PORT COMMUNITY PORT SYSTEMS COMMUNITY SYSTEMS LESSONS FROM GLOBAL EXPERIENCE LESSONS FROM GLOBAL EXPERIENCE EDITORS Satya Prasad Sahu Periklis Saragiotis Pascal Ollivier T H I S W O R K W A S S U P P O R T E D B Y T H E T R A D E FA C I L I TAT I O N S U P P O R T P R O G R A M ( T F S P ) I N PA R T N E R S H I P W I T H : Editors Pascal Ollivier, Satya Prasad Sahu, Periklis Saragiotis 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of the World Bank with external contributions from the International Association of Ports and Harbors (IAPH). The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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It provides an overview of global experiences and offers a set of guiding principles to help inform stakeholders in maritime trade and pave the way to reform the national trade facilitation and logistical framework. ii Port Community Systems  iii Port Community Systems PHOTO BY: © 2014 GYN9037/SHUTTERSTOCK  iv Port Community Systems Acronyms ACCS Air Cargo Community Systems NTFC National Trade Facilitation Committee AEO Authorized Economic Operator OGA Other Government Agencies B2B Business to Business PCS Port Community System BCO Beneficial Cargo Owner PCSO Port Community Systems Operator DCSA Digital Container Shipping Association PPP Public-Private Partnership DSI Digital Standards Initiative (of ICC) SIDS Small Island Developing States EDI Electronic Data Interchange SPS Sanitary and phytosanitary EMSA European Maritime Safety Agency SSP Single Submission Portal EU European Union TEU Twenty-Foot Equivalent Unit IAPH International Association of Ports and TFA Trade Facilitation Agreement Harbours TOS Terminal Operator System IATA International Air Transport Association TRS Time Release Studies ICAO International Civil Aviation Organization TSW Trade Single Window ICC International Chamber of Commerce ULD Unit Load Device ICT Information and Communications UML Unified Modeling Language Technology UN EDIFACT United Nations rules for Electronic IMO International Maritime Organization Data Interchange for Administration, IPCSA International Port Community Systems Commerce and Transport Association UN/CEFACT United Nations Centre for Trade ITPCO International Taskforce on Port Call Facilitation and Electronic Business Optimization UNECE United Nations Economic Commission JSON JavaScript Object Notation for Europe LEI Legal Entity Identifier WBG World Bank Group MSME Micro Small, and Medium Enterprise WCO World Customs Organization MSW Maritime Single Window WCO SAFE WCO Framework of Standards to Secure and Facilitate Trade NTFB National Trade Facilitation Body  v Port Community Systems About the Lead Authors Satya Prasad Sahu is a Senior Trade Facilitation Specialist with the World Bank’s Global Practice on Trade and Regional Integration. He specializes in the use of ICT in trade facilitation and works extensively on projects and analytical activ- ities concerning digitalization of international trade, transport, and regulatory procedures. Periklis Saragiotis is a Senior Private Sector Specialist with World Bank’s Global Practice on Trade and Regional Inte- gration. He has a firm understanding of global trade and transport logistics trends, challenges, and opportunities and possesses extensive experience on trade facilitation compliance policies, especially in relation to the Trade Facilitation Agreement of the World Trade Organization. Olivier Hartmann is a Senior Private Sector Specialist with World Bank’s Global Practice on Trade and Regional Inte- gration. He specializes in transport and logistics services reforms along international corridors, working on analytical activities and World Bank investment operations in transport and trade facilitation. Daniel Saslavsky is a Senior Economist with the World Bank’s Global Practice on Trade and Regional Integration. He specializes in trade logistics and connectivity and works on projects and analytical activities aimed at improving the efficiency and delivery of infrastructure services supporting cross border trade. Pascal Ollivier is President of Maritime Street, and advisor to international financial institutions on the digital port infrastructure and maritime trade supply chain. He is the chairman of the International Association of Ports and Harbors (IAPH) Data Collaboration Committee, where he is leading digitalization initiatives with the International Maritime Organization, the World Customs Organization, the World Bank, and the World Economic Forum. Natalie Gupta works as an Independent Consultant through her own company Port Processes Limited, focusing on ports and shipping and trade facilitation and the energy transition with a particular focus on hydrogen derived fuels. She has previously held corporate roles in Abu Dhabi Ports and Yara Clean Ammonia. Natalie has a PhD in Development Economics and MSc in Finance and Financial Law. Acknowledgments vi Port Community Systems Acknowledgments This report was a collaborative effort between the World Bank and the International Association of Ports and Harbors (IAPH). The World Bank team was co-led by Satya Prasad (SP) Sahu, Senior Trade Facilitation Specialist, Periklis Saragiotis and Olivier Hartmann, Senior Private Sector Specialists, Daniel Saslavsky, Senior Economist, and Natalie Gupta, Consultant. The IAPH team was led by Pascal Ollivier, President of Maritime Street and Chairman of the IAPH Data Collaboration Committee. The team would like to express its sincere appreciation to the Secretariat of the International Port Community Systems Association (IPCSA) for its valuable support in connecting the World Bank-IAPH team with its members. The assistance provided by the following members has greatly contributed to the review and quality assurance process, and their substantive contributions have been highly valuable. Javier Gallardo Chairman IPCSA & Director, Portic, Barcelona PCS Nico De Cauwer Secretary General IPCSA & Business Architect Digitalization & Port Community Projects Inga Morton General Manager IPCSA Hans Rook Former Chairman, IPCSA Justin T Wardle Port Manager at RAK Ports Group, UAE Mees van der Wiel Senior International Advisor, Digital Container Shipping Association (DCSA) Alexandre Sánchez PCS Director, Port Authority of Valencia Sven Reimers Business Development, DAKOSY AG Dmytro Iakymenkov Specialist, Standards in Data Modelling & Business Processes, Ukraine Remi Julien Président du directoire, MGI (Marseille Gyptis International) Amar More CEO, Kale Logistics Solutions Private Ltd. The lead authors thank the following experts for their substantive contributions to the preparation of this report: Chris L Wellisz Communications Specialist, World Bank Marc Juhel Senior Transport Specialist, Wind and Tides Prakhar Bhardwaj STC, The World Bank Julian Abril Head of Facilitation, International Maritime Organization Martina Fontanet Technical Officer, Facilitation, International Maritime Organization Eranda Kotelawala Chief Executive Officer, Solomon Islands Ports Authority and South East Asia and Ocean, Vice President, IAPH Patrick Verhoeven Managing Director, IAPH Gadi Benmoshe Managing Director of Marinnovators and Vice-Chairman of IAPH Data Collaboration Committee Glenn Roach Secretary General, Port Management Association of the Caribbean Lance Thompson Head, Regulatory Cooperation and Standardization Policies Support Unit, UN ECE Kyung-cheol Park Senior Director of ICT department, Busan Port Authority Min-su Jeong ICT manager of ICT department, Busan Port Authority Eung-hyuk Lee Director of Marketing & International affairs, Busan Port Authority Kang-hee An Deputy General Manager of Logistics Policy Department, Busan Port Authority Kate Mun Kate Kyung Ae Mun Chief Maritime Consultant at 2Tribes Communications Iwan van der Wolf Chief Executive Officer, Portbase Acknowledgments vii Port Community Systems Franz Van Zoelen Seasoned Legal Specialist in Port and Maritime Industry - Head Legal Emeritus at Port of Rotterdam Authority Sriram Ramanujam Assistant Vice President, PSA Global Peter Bresseleers Managing Partner Port Expertise Dwain Powell Director Jamaica PCS, Vice President, Port Authority of Jamaica Nikane Peck Operations Manager, Jamaica PCS, Port Authority of Jamaica Andre William Chief Information Officer, Jamaica Customs Agency Ed March Supply and Logistics Advisor and former Vice President Business Develop¬ment, Logistics and Supply Chain Port Authority of Jamaica Juan Marcos Mancilla Medina Logistics Manager, Empresa Portuaria Valparaíso Rosa G. Gonzalez Ramirez Associate Professor, Universidad de los Andes Rajeev Puri Executive Director, ICT, Indian Port Association Abhijit Desai Portall, PCS 1.x India Nikita Singla Bureau of Research on Industry and Economic Fundamentals Pritam Banerji WTO Inistitute, India Youssef Ahouzi Chief Executive Officer, Portnet Tarik Maaouni Chief Information Officer, National Port Authority of Morocco Karim Gharbi Senior Consultant Trade Facilitation, MSS Stephane Gaudechon Vice President Government Services, Bureau Veritas Niaty-Mouamba Maurice SITRASS, Republic of Congo Warsama Guirreh Chief Executive Officer, Djibouti Port Community System Achaa Abdillahi Ahmed Doyenne de l’Institut Universitaire de Technologie Tertiaire, Université de Djibouti Jean-Pierre Herault President, GIPANC Christine Tivollier Director, GIPANC Guillaume Ostermann Project Manager Officer, MGI Sonia Lecomte Deputy Director New Caledonia, French Customs Ronen Mualem Maritime Applications Manager, Israel Port Company Jerome Besancenot Digital Transition Project Director, HAROPA Darlin Gaitan Ports Commissioner, Belize Port Authority Gerhard du Plessis Manager, Business Applications and Processes, Namport Frank Janssens Senior Consultant - International expert on Trade Facilitation and Customs modernization & Former Head of Unit, DG TAXUD, European Commission Alan Long Director at Collabor8 Consultancy Services and former chief executive officer, MCP Felixstowe, & former Chairman IPCSA Prof. Valentin Carlan Program manager master Maritime and logistics management at the University of Antwerp Prof. Kerri Ahn Head of Research and Development, The K Consulting Glyn Hughes Director General at The International Air Cargo Association Henk Mulder Head, Digital Cargo, International Air Transport Association Christian Piaget Head, Cargo Border Management & Claims at International Air Transport Association Luc Scheidel Cargo Strategy Director at Amsterdam Airport Schiphol Houmed Mohamed Ali Director of Operations, Djibouti Port Community System Matthew Bradley Managing Director, Community Network Services Claudio Pinto Chief Information Officer and PCS Director at Port of Sines Luis M. Ascencio Director, LMAC, Chile Francisco Dominguez General Manager, DR Trade Acknowledgments viii Port Community Systems Alaa AlTef Senior Manager, Business Development, Dubai Trade World Fayez Maarrawi Senior Manager, Business Development, Dubai Trade World Vineet Malhotra Kale Logistics Peter Johns Director, ESI DLI Piper Africa Francisco Ruiz General Coordinator VUCE 2.0, Ministry of Foreign Trade and Tourism of Peru Natalia Teruya Manager, Maritime Single Window VUCE 2.0, Ministry of Foreign Trade and Tourism of Peru John Kerkhof Project Manager, Portmade NV Uwe Liebschner Senior Director Operations, LKL E-Clearance Services GmbH Andrea Minardi Chief Information Officer, Port of Ravenna Authority Niels Postma Program Manager, Harbour Master Next Generation, Port of Rotterdam Additionally, the team would like to- thank Luc Scheidel from the Royal Schiphol Group, Henk Mulder and Cristian Piaget from IATA, Amar More from Kale Logistics, Jean Verheyen, Cristina Toscano, and Joke Aerts from Nallian for providing information that supported the drafting of Chapter 12 on Air Cargo Community Systems. We would also like to express our gratitude to Glyn Hughes of TIACA for providing feedback on this chapter. Furthermore, this chapter incorporates inputs from an earlier unpublished work conducted by James Friedel, a consultant to the World Bank. His work included extensive consultations with industry stakeholders and experts, making his contributions invaluable. The lead authors would like to express their appreciation for the support and guidance provided by Richard Martin Humphreys, Lead Transport Economist, Ninan Oommen Biju, Senior Ports Specialist, and Fung Ying Ho (Serene), Senior Digital Development Specialist at the World Bank. Lastly, the lead authors and contributors extend special thanks to the World Bank’s leadership team for their constant encouragement. We would like to acknowledge Mona Haddad, the Global Director of Trade and Competitiveness, Nicolas Peltier, the Global Director of Transport, Sebastien Dessus, the Practice Manager of Global Trade and Regional Integra- tion, and Antonio Nucifora, Practice Manager of Macroeconomics, Trade and Investment for Europe and Central Asia. We also appreciate the support of Subramaniam Karuppiah, the General Manager at Klang Port Authority and President of IAPH, and Patrick Verhoeven, Managing Director of IAPH, for their collaboration with the World Bank on this report. Contents ix Port Community Systems Contents Acronyms iv About the Lead Authors   v Acknowledgments   vi PCS Dimensions   xi Executive Summary   1 Preface   2 The Concept and Global Evolution of the PCS   3 Global PCS adoption landscape and trends   3 The Positive Impact of PCS   6 Building Blocks for Successful Implementation   8 A. PCS implementation framework   8 B. The enabling environment   8 Conclusion   13 PCS Fundamentals and Trends   15 1. Facilitating Trade via PCS Investments   16 2. Port Competitiveness and Trade Facilitation   17 Trade facilitation reforms and trade costs’ reduction   17 How Port Procedural Efficiency Facilitates Trade   18 The Complementary Role of Port Physical & Digital Infrastructure   19 3. The Strategic Role of PCS   20 Digital Collaboration in Port Logistics   20 Port Digitalization Roadmap   21 PCS Definition and Status Quo   22 PCS in the Port Digital Eco-System   25 The role of NTFCs in PCS Effectiveness   26 4. Salient Functions and Features of PCS   27 PCS Core Features   27 PCS Benefits   29 5. Global trends in PCS implementation   33 Lessons Learnt from Four Decades of PCS Experience.   