instructions,
and predicted container pick-up schedules.

Sia Partners | INSIGHT | THE INTERNET OF THINGS IN TRANSPORTATION

PORT OF HAMBURG CASE STUDY| October 2016| 6
YOUR CONTACTS

ROEL PEETERS SEBASTIAAN BAECK

Senior Managers Consultant

+ 32 477 20 51 51 + 32 2 213 82 85
Roel.Peeters@sia-partners.com Sebastiaan.Baeck@sia-partners.com

ABOUT SIA PARTNERS

Founded in 1999, Sia Partners is an independent global management consulting firm with over 700 consultants
and an annual turnover of USD 125 million. The Group has 17 offices in 13 countries, including the U.S., its second
biggest market. Sia Partners is renowned for its sharp expertise in the Energy, Banking, Insurance, Telecoms and
Transportation sectors.
For more information visit: www.sia-partners.com . Follow us on Twitter @SiaPartners

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PORT OF HAMBURG CASE STUDY| October 2016| 7
i
Forrester Consulting, 2014, Internet-Of-Things Solution Deployment Gains Momentum Among Firms Globally,
https://www.zebra.com/content/dam/zebra/press-releases/en-us/2014/zebra-tlp-final.pdf.
ii
DHL & Cisco, 2015, Internet Of Things In Logistics,
http://www.dhl.com/content/dam/Local_Images/g0/New_aboutus/innovation/DHLTrendReport_Internet_of_
things.pdf.
iii
Business Insider, 2016, Here’s how the internet of things will explode by 2020,
http://www.businessinsider.com/iot-ecosystem-internet-of-things-forecasts-and-business-opportunities-2016-
2?IR=T
iv
Cisco, 2013, Internet of Everything,
http://internetofeverything.cisco.com/sites/default/files/docs/en/ioe_vas_public_sector_top_10%20insights_1
21313final.pdf.
v
Hamburg Port Authority, 2012, The Port Development Plan to 2025, http://www.hamburg-port-
authority.de/de/presse/broschueren-und-publikationen/Documents/port-development-plan2025.pdf.
vi
Hamburg Port Authority, 2012, The Port Development Plan to 2025, http://www.hamburg-port-
authority.de/de/presse/broschueren-und-publikationen/Documents/port-development-plan2025.pdf.
vii
Marco Ferretti Francesco Schiavone , (2016),"Internet of Things and business processes redesign in
seaports: The case of Hamburg", Business Process Management Journal, Vol. 22 Iss 2 pp. 271 – 284.
viii
Marco Ferretti Francesco Schiavone , (2016),"Internet of Things and business processes redesign in
seaports: The case of Hamburg", Business Process Management Journal, Vol. 22 Iss 2 pp. 271 – 284.
ix
Hamburg Port Authority, 2015, Energieeffizienz und Smart Energy, http://www.hamburg-port-
authority.de/de/smartport/energy/Energieeffizienz/Seiten/default(Standard).aspx.
x
Forbes, 2016, The Hamburg Port Authority's Impressive IoT Project,
http://www.forbes.com/sites/stevebanker/2016/04/01/the-hamburg-port-authoritys-impressive-iot-
project/#5e02bd0d3d4c.
xi
Sia Partners, 2016, Platooning toward sustainable road freight transport, http://transport.sia-
partners.com/20160712/platooning-toward-sustainable-road-freight-transport.
xii
Flows, 2016, Privésector Antwerpse haven bundelt krachten in NxtPort,
http://www.flows.be/nl/trade/privesector-antwerpse-haven-bundelt-krachten-nxtport.
xiii
Flows, 2016, NxtPort-partners willen van Antwerpen maritieme Silicon Valley maken,
http://www.flows.be/nl/shipping/nxtport-partners-willen-van-antwerpen-maritieme-silicon-valley-maken

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