34 Global Trade Challenges & PCS   37 6. Challenges of Implementation   38 7. The Future of PCS   40 Appendix 1. The Port Community & Port Services   42 Appendix 2. Operational Logistics And Regulatory Procedures Are Intertwined   44 Contents x Port Community Systems PHOTO BY: © 2017 MAGNIFIER/SHUTTERSTOCK Contents xi Port Community Systems PCS Dimensions PCS in SIDS Air Cargo Trade Process Technical The role Community Systems Efficiencies & Functional of Trade Architecture & Maritime (Special cases of PCS) Single Windows PORT COMMUNITY SYSTEM Implementation Enabling Framework Legal & Regulatory PCS 101 Framework Impact on Costing & Revenue Governance & Port & Customs Trade & Industry Structures Operating Models Cooperation PHOTO BY: © 2017 MAGNIFIER/SHUTTERSTOCK xii Port Community Systems EXECUTIVE SUMMARY Port Community Systems 1 Executive Summary 2 Port Community Systems Preface The emergence of the Port Community System (PCS). The financial, governance, and legal aspects of their deployment. PCS represents a pivotal development in the world of maritime Central themes of our analysis include strengthening Customs- trade facilitation and logistics. These sophisticated digital plat- port collaboration and optimizing trade processes through forms enable seamless exchange of information, coordination, PCS-enabled efficiencies. We also discuss the relationship and collaboration among the port community stakeholders. By with the trade and maritime single windows and provide tailored streamlining communication and automating data exchange, the implementation guidance for Small Island Developing States PCS drives efficiency, transparency, and security in the complex (SIDS). Lastly, the book extends the principles of the maritime ecosystem of global trade. As the volume of international trade PCS to the Air Cargo Community System (ACCS) and explains continues to grow, the implementation of the PCS has become how key learnings from one sector can benefit the other. This increasingly vital. This book digs into the complexities of these print publication summarizes the core concepts of PCS and platforms and examines their roles in shaping the future of inter- serves as an introductory guide, with the remaining chapters national trade and supply chain management. and case studies available on the official World Bank website. Demystifying the concept, functionalities, and impact. Confu- Leveraging the industry’s global expertise. We are deeply sion surrounding the PCS concept and the limited understand- grateful to the industry experts, academic researchers, and ing of its fundamental building blocks represents a significant policymakers for their invaluable contribution and support challenge for both policy formulation and industry practice. throughout the research and writing process. We are honored Conversations with stakeholders from diverse backgrounds to have collaborated with the IAPH and with their affiliated PCS revealed a lack of clarity on the functionalities, benefits, and operators as co-authors, benefiting from their vast experience potential challenges associated with the PCS. These experiences and knowledge. Special thanks are due to the International Port highlighted the pressing need for a comprehensive resource Community Systems Association (IPCSA) for their unwavering that demystifies the PCS and provides practical guidance on commitment to promoting innovative solutions for efficient, their establishment, operation, and integration into existing port secure, and sustainable maritime trade, as well as providing ecosystems. The aim of this study is to bridge the knowledge constructive inputs into this book. gap, share valuable insights, and contribute to the sustainable development of maritime trade facilitation and logistics through How to use this publication. We strongly encourage port, effective PCS implementation. maritime and air industry senior executives and practitioners, international organization experts, government officials, and Contributing to the port digitalization knowledge base. The international consultants to explore the contents of this book. recent wave of port digitalization has accentuated the rele- By engaging critically with this content, we hope that readers will vance of this study, making it a timely and critical contribution emerge with a deeper understanding of the implications of PCSs to global dialogue. This study stands out as an essential resource on their own work and industry and find inspiration to explore that aligns with and complements the efforts of international new opportunities and approaches. organizations such as the United Nations Conference on Trade and Development (UNCTAD), International Maritime Organi- Candidate future analytics. The scope of this first attempt to zation (IMO), World Customs Organization (WCO), and World cover the PCS fundamentals is de facto limited. In future editions, Trade Organization (WTO) in promoting digital ports and trade we hope to explore the evolving role of emerging technologies in facilitation. By building on the recent World Bank-International enhancing PCS functionalities and capabilities, and techniques Association of Ports and Harbors (IAPH) report, “Accelerating for analyzing big data generated by PCSs to support informed Digitalization Across the Maritime Supply Chain”1 this publication decision-making for port logistics and trade facilitation. Finally, not only demonstrates a clear understanding of the existing we plan to delve deeper into the challenges and opportunities knowledge base, but also seeks to further expand it by providing associated with potential contributions to reducing carbon foot- valuable insights and recommendations. prints in support of green port initiatives. The scope of this study. The complete PCS study includes a number of thematic chapters and case studies2. We embark on a comprehensive exploration of the concept, evolution, and impact of the PCS in modern global trade. We delve into the strategies and best practices for implementing a PCS and examine the 1 World Bank. (2020). Accelerating Digitalization: Critical Actions to Strengthen the Resilience of the Maritime Supply Chain. World Bank 2 Available at the official website of the World Bank’s Trade and Regional Integration Department Executive Summary 3 Port Community Systems The Concept and Global Evolution of the PCS What is a PCS? A PCS is a digital platform designed to facilitate the 1990s, the focus shifted towards enhancing efficiency and and optimize the exchange of information and data between streamlining port operations, leading to the emergence of the a wide range of port stakeholders, including shippers, cargo second-generation PCS. Today, third generation PCSs have evolved owners, carriers, terminal operators, freight forwarders, clearing into sophisticated digital and cloud-based platforms that enable agents, port and maritime authorities, Customs administra- real-time information sharing, integrated logistics, and supply chain tions, and other regulatory agencies, allowing them to exchange visibility, among other capabilities. The need for the industry to data and enable data collaboration. The main purpose of a PCS use data to further reduce costs and time of international trade is to enhance the efficiency, security, and reliability of mari- channeled via ports triggered the technological evolution. time trade and logistics operations, by reducing administrative burdens, minimizing waiting times, and improving visibility and The Next-Gen PCS. We envision a future characterized by contin- transparency along the entire supply chain. The PCS offers a uous evolution and remarkable innovative advancements for the variety of functionalities, including cargo tracking and tracing, PCS. Driven by rapid technological progress, growing industry vessel scheduling and berth planning, Customs clearance and demands, and stricter regulatory obligations, they will continue to inspection, and invoicing and payment, among others. transform the landscape of port and maritime logistics. This will evolve through further integration of cutting-edge technologies The evolutionary journey of PCS. From humble beginnings as a such as Artificial Intelligence (AI), blockchain, and the Internet basic communication system, the PCS has undergone significant of Things (IoT). Moreover, data analytics and predictive model- transformation over the years. The first-generation PCS emerged ing are paving the way for the utilization of PCS for enhanced in the 1980s. They were designed primarily to improve commu- data-driven decision-making, proactive risk management, and nication and information exchange among port stakeholders. In optimized resource allocation. Global PCS adoption landscape and trends PCS global adoption rates. In this study, we analyze PCS adoption limited availability of financial resources and the lack of specialized rates across different regions and countries. The study examined technical expertise. The twelve PCS case studies, developed in the PCS implementation in over 897 ports based on UNCTAD’s top context of this study, summarize experiences from both high and ports listed in the Liner Shipping Connectivity Index (2022: Q4) low-adoption rate regions. They capture experiences and knowledge covering 201 countries and territories. Table 1 summarizes the gained from the PCS implementation journey and provide valuable status of PCS implementation. Most functional PCSs operate in insights for policymakers, port authorities, and logistics service the ports of high-income countries while they are rarely found in providers on how to enhance PCS adoption and leverage its benefits. low-income ones. Countries in North America are an exception, where digitalization of port logistics systems is implemented Embracing digital connectivity in SIDS. As SIDS are sea-locked, fragmentedly, covering different segments of port operation, with digital connectivity to port and maritime hubs becomes essential. only recent attempts to introduce proper PCS. Over 90 percent Implementing a PCS is crucial for enhancing their trade capacities of the ports in low- and middle-income countries have not yet and overall efficiency. The economies of SIDS rely heavily on implemented these platforms. It is interesting to note that 32 international trade. By adopting a PCS, these countries can signifi- low-and middle-income countries have initiated projects or are cantly improve the efficiency of their local supply chains. Several in various stages of implementing a PCS covering 93 ports. SIDS have adopted a PCS, and 12 out of 58 are PCS-ready. These early adopters offer valuable lessons for broader implementation Gap between developed and developing countries. We found that across all SIDS, paving the way for more efficient and sustainable Europe, Asia, and Africa have high adoption rates, with some coun- port operations. The mandatory requirement, under the IMO’s tries having mandatory PCS implementation in their ports. The United Facilitation of International Maritime Traffic (FAL) Convention, Kingdom, France, Germany, Netherlands, Belgium, Spain, Singapore, for the adoption of a Maritime Single Window (MSW) presents Japan, and South Korea are among the leading countries in PCS adop- an excellent opportunity to promote PCS implementation in SIDS, tion. We also identified emerging markets, such as India and Chile, with MSW as the first module of a PCS. More information on how which have been implementing a PCS to improve their trade facilita- a PCS can be implemented in the special economic and sectoral tion and logistics processes. There are serious initiatives underway context of SIDS, can be found in the online version of the study. in emerging markets such as Indonesia, Malaysia, Thailand, Mexico, and Brazil. However, developing countries face challenges in adopting Linkages with the single windows. PCSs vary around the world in a PCS, as shown in Figure 1. This could be partially explained by the terms of their scope, functionality, and interoperability. In some Executive Summary 4 Port Community Systems PHOTO BY: © LISANDRO LUIS TRARBACH/SHUTTERSTOCK Executive Summary 5 Port Community Systems Table 1. Status of PCS implementation WB Income Pcs Status Group Count of Countries Count of Ports NO Project Build Design Some PCS is Status NO Project Build Design Some PCS is Status PCS initiated phase phase modules operational unclear PCS initiated phase phase modules operational unclear operational operational High income 37 13 2 2 3 25 3 227 28 2 2 6 179 8 Upper middle 26 17 4 2 3 1 107 61 5 3 5 42 income Lower middle 26 8 1 3 8 2 81 23 2 15 25 46 income Low income 11 1 1 2 23 1 1 3 Figure 1. Status of PCS Implementation PCS Status 450 400 350 227 300 Count of Portname 250 200 150 107 179 100 28 8 71 42 50 61 25 46 0 23 23 No PCS Project initiated Build phase Design phase Some modules PCS is Status unclear operational operational WB Income Group High income Upper middle income Lower middle income Low income countries, PCSs are integrated with MSW systems, which enable merchandise movements. Given its similarities and differences, the ship-to-shore data exchange. In other countries, they are inte- it is useful to explore how the digital environment around airports grated with Trade Single Window (TSW) systems, which allow the can significantly contribute to the successful implementation of exchange of information between traders and border agencies. a PCS. In the online version of the study, we analyze the key char- The overlap between PCS, MSW, and TSW systems is significant, acteristics of the ACCS and draw conclusions about successes as they all aim to facilitate the exchange of information and data and failures. Key insights include the importance of customization between various stakeholders involved in maritime trade and and localization, which ensures faster adoption, highlighting the logistics. The challenge lies in achieving interoperability and need for a PCS to address specific needs and priorities of the port standardization between these systems to enable seamless community to foster greater adoption and effectiveness. Active data exchange and improve efficiency and sustainability in global engagement and collaboration with all stakeholders, facilitated supply chains. In the online version of the study, we present through transparent communication, fair distribution of benefits the MSW and TSW and identify opportunities for functional and and costs, and neutrality in leadership, are crucial to building trust architectural complementarities with the PCS. and fostering cooperation among the involved parties. Consid- ering flexible governance models, as seen in the ACCS, can help Adapting lessons from the Airport Cargo Community System find the best fit for each port community, ensuring successful (ACCS) to the PCS. At a conceptual level, both ports and airports implementation and long-term viability. In practice, many coun- are physical gateways that cargo goes through to reach the final tries have established linkages between a PCS and an ACCS. consumer. As in the case of seaports, the ACCS is a digital plat- The future of PCS is linked to the development of multimodal form set up to share and ease the flow of information and expedite platforms that integrate different modes of transport. Executive Summary 6 Port Community Systems The Positive Impact of PCS PCS benefits categories. The most common benefits of port Improved port efficiency and effectiveness. PCSs are revolu- digitalization and therefore PCS are cost reduction in handling tionizing port logistics by improving efficiency and effectiveness. documentation, increased efficiency, and increased compliance. The automation and streamlining of processes can facilitate cargo tracking, Customs clearance, and enable real-time data • Cost reductions in handling the documentation stem from the collaboration between different stakeholders. This not only suppression of duplicate data entry, resulting in time savings reduces delays and costs but also increases the predictability of not only by suppressing multiple entries, but also because it supply chains going through the port. By eliminating the need for requires less correction and validation of the data. paper-based documentation and manual processes, the PCS can improve accuracy, reduce errors, and improve communication • Increased efficiency stems from early availability of informa- between different stakeholders. The port ecosystem becomes tion that enables advance planning of operations and reduces more efficient and effective, ultimately supporting the growth idle time between them. of international trade. The PCS is a critical tool for the modern port, providing the necessary digital infrastructure to manage the • Increased compliance can be facilitated by advanced infor- increasing volumes of trade passing through ports. mation that allows for better risk management, and traceabil- ity of the data which makes it easier to reconcile information. Visibility of cargo flows. Enhanced visibility and transpar- ency provided by the PCS can help to facilitate more effective It is important to identify and quantify the benefits of imple- supply chain management, while reducing the risk of fraud in menting a PCS before, during and after its implementation. It trade. By providing real-time data on the location, status, and is also crucial to identify what prior actions may be needed to condition of goods, the PCS can help to build greater trust maximize the chances of bringing positive benefits to the PCS and confidence between different stakeholders in the supply stakeholders. The expected transaction cost reduction and effi- chain. This increased transparency can lead to increased ciency gains from a PCS, thanks to the digitalization of the infor- collaboration, better coordination, and streamlined logistics mation exchange, depends on several assumptions. The main processes. Additionally, the PCS can enable shippers and ones are the degree of digitalization of the logistics and trading cargo owners to track cargo and adjust their supply chains in industries which may require dedicated support for the small to real-time, resulting in greater flexibility and responsiveness. medium-size operators, the actual suppression of the paper trail, With enhanced visibility, supply chain participants can better and effective business process reengineering and simplification. anticipate potential problems and take pre-emptive measures to mitigate their impact. The PCS primarily serves the local port community, but a recent evolution, resulting from the disruption of the global supply Reductions in trade costs and time. One of the significant bene- chains during the COVID-19 pandemic, saw shippers and cargo fits of the PCS in trade facilitation is the reduction of transaction owners taking interest in the data that can be obtained through costs and time. PCSs automate and digitalize trade procedures, the PCS. Global shippers with greater visibility over their cargo eliminating the need for paper-based documentation, manual found this very helpful and have been increasingly demanding data entry, and physical inspections. By streamlining processes this feature. such as Customs clearance, document processing, and cargo tracking, the PCS enables faster and more cost-effective trade The impact of the PCS on the private sector. The adoption of transactions, leading to reduced administrative burdens and PCS can significantly benefit the private sector by reducing increased efficiency. costs, saving time, and enhancing predictability in supply chain management. By facilitating seamless information exchange and The PCS and port procedural improvement. The implementa- collaboration among port stakeholders, the PCS promotes more tion of a PCS has a direct impact on the improvement of port efficient and sustainable port operations, ultimately leading to a procedures. Based on global experiences, a PCS can simplify, more competitive and resilient global supply chain. In addition, standardize, and digitalize port logistics processes, resulting PCS implementation has been found to stimulate digital invest- in positive effects on procedural efficiency. In addition, the ments and innovation in the port and maritime industry. Its imple- re-engineering of port business processes is an integral part mentation encourages the development of new technologies of both PCS and maritime and trade single windows. This can and digital solutions by private companies and creates demand take place during the design phase or after the adoption of a for innovative solutions that enhance the port efficiency and PCS. To accurately map existing processes and discuss and competitiveness. In the online version of the study, we analyze sequence re-engineering activities, public-private consultation in more detail the impact of the PCS on the trade industry from mechanisms like a Port Community Council (PCC) and National different angles. Trade Facilitation Committees (NTFC) are necessary. In the future, the application of process mining technology in the port Executive Summary 7 Port Community Systems sector will further simplify the process mapping phase by using Article 10.4 on “Single Window,” Article 12.2 on “Cooperation and big data gathered on a PCS platform. The online version of the Consultation,” Article 7.5 on “Pre-arrival Processing” and Article study offers an in-depth analysis of the relationship between the 7.6 on “Risk Management”. PCS and business process improvement. Initiating Customs-Port collaboration. In this context collabo- PCS as a trade facilitation tool. PCSs, often viewed as a port and ration between Customs and Port Authorities is essential. The maritime solution, are essentially a trade facilitation tool, given success of a PCS depends on the active backing and stewardship the high interdependence levels between regulatory and trade of Customs authorities, as they have a crucial and determining logistics processes related to importing and exporting. While the role. The four pillars of cooperation between ports and Customs regulatory processes may be covered by Customs automated are legal and regulatory, institutional and governance, business systems and trade single windows, the PCS steps in to automate processes and data, and Information and Communications Tech- and integrate the complementary logistical and commercial nology (ICT) systems and interoperability. Therefore, institutional- processes. These collaborative interchanges contribute signifi- ization of cooperation between the two parties is foundational for cantly to the reduction of trade compliance costs and time spent building trust between them and synchronizing their regulatory by cargo owners and their agents. Therefore, PCS contributes procedures and clearance formalities. We analyze in depth the to the effective implementation of the Trade Facilitation Agree- need for collaboration between ports and Customs the online ment (TFA) of the World Trade Organization (WTO). The most version of the study. relevant TFA articles where the PCS can play a critical role are Executive Summary 8 Port Community Systems Building Blocks for Successful Implementation A. PCS implementation framework the intricate web of stakeholders and port services provided: the more extensive and complicated the services, the higher the Planning a successful PCS implementation. Developing a PCS expenses. While determining the overall establishment costs is involves several stages and preparatory actions. One of the essential, it is also important to challenge the business model, most important ones is the PCS visioning. This requires the port would it be fully supported by the state as public services or community to collectively agree on the scope and objectives of will be financed or co-financed by private sector. The creation the system and how it should function. In the PCS preparation and maintenance of a PCS can be costly, necessitating consid- stage, it is also essential to create a detailed PCS blueprint. erable investments in software, hardware, other infrastructure, This covers several factors, such as governance and operating and human resources. The financing model must pinpoint and models, financial models, legal and regulatory frameworks, busi- apportion these expenses sustainably, ensuring the system’s ness process and data models, technical and functional archi- long-term financial viability. In the online version of the study, we tecture, and a detailed implementation roadmap. When creating discuss in detail the various funding options available throughout the blueprint, it is crucial to consider existing digital infrastruc- the PCS project cycle. ture and how the PCS will fit into the already functioning digital ecosystem. The development of the blueprint demands intense Essential funding for preparatory phase. The funding for the collaboration led by specialized teams, consists of port commu- preparatory phase is essential. Funds are required for the needs- nity members. In the online version of the study, we discuss evaluation, feasibility analysis, visioning workshop, digitalization in more details what a framework for implementation entails. gap assessment, and the creation of a roadmap and implemen- tation blueprint. It also encompasses the creation of the enabling The importance of technical capacity and expertise. Devel- environment including the setting up a legal structure, organi- oping a roadmap and blueprint requires specialized expertise zational models, and institutional support and an open-minded and technical knowledge. To guide them through this process, examination of PCS concepts and desired outcomes. Obtaining governments should consider hiring technical advisors. The public funds for this stage of the project can be challenging, due World Bank is an organization with vast experience in the proper to the governments’ competing priorities and limited resources. development of trade facilitation and logistics digital solutions, and it can provide valuable insights into best practices and the Funding options for PCS development. The level and sources latest PCS technologies. As an honest broker and advisor, it can of funding during the development phase depends largely on assist interested governments in the upstream stages of project the PCS operator model adopted. The operator must create a development and share implementation knowledge across coun- business plan to ensure the financial viability of the PCS. Case tries and regions. A comprehensive technical support system is studies have shown that the development costs for a PCS can highly recommended to cover the various dimensions of project vary significantly based on the size of the port 3. In smaller ports, development, including creating buy-in from all stakeholders, the cost may be under $10 million, while it can increase to over facilitating communication, building consensus, and managing $50 million for medium ports. For larger ports, the cost may changes to existing processes, systems, and workflows. Advi- exceed $100 million, and for an implementation covering a sors with experience in change management can help develop group of regional or national ports, the expenses can be much strategies to mitigate resistance, train staff, and ensure a smooth higher. The varying costs are determined by factors such as port transition to the new system. size, technology used, and the modules and features provided. Funding sources can be public, typically allocated from the port authority budget, private capital, or a combination of both. B. The enabling environment Sustaining revenue streams. Revenue generation during the operational stage can come from various methods, with funding Sustainable funding and operational PCS models sources grouped into three main categories. The first category is government financing. PCSs frequently receive public funds PCS financial framework. Securing appropriate funding is vital because efficient ports are a public good and deserving of for the success of such an endeavor. It is crucial to carefully taxpayer support. This approach ensures that the PCS receives estimate capital and operating expenses to guarantee long- stable financial backing, allowing it to operate smoothly and term scalability and sustainability. This needs to account for provide essential services to the port community. The second 3 The categorize ports based on their container handling capability. In this context, small-size ports handle under 100k TEUs, medium-size ones between 500k and 1million TEUs, while large size ports handle between 1million and 5million TEUs and very large port over 5million TEUs Executive Summary 9 Port Community Systems category involves generating income through a transac - financial risks. The operators must be aware of the challenges, tion-based user fee per transaction conducted within the PCS. apply effective risk management strategies and a customer-cen- Customs declarations are often the standard unit for payment. tric approach, especially during the design and the implementa- Lastly, the third category is a user fee subscription model where tion phase, to mitigate these risks and improve the platforms’ connected users pay a subscription fee, usually annually. These performance in the long-run. Tools they have in their disposal funding options can be independent or combined, depending include the adoption of risk assessment and mitigation plans on the needs and preferences of the PCS and its stakeholders. which encompass – among others - regular audit mechanisms, cybersecurity measures, compliance monitoring policies, and The role of a PCS Operator (PCSO). Deciding the most appropri- sustainable financial planning. ate PCS operator model is one of the most important decisions during the preparatory stage. The role of a PCSO encompasses Overcoming resistance to PCS implementation. Operators may overseeing the development, integration, and management of encounter resistance to change during the preparatory and the digital infrastructure, systems, and applications within one development stages. Stakeholders may be hesitant to adopt single platform. This involves working closely with port stake- new technology and feel threatened by the potential loss of holders to ensure effective exchange of data, legal and regu- control. In many cases, the culture within the port community latory compliance, and the adoption of new technology. The values tradition and established ways of modus operandi. PCSO is responsible for managing the day-to-day operations of PCSOs should develop clear digital strategies, foster stake- the system, including technical support, user training, system holder engagement, prioritize key areas for improvement, select maintenance and evolution. Currently, there is strong interest the right technology solutions, and measure overall progress. from cargo owners and shippers to become stakeholders of By using these tools and strategies, the operator can minimize PCSO as a way to enhance cargo flows’ visibility, predictability, resistance to change and ensure that the PCS’s success in the and supply chains’ resilience. medium to long run. Three distinct operating models. The different operating models of the PCS have significant implications for how they The power of governance, are managed, funded, and governed. Some are owned and oper- institutions and leadership ated by port authorities or government agencies, which can lead to greater accountability and control. In contrast, a PCS Effective port governance framework. A clear and well-defined managed by private companies or special purpose vehicle may governance and institutional framework facilitates effective be more agile and able to respond quickly to changes in the collaboration and coordination of siloed port stakeholders. In market or industry. Alternatively, the public-private partnership the absence of such a structure, fragmentation, duplication, and (PPP) model follows a hybrid approach, where the government conflicting priorities may arise, leading to delays, inefficiencies, collaborates with private entities to share the responsibilities and higher costs. Such a framework helps to minimize the risks and risks associated with the development, management, and associated with implementing these systems by defining clear financing of the PCS. The governance structure of the PCS roles and responsibilities, decision-making processes, and also plays a critical role in how decisions are made and how mechanisms for dispute resolution and conflict management. stakeholders are represented. A single entity managing the PCS The typical elements of a governance framework as identified may be able to make decisions more efficiently, but it may also by global case studies and international best practices include limit stakeholders’ participation. In contrast, a multi-stakeholder four tiers: the inter-ministerial committee, steering committee, committee can ensure that the interests of different actors in the business process committee, and working groups. port community are considered, but it may also lead to slower decision-making processes. The funding mechanisms of a PCS The benefits of a robust governance structure for the port also vary, with some being fully funded by the government, while community are clear. Firstly, it encourages collaboration between others rely on fees and charges from users. Self-sustaining stakeholders, which, in turn, leads to better decision-making and PCSs are more likely to be responsive to market demands, but a stronger sense of ownership. Secondly, it aids in establishing they may also exclude smaller players who cannot afford the data governance, which ensures its proper management, security, fees. Therefore, they should be carefully designed, following and integrity within the system. Thirdly, it leads to improved data an inclusive consultation process structured in a way to take orchestration which helps coordinate the collection, process- under consideration views from the entire port community. In ing, and distribution of data from different sources. Fourthly, it the online version of the study, we touch upon the pros and cons supports change management by providing a clear framework for of various operating models. adapting to new requirements, technologies, or regulations. Lastly, a well-designed governance structure contributes to long-term Identifying and managing operating risks. The PCSO’s risk financial sustainability by ensuring that resources are allocated management strategy can adversely affect or enhance the perfor- efficiently, and the system remains viable in the face of chang- mance of the system. PCS project risks are summarized in four ing market conditions or regulatory requirements. This fosters categories and include technology, regulatory, operational, and confidence among stakeholders, which is crucial for the system’s Executive Summary 10 Port Community Systems PHOTO BY: © UNGUREANU CATALINA OANA/SHUTTERSTOCK Executive Summary 11 Port Community Systems continued success. In the online version of the study, we outline Legislative framework the core elements of a successful PCS governance structure. Legal framework for PCS efficiency. An efficient legal framework Governance in PCS early development phases. During the is critical to the PCS’s successful implementation and function- preparatory phase, the steering committee and business ing. It defines the roles, responsibilities, and obligations of parties process committee play crucial roles in delineating the proj- involved, particularly the PCS operator and internal and external ect’s scope, formulating strategic objectives, and ensuring that users. It serves as a guide and ensures that all parties involved the PCS effectively addresses the needs of all stakeholders. are accountable and responsible for their actions, thereby These committees work hand-in-hand with specialized work- promoting transparency and fairness. In summary, a well-defined ing groups, which contribute their expertise during the design legislative framework is crucial to the smooth functioning of a phase by offering technical guidance and recommendations PCS, ensuring the seamless exchange of information, fostering on specific aspects of the system, such as data standards trust among stakeholders, and promoting accountability. In the and interoperability. By working collaboratively, these various online version of the study, we analyze the legal and regulatory components of the governance structure facilitate a compre- framework for PCS from various angles. hensive and well-rounded approach to the development of a robust and effective PCS that meets the expectations and Reforms for PCS functionality. Legal and regulatory reforms requirements of all involved parties. are necessary to facilitate two key aspects related to the PCS. Firstly, these reforms are required for the establishment of the Effective governance during PCS Implementation. During the PCS itself, ensuring that the necessary legal framework is in place implementation phase, the steering committee plays a crucial to support its functioning. Secondly, these reforms are needed to role in overseeing the execution process by monitoring the proj- enable the PCS operator to effectively provide its services. Both ect’s progress, guaranteeing that it adheres to the established aspects require adjustments to existing laws and regulations to plan, and addressing any issues or risks in a timely fashion. accommodate the unique requirements and complexities of the Simultaneously, the business process committee is responsible PCS environment. In many instances, regulations or decrees have for making sure that the PCS aligns with the varying business institutionalized governance frameworks to facilitate public-pri- needs of all stakeholders. This alignment is important to ensure vate collaboration. These often include the establishment of that the system is not only technically sound but also practical various entities, as described above. and useful for the port community. Meanwhile, the working groups contribute significantly by providing technical support Legal principles of data collaboration. Data exchange among and guidance to both the steering committee and the business public and private stakeholders is a complex task that requires process committee. Their expertise helps to refine the PCS, adequate legislative support. Countries such as Belize and adapt it to changing needs and circumstances, and facilitate Namibia are looking to the opportunity to establish a compre- the smooth integration of the system within the port commu- hensive legal framework towards a “PCS Data Collaboration Act,” nity. By working together, these committees and groups form which not only lays out the legal principles of data governance a cohesive governance structure that drives the successful but also defines the rules of stakeholder engagement, data implementation of the PCS and maximizes its impact on the orchestration, change management, and long-term sustainability. port community. This act ensures that data protection, privacy compliance, and cybersecurity risks are managed effectively. This is critical for a The importance of the human factor. PCS projects cannot platform which handles vast amounts of sensitive personal and materialize without strong leadership and strategic guidance commercial data. The data needs to be protected from unau- at the highest levels. The roles of the port authority’s CEO thorized access, misuse, or disclosure. Moreover, the legal and and the head of Customs are crucial. In addition, C-level top regulatory environment should be flexible and adaptable to keep management of the PCS operator, is responsible for setting the pace with emerging cyber threats and technological advance- organization’s vision and direction, and ensures alignment with ments. Legislative actions, in this context, include foundational the overarching business strategy. The CEOs and CIOs of the electronic transaction and data protection laws that recognize PCSO should have a comprehensive understanding of the port electronic records, transmission, authentication, and signatures. community, and effectively engage and collaborate with both public and private stakeholders. The CEO’s role is to guaran- National and international legislative considerations. When tee that the PCS aligns with the company’s overall objectives creating a national legal framework, it is crucial to consider and values, while the CIO oversees technical aspects such as existing legislation of the port, maritime and trade sectors. system architecture and cybersecurity. It is vital to emphasize Any process re-engineering that takes place should adhere to that the success of a PCS relies on the capabilities of individ- Customs law and the laws of other relevant regulatory agencies. uals involved, transcending merely the technology or systems This means that procedural changes must be legally conformant employed. Effective top management prioritizes cultivating and aligned with existing regulations to avoid legal complica- relationships and promoting a collaborative culture among all tions, unnecessary delays, or even legal disputes. In addition, participating parties. the national legislation should comply with international legal Executive Summary 12 Port Community Systems instruments by the WTO-TFA, the IMO’s FAL Convention, the landscape, enhancing communication, collaboration, and data WCO’s Framework of Standards to Secure and Facilitate Global exchange, ultimately improving port operations. Trade (SAFE) and the United Nations Centre for Trade Facilita- tion and Electronic Business (UN/CEFACT). Failure to comply The challenging task of defining the PCS scope. Defining the may lead to legal or reputational risks, which could have serious PCS scope is challenging due to diverse stakeholder needs. consequences for the long-term sustainability of the PCS and Integration requires understanding stakeholder requirements and its stakeholders. addressing complexities. Establishing common interoperability principles, guidelines, and standards is essential, along with PPP and concessions legal framework. The establishment of a developing community artifacts that foster trust. Adherence to PPP and concessions legal framework is a crucial aspect of the semantic data standards and embracing interoperability prin- legislative infrastructure required, particularly if this PCS operator ciples like openness, transparency, and user-centricity ensure model is selected. The legal framework must define the roles, seamless integration. This improves communication, informa- responsibilities, and obligations of all parties involved in the tion exchange, and supports complex operations across port, PPP, including the government, the private sector, and the PCS maritime, and border management systems. A well-defined PCS operator. It should also provide a framework for risk allocation, scope and focus on interoperability enhance overall efficiency revenue-sharing, and dispute resolution. The success of the PCS and collaboration within the port ecosystem. largely depends on the effectiveness of the PPP and concessions legal framework in ensuring transparency, accountability, and The layered concept of PCS architecture. The PCS technology sustainability. architecture utilizes a layered concept, organizing components into distinct layers for specific functionalities and services. This structured approach simplifies organization and management, Technical and functional architecture enabling efficient integration of stakeholders’ diverse needs. Layers include access, gateway, security, application, data, and The importance of PCS architecture. Despite the presence of infrastructure. The access layer manages secure access, the numerous port, maritime, and border management systems there gateway layer enables seamless interoperability with other digital remains a critical need for the PCS to serve as the central hub for systems, and the security layer safeguards the system. The appli- communication and data exchange. The technical architecture of cation layer drives functionality, while the data layer manages a PCS significantly impacts existing ICT systems and their vital information. The infrastructure layer provides necessary hard- functions. Consequently, defining the scope of a PCS project ware and network resources, allowing developers to create a and ensuring its seamless integration within the port’s existing comprehensive solution for the port community. digital infrastructure is one of the most challenging aspects. To guarantee successful data exchange between a PCS and the Smart Ports and technology architecture. The PCS architecture various trade and transport information systems, interoperability must keep pace with the evolving maritime industry. Emerging and interconnectivity is a priority. In the online version of the technologies such as IoT, Big Data Analytics, and AI offer power- study, we examine the challenges and opportunities of existing ful tools for optimizing decision-making and streamlining port PCS technical and functional architecture. operations. Incorporating these innovations into PCS technology can enhance efficiency, monitor data in real-time, and identify Designing effective PCS architecture. The technical architec- trends. The PCS play a crucial role in facilitating communication ture and functional requirements of a PCS must address the and data exchange between diverse port systems and stake- diverse needs of all stakeholders. Developers should conduct a holders, ensuring smooth operations. Smart Ports emphasize thorough analysis of stakeholder requirements, working closely the importance of integrating PCS with advanced technologies with each group to identify and prioritize their specific needs. to create a seamless, interconnected port environment. PCS This collaborative approach allows for a PCS design that effec- technology architecture design can support the development tively meets diverse demands while promoting interoperability, of Smart Ports, enhancing the benefits and value provided by a scalability, and adaptability. As a result, the PCS can evolve with PCS in the maritime industry. the changing needs of the port community and technological Executive Summary 13 Port Community Systems Conclusion Global momentum for PCS development. In recent years, PCSs Essential PCS knowledge for governments. Governments must have gained significant momentum worldwide, and this trend is understand the concept of PCS, in order to install the required expected to continue in the upcoming decade. The benefits of building blocks for its successful adoption. By integrating PCS implementing PCS are becoming increasingly evident, including into the existing digital port infrastructure, port stakeholders enhanced efficiency, reduced costs, and improved collaboration can achieve more efficient and secure communication, enhance and communication between different port community stake- cargo visibility, and reduce the time and costs associated with holders. As a result, more countries are recognizing the value of manual paper-based processes. Additionally, PCS can help PCS and are investing in their development. However, develop- governments to streamline the Customs and border procedures ing countries may face significant challenges in implementing and contribute to the successful implementation of national PCS due to limited financial and human resources, and as such, trade facilitation programs. This is particularly important for support from international organizations may be crucial to ensure SIDS, sicne these countries are mostly trading via ports as their the widespread adoption of PCS and the benefits they bring to main, if not the only, cot-efficient option. Therefore, governments a country, regardless its level of development. must prioritize the implementation of PCS as it will lead to more efficient and secure port operations and assist in the implemen- A trade-oriented perspective on PCS. Although our analysis tation of trade facilitation reform programs. primarily concentrates on the port and maritime industry, this is essentially a study of trade facilitation. The unique value-added of The value-added of the World Bank. This is the first World this research, compared to other studies, lies in its examination Bank PCS study, in an intense collaboration with IAPH and its of PCS from a trade-oriented perspective. By viewing PCS as a members, that has comprehensively addressed the concept. This trade and transport facilitation tool, we can better understand groundbreaking study examines the PCS from various perspec- its potential to enhance the efficiency and effectiveness of port tives, shedding light on its potential benefits and challenges. operations. This comprehensive approach considers both the Furthermore, it complements other analytical pieces that the transport and trade aspects of port and border compliance activ- World Bank is developing in the trade facilitation and transport ities, bridging the gap between these two critical components. connectivity domains. It creates a more complete picture of the Consequently, our investigation advocates for a holistic strategy role that the PCS can play in facilitating trade and promoting that aims to improve port operations by unifying trade and trans- economic development and growth. port elements within the broader framework of PCS. PHOTO BY: PCS OPERATOR | PORTBASE, NETHERLAND 14 Port Community Systems PCS FUNDAMENTALS AND TRENDS Port Community Systems 15 PCS Fundamentals And Trends 16 Port Community Systems 1. Facilitating Trade via PCS Investments International trade helps to power a country’s economic devel- the port ecosystem becomes vital. Such a collaborative environ- opment. Countries engaged in higher international trade tend to ment not only accelerates cargo movement but also promotes experience faster and more sustained economic growth. Trade a more sustainable and responsive port operating environment increases access to resources, technology, and capital, therefore where facilitating trade becomes an integral port strategic goal. boosting productivity and lifts living standards. Additionally, it also diversifies economies, provides new market opportunities In this context, designing port-centric trade and transport facil- for businesses, and generates job domestically. The impact of itation policies to improve the procedural efficiency of ports is international trade on international development extends beyond key and technology, plays a critical role. The WTO-TFA supports mere economic metrics. It fosters innovation through the exchange the use of automated platforms throughout the cargo clear- of ideas and technologies across borders. It enables countries to ance process, aiming at enhancing efficiency, transparency, and specialize in sectors where they have a competitive advantage, accountability at and beyond borders. However, while the TFA thus maximizing their economic efficiency. The integration into provides a crucial framework for improving border management, global trade networks also encourages policy reforms and improve- it is not sufficient to drive the entire trade facilitation agenda. A ments in governance, further catalyzing development and growth. significant focus needs to be placed on facilitating the movement of cargoes via ports. This involves not only implementing tech- Ports, serving as integral nodes in international trade networks, are nological solutions but also streamlining processes, improving vital platforms for the movement of raw material and merchandise. infrastructural capabilities, and enhancing inter-agency coor- Seaports and airports act as gateways for businesses to efficiently dination beyond the narrow Customs and border inspection move goods and materials globally while facilitating exports of domain of responsibility. TThe integration and interoperability final or intermediate goods to diverse markets. Efficient ports are of technological solutions of various port community members highly valued by international traders as they are critical for the will ultimately lead to smoother, faster, and more cost-effective reliable and timely delivery of their cargoes. They are central to movement of traded goods. sustaining a country’s economic activities and the dynamism of the transportation and logistics sector. Efficiently managed ports While investment by governments and businesses in transport reduce frictions in international trade and minimize costly delays infrastructure, such as roads and ports, is crucial to interna- and disruptions in global supply chains. Ports modernization not tional trade, investment in digital infrastructure is no less import- only enhances operational efficiency but also attracts foreign ant. This “soft” type of investment encompasses not only the investment and boosts economic opportunities, thereby playing promotion of trade facilitation policies for effective cargo clear- a pivotal role in both micro and macro-economic development. ances but also the adoption of digital platforms that enable the exchange of regulatory and operational electronic information. Advances in transportation and communication technologies, These digital infrastructure investments, while typically less liberalization of trade policies, and the worldwide expansion of expensive than their physical counterparts, are equally critical. production networks, among others, have driven the globalization They allow precise monitoring of port performance and, in some of supply chains. This phenomenon has increased competition instances, demonstrate how targeted procedural reforms can among ports, which are now striving to provide more efficient be more beneficial than expensive terminal expansions or other handling facilities and enhanced connectivity to domestic and complex infrastructure investments. By optimizing processes regional markets. Furthermore, this intensified competition and enhancing data transparency, digital infrastructure plays a necessitates ports to innovate and improve their service qual- key role in streamlining operations and improving overall port ity while ensuring cost-efficiency. Ports are increasingly adopt- efficiency and effectiveness, offering a high return on investment. ing advanced technologies and optimizing their operational processes to meet these challenges. As a result, the focus has Investments in PCS constitute the latest trend in the adoption of shifted towards creating a more integrated and seamless supply port electronic platforms. These neutral and open digital solu- chain, which not only benefits the ports but also contributes to tions optimize and automate seaport logistics through a single the broader efficiency of global trade. data submission point, ensuring intelligent and secure informa- tion exchange between public and private stakeholders. A PCS While adopting advanced technologies is a significant step forward, acts as a nexus, connecting various automated systems operated it is not sufficient in the absence of a collaborative culture within the by different port stakeholders in the port community. This collab- port community. The true potential of technological advancements orative setup is crucial, as stakeholders of a port collectively can only be realized when they are integrated into a framework of establish a PCS, signifying a unified approach to bolster trade strong cooperation and partnership. Ports thrive on this effective and logistics efficiency at ports. The growing interest in PCS collaboration, which is essential for enhancing their performance, and the rising shift towards its adoption not only enhances a both in terms of efficiency and effectiveness. Building on this princi- country’s national logistical capabilities but also contributes to ple, fostering strong communication and cooperative efforts within the broader goal of global trade facilitation. PCS Fundamentals And Trends 17 Port Community Systems 2. Port Competitiveness and Trade Facilitation Trade facilitation reforms and Trade costs influence the strength and direction of trade.5 High trade costs’ reduction trade costs tend to exclude countries from participation in global commerce. The Organization for Economic Co-operation and Trade facilitation measures, such as those contained in the WTO Development (OECD) developed a model listing three groups TFA, set out to improve and simplify international trade. They seek of trade costs:6 to remove obstacles to trade, such as administrative and regu- latory barriers. Reforming border management helps to make • Border policies (non-tariff regulatory measures, market importing and exporting easier and reduces trade costs. Trade access restrictions, costs, and general impediments to doing facilitation also involves comprehensive policies to reduce trade business). costs, including efforts to make transport more efficient. This • Border crossings (documentation and Customs compliance includes the simplification, streamlining and standardization of requirements). border management processes and procedures. Furthermore, • Getting to the border (transport infrastructure and logistics it encompasses a drive to reduce operational costs and the services). removal of procedural uncertainties. Trade facilitation includes any policy which simplifies trade and reduces trade costs. Its Figure 2 maps the factors associated with trade costs along the ultimate goal is to “reduce the wedges between export & import entire supply chain beginning with the country of export, through the prices” in order to unlock economic growth for all.4 transport chain and ending with the country of import. Implementing Figure 2. Policy Areas Affecting Trade Costs GETTING TO THE BORDER AT THE BORDER BEYOND THE BORDER Trade finance Export restrictions Tariffs Regulations Institutional (NTMs) structure Access Foreign Direct costs to credit currency Quotas Standards Bussines & exchange Logistic services TBTs, SPS environment rate Supplying info Supplying info & docs. & docs. Transparency Private sector Procedural delays participation Services, trade Competition policy Indirect costs Direct barriers; ICT Hard infrastructure foreign ownership, R&D Oportunity costs inventory holding MA restrictions Smuggling and info. trade Implicit barriers; Inland transit Seaports, aeroports licensing, recognition Hidden costs Corruption & bribery TRANSPORT TRADE CHAIN EXPORTING COUNTRY IMPORTING COUNTRY Source: Moïsé, E., & Le Bris, F. (2013). Trade Costs-What Have We Learned? A Synthesis Report. 4 Working Paper No. 129, UNESCAP (2013) “Who Profits from Trade Facilitation Initiatives?” by Bernard Hoekman and Ben Shepherd (2013) 5 In a working paper titled ‘Trade costs’, Anderson and Wincoop (2004) defined it to include “all costs incurred in getting a good to a final user other than the cost of producing the good itself: transportation costs (both freight costs and time costs), policy barriers (tariffs and non-tariff barriers), information costs, contract enforcement costs, costs associated with the use of different currencies, legal and regulatory costs and local distribution costs (wholesale and retail). 6 “Trade Costs: What have we learned? A synthesis report” OECD Trade Policy Paper No. 150 - By Evdokia Moïse and Florian Le Bris (2013) PCS Fundamentals And Trends 18 Port Community Systems the TFA will help to reduce one set of trade costs, especially those offers a comprehensive insight into the interplay between border dealing with Customs and other border agencies’ procedures. compliance procedures and logistics operational processes. These are intricately intertwined, showcasing how they func- Adoption of trade policies and other trade promotion activities tion in tandem and their inherent connection with multiple ICT can help reduce costs due to friction in market access and systems. A pivotal aspect of these processes is the consistent non-tariff restrictions. Non-tariff barriers that impact trade costs use of overlapping data elements. Central to their efficiency is can take the form of quotas, technical barriers (such as safety the seamless transfer of data among stakeholders, facilitated by or quality restrictions) to export, or even subsidies to domestic the exchange of electronic messages. Although there might be industries, giving them a competitive advantage over foreign congruence in the received data, there exists a distinct difference competitors. However, additional measures are needed to tackle in its utilization. Regulatory and administrative authorities, in transport and logistics challenges. contrast to logistics operators, interpret and employ this data in unique ways. Table 5 in Appendix 2 depicts how members within The OECD study found that transport infrastructure and logistics the port community harness specific data submitted by trade services are the determining cost factors in all stages of the and transport participants for varied objectives. By aligning data trade supply chain. These factors impact trade costs through requisites, it lays the foundation for port community members time delays and can be “more taxing on trade than tariffs.” to cultivate and actualize the principles of data collaboration. Poor transport infrastructure contributes significantly to the ad valorem costs in the maritime supply chain. Without efficient and The manual handling of extensive port data often results in competitive logistics services, however, the gains from quality excessive bureaucracy and red tape. Operations at a port transport infrastructure will be lost. involve a complex array of information interchange. Ports serve a range of vessel types, such as bulk and break-bulk cargo vessels, container vessels, recreational vessels, barges, cruise How Port Procedural Efficiency ships and ferries. Ports have responsibilities, including dealing Facilitates Trade with a vessel’s call, the management of cargo and passengers, the movement of trucks, rail, and barges to connect with the Streamlining port processes and trade facilitation are closely hinterland, ensuring security of people and property, and safety intertwined, working together to reduce trade costs and cargo and efficiency of operations. Most aspects of movement and delivery delays. Improvements in port processes via the adoption cargo handling in ports involves government regulations and of automated solutions, such as cargo handling and logistics permits. Authorities need a tremendous amount of data and management systems, help reduce waiting times at ports while documentation to move and monitor vessels, cargo, trucks, and minimizing overall costs. However, they must be complimented people through a port. When this data is generated and shared with respective procedural simplifications on the trade compli- through manual modalities, such as the generation of paper ance side, in order to maximize their impact for port clients and documentation, it leads to excessive paperwork leading to high users. So, a holistic approach towards re-engineering of both logistics costs. Therefore, when looking at a port’s processes inbound and outbound processes is required. This approach and procedures, it is helpful to examine regulations for vessels, covers both business and administrative operations at a mari- goods, and people as they all impact the port’s logistical flows. time, port and hinterland stages of port supply chains. The reality on the ground reflects a daunting level of complexity Hence, both trade facilitation and port logistics improvements and redundancy in port documentation processes, hampering require complementary regulatory policies, appropriate opera- efficiency and inflating trade costs. A recent World Bank analysis tion practices, and ICT systems. Therefore, it is important that on Fiji’s port and maritime processes, found that up to 59 docu- simplification of port procedures must be complemented with ments were required for a vessel’s arrival and 15 documents were broader border management reforms. This integrated approach associated with a vessel’s departure. The problem of duplica- ensures that while port operations become more efficient, the tive, redundant submission of data and documents is even more border processes align with these improvements, creating a daunting for cargo clearance. Global experience from supporting seamless inflow and outflow of goods. Holistic reforms in border trade facilitation projects on the port level revealed that an aver- management, encompassing Customs procedures, documenta- age international trade transaction involves between 20-30 differ- tion, and inter-agency coordination, are essential to fully realize ent parties, up to 40 documents and around 200 data elements, the benefits of streamlined port operations. many of which were repeated multiple times in documents.7 Port operational and trade compliance processes correspond Traders frequently encounter significant complexities and to overlapping data elements, which are used and interpreted increased costs due to the abovementioned repetitive data differently by various port stakeholders. Table 5 in Appendix 2 submission requirements. Trade related documents are issued 7 APEC Business Advisory Council - Report to the Economic Leaders 1996 – file:///C:/Users/wb536937/Downloads/96_abac_rpt.pdf PCS Fundamentals And Trends 19 Port Community Systems by government agencies but directly impact the trade and trans- Port digital systems play a crucial role in optimizing cargo port industry. In the past, when there was little automation, flows by enhancing the efficiency and management of logistics government agencies required traders to produce hard copies processes. Digital infrastructure enables the efficient exchange of regulatory declarations, applications, licenses, certificates, of information about the flow of those goods, such as tracking permits, and other authorizations. But even with the digitalization and monitoring their location and status. It can also support of processes, quite often requirements for paper submission still the automation of many trade compliance processes, such as persist while the data remains within the ownership of respective Customs clearance, as well as transport and warehousing logis- government agencies which they rarely share with others as they tics, which can reduce costs and improve the overall efficiency work in silos. In these cases, traders have to make repeated data of the port logistics chain. submissions which unnecessarily increases the cost of doing business and escalate trade logistics transaction costs. Additionally, digital infrastructure can help optimize the use of physical infrastructure by providing real-time data on Therefore, enhancing port procedural efficiency directly impacts traffic and supply chain conditions, thus allowing for more the ease and cost-effectiveness of international trade. By eliminat- efficient routing and scheduling of transportation resources. ing repetitive data submissions and promoting integrated digital Data derived from port digital systems also enriches the risk processes, ports can effectively reduce bureaucratic delays and management systems, allowing border authorities to reduce operational expenses. This targeted approach aligns with the physical inspection and improve the targeting of illegal activ- needs of traders, ensures faster clearance times, and ultimately ity. Especially in the maritime side of operations, information makes trading across borders more predictable and cost-efficient. is the glue that binds port processes together and serves as the basis for achieving optimization of the port call, terminal, and hinterland flows. The Complementary Role of Port Physical & Digital Infrastructure In many cases, optimizing port processes through digital systems can alleviate congestion, offering a viable alternative The careful design of the port’s assets is pivotal for optimizing to capital intensive terminal expansion projects. Both physical cargo movement. A typical port involves a blend of infrastruc- and digital infrastructure are essential for efficient international ture and superstructure8. Infrastructure includes foundational trade logistics, as they collaboratively support the movement of elements like berthing facilities, piers, docks, channels, and goods in and out of the port. The efficient movement of goods breakwaters while superstructure covers cargo-handling facili- is critically dependent on the management of both commercial ties and equipment, including cranes, forklifts, and warehouses and trade compliance information, given the existing design of for goods storage and consolidation. Additionally, the infrastruc- port infrastructure assets. ture integrates road, rail and waterways networks for hinterland connectivity and administrative buildings for logistical and regu- Consequently, the harmonious integration of a port’s physical and latory processes, coupled with advanced security systems to digital infrastructure is essential for ensuring the swift movement ensure efficiency, safety, and security. of cargoes. The strategic design and implementation of these infrastructures should focus on their complementary functions, The design of a port’s infrastructure and superstructure is critical which are vital for optimizing cargo movement and reducing for the fast movement of cargoes as it directly impacts effi- congestion. This approach is integral to achieving streamlined, ciency and throughput. Well-designed berthing facilities, cargo efficient, and high-performing port operations, essential for meet- handling equipment, and storage areas ensure smooth and quick ing the demands of modern global trade logistics. The motto transfer of goods between ships and land transport. Without a “digital-first, physical-second” reflects the preferred prioritization well-conceived infrastructure design, ports are highly susceptible strategy of port digital transformation, emphasizing the impor- to congestion, leading to delays and increased operational costs. tance of developing digital solutions before investing in physical However, physical infrastructure cannot maximize, on its own, infrastructure. This approach is one of the key values of chain- the procedural efficiency of a port. PORT, a cross-national partnership initiated by the Hamburg Port Authority and the Port of Los Angeles, which seeks to minimize unnecessary future investments in physical assets. 8 Port Reform Toolkit PPIAF, World Bank, 2nd Edition PCS Fundamentals And Trends 20 Port Community Systems 3. The Strategic Role of PCS Digital Collaboration in Port Logistics In this context, many ports focus particularly on the maritime side of operations aiming at the optimization of port call. The Effective coordination of port services and cargo movements port community, being a multi-player self-organizing ecosystem, relies on the seamless exchange of information among port generally lacks the capabilities to optimize its operations. The community members. The efficient management of port risk of the port logistics system being subject to sub-optimiza- services, require that port community members must exchange tion is ever present when each independent player acts in its vital information at each stage of a vessel call or cargo clear- self-interest. This phenomenon is particularly apparent in the ance operation. Inbound and outbound vessel and cargo nautical side of port operations and fuels efforts to optimize the movements comprise a range of business and administrative port call process, as described in Figure 4. Port call optimiza- processes and are divided into three categories: (i) hinterland tion is essential in the maritime industry, as it involves strategic connectivity (ii) port terminal operations (iii) navigation, as coordination of ship arrivals, via the reduction of vessel idle time, shown in Figure 3. optimized berth planning, leading to reduction of port congestion. Digitalization is pivotal in port call optimization process, as it There are opportunities for digital collaboration in all three facilitates real-time data exchange between ships and ports, categories. Port stakeholders can use data generated in the supports just-in-time arrivals and minimizes anchorage times. supply chain processes to plan and coordinate the movement of The international port call optimization taskforce9, comprising cargo. They can also track the performance of various logistics global maritime industry leaders and ports, advocates for stan- actors, such as carriers and freight forwarders, allow them to dardized digital data to enable real-time updates in the port call identify bottlenecks and enhancing efficiency. Digital logistics process. This taskforce’s work includes defining the port call collaboration can involve tracking and visibility tools, such as process and establishing international data exchange standards, Global Positioning System (GPS), allowing stakeholders to through the principles of simplification, unification, and standard- accurately track the location and status of their shipments. ization, to promote digital platforms’ interoperability. Several initiatives are focused on the improvement of data exchange, especially on the maritime and hinterland side of Similarly, on the hinterland side of operations, truck appointment operations. Regardless of the focus of these initiatives, the systems (TAS) are good examples of optimizing freight move- beneficiary of the operational optimization is always the entire ments. These systems are designed to optimize truck arrivals port community. and manage the number of service gates at container terminals. Figure 3. Typical port flows and services Transport Customs Inspection Outbond Vessel Booking Stuffing & Clearance Clearances Secure Empty Gate Loading & Vessel Containers Appointment Unberthing Departure Hinterland OUTBOND Port Terminal Navigational EXPORT connectivity Hinterland IMPORT Port Terminal Navigational INBOUND connectivity Stripping Transport Berthing & Vessel & Delivery Booking Unloading Arrival Return Empty Gate Customs Inspection Inbound Vessel Containers Appointment & Clearance Clearance Source: Authors 9 https://portcalloptimization.org/ PCS Fundamentals And Trends 21 Port Community Systems Figure 4. Port Call Optimization Port call optimization Port call synchronization Port call cordination THE PORT AS A HUB Ships Actor A Actor B Previous EXTERNAL INTERNAL and next ports COLLABORATION COLLABORATION Actor C Actor D Hinterland operators Source: Lind, M., Bergmann, M., Haraldson, S., Watson, R. T., Park, J., Gimenez, J., & Andersen, T. (2018). Port collaborative decision making: An enabler for port call optimiza- tion empowered by international harmonization. They work by allowing terminal operators to divide daily working Port Digitalization Roadmap hours into various appointment time slots and set maximum quotas for each slot. Truckers are required to reserve their entry Currently, the levels of port digitalization remain low. Using a 2021 into the terminal for a specific time slot, which helps in manag- IAPH survey10 which covered 111 countries as a proxy to measure ing the flow and reducing congestion. The objective of truck port digitalization, we conclude that only 34 percent of participat- appointment systems is to minimize total costs, including the ing ports have an EDI system in compliance to the IMO FAL new cost of shifting truckers’ arrival times, gate operating costs, and mandatory requirements. Similarly, 35 percent of the ports are at truck operating costs and is achieved by managing the arrival design or implementation stage of setting up such systems, with rate and the number of service gates. the remaining 30 percent of ports reported that they have taken no action. The survey reveals that 1 in 5 countries have approached The TAS employs methods such as queuing models and simula- international development banks or other organizations to assist tion approaches to optimize the gate layout and improve terminal with implementing port electronic systems. Peer to peer learning efficiency. This helps in reducing average truck queuing times seems to be more important than developmental assistance. and the total cost experienced at the entrance of container termi- Roughly one in two countries confirmed that they have looked at nals. A typical TAS system includes features like a dashboard for other countries who have piloted or implemented EDI systems. appointment status, import container watch-list, the capability to schedule both import and export appointments simultaneously Building on the above needs, in 2020 the IAPH and IMO called on and the management of missed appointments. A typical exam- governments to work to accelerate the digitalization of maritime ple of a queueing system of a port container yard is presented trade and logistics. The two organizations stressed the need for in Figure 5. intergovernmental collaboration locally, nationally, and regionally and highlighted nine priorities to accelerate digitalization. One While TAS and port call optimization tools have a limited scope year later, IAPH and the World Bank released a joint report11 which and offer isolated improvements, they nonetheless serve as proposed a port digitalization road map (see Figure 6) to guide prime examples of the potential enhancements digital collabo- the identification of necessary policy reforms not just a matter ration can bring in procedural optimization. The subsequent step of technology but, more importantly, of change management, would be to establish a framework that fosters interconnectivity data collaboration, and political commitment. and interoperability, thus amplifying the benefits derived from each individual system. This concept forms the heart of PCS and Recognizing the low levels of port digitalization, a growing number represents one of its fundamental, overarching goals. of ports have expressed their interest beyond EDI systems to more modern yet complex PCS solutions. The latter are being seen as tools which will allow ports to concurrently contribute to challenges 10 Fal, I. M. O. (2021). IAPH global ports survey on the implementation of electronic data exchange to conform with the IMO Convention on Facilitation of International Mari- time Traffic (FAL) 11 World Bank. (2020). Accelerating Digitalization: Critical Actions to Strengthen the Resilience of the Maritime Supply Chain. World Bank. PCS Fundamentals And Trends 22 Port Community Systems Figure 5. Queueing System of the Container Yard Queue at gate lanes Queue at yard zones Yard zones Source: Zhang, X., Zeng, Q., & Yang, Z. (2019). Optimization of truck appointments in container terminals. Maritime Economics & Logistics, 21, 125-145. related to the operational coordination decreased congestion, and a of digital collaboration at ports, but it tends to be isolated and reduced environmental footprint. The aim extends beyond enhanc- concentrates on various segments of the port supply chain. ing individual tool functionalities; it involves ensuring these tools This fragmentation represents a missed opportunity for further operate in concert, creating a comprehensive, efficient system to enhancing port procedural efficiency and effectiveness. Address- manage the complex dynamics of contemporary port operations. ing this gap is precisely where PCS can play a pivotal role. Based on the above roadmap, PCSs should be a top priority in ports’ strategic digitalization agenda. PCS is viewed as a vital PCS Definition and Status Quo platform to optimize, manage, and automate port and logistics processes in the transport and logistics chain. The coherence A PCS is a digital platform that connects multiple members of between PCS, port management system (PMS), and MSW should the port community and their ICT systems. It provides a single be ensured in order that the maritime and trade logistics actors submission platform for exchanging information and documen- can benefit from the digitalization of these processes and asso- tation among all parties involved in the cargo movement through ciated applications, and that those benefits are realized in a the port. By integrating the various systems, the PCS reduces country’s international trade costs. duplication of effort, saves time, and improves communication among all stakeholders. Therefore, the entire port community In conclusion, while digital collaboration in port logistics is benefits from its operation. A typical PCS is operated within emerging, it currently exists in a fragmented state, focusing on specific governance and institutional structures and legislative different stages of the port supply chain. There is some form frameworks while it is run by a dedicated operator. PCS Fundamentals And Trends 23 Port Community Systems Figure 6. Maritime Trade Logistics Digitalization Road Map Maritime Trade Logistics 2021 2022 2023 2024 2025 Digitalization Road Map Digital Health Health security Ship to Shore FAL Convention Security Cybersecurity Port Call Optimization Ship to Shore Maritime Single Window Port Community Port Community System Port Authority Port Management System Disruption Smartport Source: World Bank. (2020). Accelerating Digitalization: Critical Actions to Strengthen the Resilience of the Maritime Supply Chain. World Bank. Figure 7. The Barcelona PCS Inbound Transport Booking Cargo collection note Schedules Container delivery note Hazardous Cargo Prior notice of cargo collection Booking Prior notice of empty-container delivery Stopover request Notification of cargo collection Transport Shipping instructions Notification of empty-container delivery Booking Outbond Transport Inbound Customs Customs Transport order Confirmation of clearance Container collection note Transport Cargo delivery note Prior notice of empty-container collection Payment Prior notice of cargo delivery IMPORT EXPORT Notification of empty-container collection Electronic payment Electronic invoice Notification of cargo delivery Payment Customs Unloading Ship Schedules Outbond Customs Stopover request Unloading Customs Declaration Waste notification ship Loading Shipment confirmation request ship Request of dockers Summary declaration Hazardous cargo Loading Ship Shipment confirmation and Request for dockers proforma invoice Cargo Manifest Source: PORTIC The International Port Community Systems Association optimizes, manages and automates port and logistics processes (IPCSA) defines the PCS as “a neutral and open electronic plat- through a single submission of data and connecting transport form enabling intelligent and secure exchange of information and logistics chains”12. The Barcelona PCS, presented in Figure between public and private stakeholders in order to improve the 7, reflects the functions and services of a typical PCS and the competitive position of the sea and airports’ communities; and services that it covers. 12 https://ipcsa.international/pcs/pcs-general/ PCS Fundamentals And Trends 24 Port Community Systems The above definition of PCS is worded carefully and captures its essence. Several other definitions exist in academic articles. For Box 1. PCS Fundamental Questions instance, some define PCSs as “holistic, geographically bounded information hubs in global supply chains that primarily serve the What is a PCS? It is a digital platform that: (i) Facilitates interest of a heterogeneous collective of port related compa- the exchange of electronic information between orga- nies”13, while others adopt a much simpler definition, such as the nizations that are members of the port community. (ii) one of “an electronic platform that connects multiple systems Facilitates inter-organizational business processes at a operated by a variety of organizations that make up a seaport port and (iii) provides value added analytical services to community”14 or the one of service system networks defined as the members of the port community. “an electronic platform that links the multiple systems operated by its members, namely both private and public organizations”. Who uses it? Public and private sector stakeholders in a Box 1 addresses a few fundamental questions around the PCS port or airport –the community of sea and airport users. concept, including a definition. PCS covers all types of exchanges - Business to Business (B2B), Business to Government (B2G) and Government In simple words, a PCS is an electronic platform that connects to Business (G2B) and in some cases Government to to multiple organizations and businesses in the port community. Government (G2G). The efficiency and simplicity of the PCS arise from the adoption of the ‘single window’ concept, where each entity is concerned How is the PCS a trade facilitation tool? PCS synchro- with the adoption of a single and simplified interface instead nizes the regulatory/administrative procedures with of connecting with multiple systems of various stakeholders. operational procedures electronically via the exchange of Therefore, the PCS secures the fast, structured, well-ordered, messages, thereby, simplifying procedures, cutting down and reliable communication between transport and logistics steps required, procedural red-tape, hand-offs, paperwork providers and cargo owners leading to the improvement of the and delays. port’s competitive position. What is in it for PCS users? A PCS improves the compet- The PCS addresses the need for members of the port community itive position of the seaport/airport and its users by auto- to connect individually with all other stakeholders. It provides the mating and streamlining the port’s regulatory and logistics technical infrastructure and tools for digital connectivity between processes, eliminating duplication through single submis- port stakeholders, thereby serving as a valuable trade facilitation sion of data, connecting transport and logistics chains. tool that electronically links both administrative (B2G2B, G2G) PCSs are built modularly, and their users can access and and operational procedures (B2B) electronically via the electronic use specific services in their respective sectors. A PCS exchange of data. helps integrate a broad range of port processes covering the maritime, terminal and hinterland segments giving its The fact that PCS responds a collective need for digitalization users a seamless view of operations. and effective data exchange, it does not mean that it is easy to implement. Many challenges are associated with complex What makes a PCS reliable and trustworthy? The PCS dynamics of the port community members and the intrinsic need Operator is neutral and open. It acts like a trusted third for control. Initial consultations among stakeholders can be party. It enables intelligent and secure electronic exchange contentious and their responses to the proposed PCS services between the members of the community. may range from a cautious welcome to an outright disinterest or opposition. Terminal operators and Customs agencies typically hold crucial logistics data that the proposed PCS would need and vice versa, and their coming on board is crucial for system’s Ports play a pivotal role in global supply chains, with approxi- success. Port community leaders must be prepared to discuss mately 1,300 ports serving as key nodes. Notably, over 100 ports and explain the role and scope of PCS services and effectively or port clusters across 58 countries have established PCSs. respond to stakeholders’ concerns. In this context, compre- Research underscores the significant contribution of ports in hensive understanding of the services provided by current port small island and low-income nations to their respective econ- systems is crucial. By gaining deep insights into the functions, omies, with these ports being 1.5 to 2 times more essential services, and limitations of both existing digital systems and compared to the global average. Despite challenges such as future platform, stakeholders will be more inclined to embrace size and remoteness, 12 SIDS out of 58 have successfully the PCS concept. implemented PCSs, indicating the widespread adoption of these systems. 13 Srour, F. & Oosterhout, Marcel & Baalen, Peter J. & Zuidwijk, Rob. (2008). Port Community System Implementation: Lessons Learned from International Scan. 14 Rodon, J. & Ramis-Pujol, J.(2006). Exploring the Intricacies of Integrating with a Port Community System, BLED 2006 Proceedings. PCS Fundamentals And Trends 25 Port Community Systems Countries undertaking PCS projects have preferred national systems to which it connects. Recognizing this interdependence, solutions covering all their major ports. Data from recent PCS the PCS operator must engage in careful consultation with port implementations suggests that port and maritime authorities are stakeholders15 when defining the PCS scope and services. This conceiving PCS projects as national projects. Usually, one of the collaborative approach ensures a comprehensive understanding larger ports in a country initiates work on a PCS, but with plans to of the system’s boundaries, therefore fostering greater accep- extend it to the rest of the ports. The main reason for this trend tance of the PCS’s role. may be that PCSs require the government’s administrative and financial support. In smaller countries, national PCS solutions Building on the notion of interconnectedness, we recognize the are the norm. Even in countries of Western Europe that pioneered blurred lines between PCS and other port systems. The distinc- PCSs, while a single PCS may not cover the entire country, imple- tion between a PCS and other port systems can sometimes be mentations now cover a cluster of ports. PCS installations reflect obscured. In some ports, the terminal operating system, the a concentration of solutions. PCS solutions provided by SOGET port management information system, or the maritime single and MGI cover more than 50 small and large ports in France. window may seem to offer services similar to a PCS, often due to MPC and Community Network Services dominate the field in the community efforts to establish one-to-one connections between UK, and PORTEL, PORTIC, and the Port Authorities of Valencia, existing systems. However, a PCS - acting as a the only neutral Algericas and Bilbao lead implementation in the Spanish ports. and trusted third party- with its hub-and-spoke topology, pres- ents a superior solution due to its enhanced design and strong The PCS concept extends to other modes of transport – namely interconnectivity features. This advantage remains true even the Air Cargo Community Systems (ACCS). An ACCS differs in ports with existing one-to-one connections, highlighting the marginally from PCS. It is organized around International Civil added value of implementing a PCS. Aviation Organization (ICAO) recommendations and International Air Transport Association (IATA) standards. IATA is an industry As we focus into the functional versatility of the PCS, it’s import- organization with near universal membership among commercial ant to consider its potential roles within a port’s regulatory frame- carriers. With air carriers under IATA’s umbrella, the broader air work. A PCS can function as a “Single Window” if it holds a freight industry generally follows IATA’s guidance and standards, mandate from the government to perform the relevant regulatory which are then adopted on ICT platforms used by the community. tasks as the sole platform in an economy for these operations. It However, there are differences between PCSs and ACCSs. Air can also function as a Single Submission Portal (SSP), providing cargo does not have the equivalent of the shipping container. trade facilitation functions to the stakeholders, notably the possi- Unit load devices (ULDs) are transport unitization equipment bility to submit all information on the movement of goods to a to facilitate cargo handling in aviation, but they are unlike multi single portal.16 In both cases, the portal can function either as an modal shipping containers that can transported by road, rail, and integrated system where the data is processed directly within the ships. Leaving aside those differences, airports, like ports, require portal, or as a decentralized, interfaced system, where the data a high degree of data collaboration. The air cargo community is sent through the portal to the relevant partner organizations benefits from the electronic interface between air cargo termi- for processing, or as a hybrid model of the two. nals, airlines, freight forwarders, trucking operators, Customs, aviation security, and ground handlers in broadly the same way Regardless of the option adopted, it is important that it reflects as the port community does in the case of PCSs. Interestingly, the needs of the port community. Within a port environment, there ACCSs and PCSs successfully interoperate in countries such are multiple stakeholders exchanging information, each with as the United Arab Emirates (UAE), Singapore, and Mauritius. their own internal systems. Some of these systems are based on internationally agreed standards. Others may be based on internal organizational standards. Ideally, the PCS should interact PCS in the Port Digital Eco-System with each of these systems and provide end-to-end visibility of the movement of goods, benefiting government agencies, the The critical role of a PCS lies in its reliance on interconnectivity with port authorities, the cargo owners or a combination of the above. existing automated systems operating at ports. These systems typically include terminal operating systems, port management However, it is crucial to differentiate the PCS from other existing information systems, harbor management systems, as well as systems in the port environment. PCS should not be confused automated customs information systems, and other back-office with existing single windows. Many ports nowadays utilize trade management systems of cross-border regulatory agencies. The single windows17, which are platforms that facilitate efficient services of such a community system are seldom self-contained. data exchange between border agencies, allow for standard- They critically depend on data and functionality offered by other ized information submission through a single-entry point, and 15 At the inception of a PCS project, the stakeholders must agree and appoint a PCS Operator. 16 UNECE, Technical Note on Terminology for Single Window and other ePlatforms, ECE/TRADE/C/CEFACT/2017/10, 2017. 17 Trade Single Windows and Cross-Border Regulatory Single Windows are often referred to as National Single Windows (NSW). PCS Fundamentals And Trends 26 Port Community Systems Box 2. Norway’s Maritime Digital Infrastructure Maritime Single Windows and Port Management Systems can handle the ship to port communication to a significant extent. The Terminal Operators Systems manage the interface with the hinterland, apart from running the terminal’s cargo handling operation. The Norwegian case suggests that where efficient facilities already exist, there may not be the incentive for the stakeholders to introduce a PCS. There are more than 150 ports and 700 port reception facilities (PRFs) along the Norwegian coast. Most of the ports are publicly owned and operated. The PRF’s are a combination of public/private. The ports are autonomous and somewhat specialized in their operations. Internationally most of them are to be considered as being relatively small when it comes to container cargo. None of the ports have implemented (or are planning) a PCS. The largest ports (around 100) are mainly using port management system and/or container terminal operating systems (TOSs). Regulatory B2G and some B2B (ship2port) communication are handled through the Norwegian Maritime Single Window. simplify import, export, and transit processes. Additionally, some The role of NTFCs in PCS Effectiveness countries have maritime single window systems that mandate ship operators to submit all regulatory data related to vessel, National Trade Facilitation Committees (NTFCs) set up under cargo, passenger, and crew into one platform. Moreover, the the WTO-TFA can provide impetus to key trade facilitation prior- carriers (shipping lines, pre- and onward carriage operators, such ities. PCSs cover a broad array of trade procedures and involve as trucks, railway, and waterways) maintain their independent the widest range of stakeholders in international trade. That systems and platforms. is why the NTFC’s role in promoting the PCS as an indispens- able trade facilitation priority is crucial. To start with, it should While each of these systems performs vital and distinct func- help to establish a joint stakeholder forum or working group to tions, requiring businesses to subscribe to them, the PCS stands develop a common understanding of the end-to-end process and out. It is unique in that it facilitates critical communication milestones involving all actors participating in cargo clearance. and interconnection between these systems, thereby offering services that are uniquely enabled by this networked structure. NTFCs can initiate Time Release Studies (TRS) at ports, airports, Further elaborating on the distinction between PCS and the and land borders to identify the weak links and to gather valu- maritime and trade single windows, can be found in the online able insights into border delays and inefficiencies. Once these are version of this study. identified, the design of the PCS can be adjusted appropriately to contribute to their elimination. The PCS contribution to the border Figure 8. PCS contribution to border delays reduction Brazil Programme will complement the SWP and deliver additionally through time savings in othe rstages Single Window Programme (SWP) will deliver time savings here 2.5 5.7 4.2 days days days Vessel Arrival Vessel Cargo Cargo Goods leave port (Notice of Arrival) Berthing Unloading Clearance (Gate Out) Imports Exports Source: CIP - IPCSA/CIP Webinar. April 21,2021 – PROCOMEX, Brazil. PCS Fundamentals And Trends 27 Port Community Systems delays reduction is shown in Figure 8. TRSs can be helpful in making Whether it is the analysis of TRS results or business process the case for a PCS. An increasingly common finding of TRSs is that analysis, remarkable results can be achieved through stakeholder Customs account for the least amount of time taken, and a signif- collaboration and consultation. A national, multi-agency study icant proportion of delays in clearance are attributable to private undertaken in Brazil established that significant time savings and sector actors that provide transport and logistics services. Reasons efficiencies would be achieved when both PCS and trade single for delays and inefficiencies in clearances must be identified and window are implemented. The trade single window systems reported accurately, regardless of whether they originate in the help achieve reductions in the time between cargo unloading public or private sectors. The traditional TRSs have been focused on and cargo clearance, whereas reducing the vessel call and gate Customs delays. The scope of TRSs should be extended to involve out processes require a more extensive data collaboration that other government agencies and logistics operators (‘TRS-plus’) can be achieved through a PCS. Given the broad mandate and to generate granular data on the bottlenecks and inefficiencies position of authority, NTFCs can launch studies of this type to attributable to all players, including logistics operators. help strengthen the case for developing a PCS. 4. Salient Functions and Features of PCS PCS Core Features Table 2. Antwerp PCS Modules and Use by PCS possesses the unique capability of speeding up the inbound Stakeholders and outbound movement of cargoes at ports. Its multidimen- sional data-sharing capabilities transform PCS into a modern Stakeholder % PCS Modules Used trade facilitation tool, tailored to the port and maritime operating environment. In fact, it extends the traditional concept of trade Ships’ Agents 57% facilitation beyond mere border management to incorporate the Shipping Lines 52% digital aspects of port processes and procedures. Functioning as a three-way information bridge, the PCS connects ship to shore Freight Forwarders 45% operations, trade compliance controls, and hinterland logistics. Terminal Operators 41% This connection provides opportunities to the participants to streamline, standardize and optimize port operations and cargo Port Authority. 30% flows. Consequently, PCSs are an integral component of both Customs Brokers 21% port’s trade and transport digital infrastructure. Customs Authority 9% The complexity of PCS functions escalates with the growth of Truck Operators 5% the trade and transport community at a port. The bigger the Source: Carlan, V., Christa, S., & Vanelslander, T. (2016). Port Community Systems trade and transport community present at the port, the more costs and benefits: from competition to collaboration within the supply chain. complicated the functions of the PCS. In practice, port operations Hellenic Institute of Transport. involve multiple actors who must co-ordinate with one another to achieve the common target of efficiency and effectiveness. These actors vary across ports, but they typically include: (a) of business processes in port and maritime operations. The flow public authorities, such as the port authority, Customs, immigra- of information is particularly critical in planning and executing tion; (b) port-based service providers, such as terminal operators, cargo movement, especially in the context of containerized goods. pilotage, stevedoring, and bunkering services; and (c) hinter- This process requires effective management of interlinked busi- land logistics service providers, such as rail, road, waterways ness activities related to the movement of goods, transportation or warehousing service provision companies. In this operational means, and crew. PCSs serve as essential hubs for information context, the efficient management of physical and information exchange and operational coordination for port users. flows between port’s users and customers -on the ocean the hinterland side- are paramount. An essential role of PCS is that of a process enabler, aiming to link the processes of respective actors into an overarching PCS plays a fundamental role in streamlining the exchange of port process. In its advanced form, it aims to provide a level of information between stakeholders in the port community. Acting integration deep enough to meet the information needs of all as electronic intermediaries, they facilitate the exchange of infor- supply chain participants. For instance, on the maritime side mation and documentation among various port stakeholders. This of operations. the PCS is critical for port call optimization and function of PCS also leads to the simplification and re-engineering enables port call synchronization, ensuring just-in-time vessel PCS Fundamentals And Trends 28 Port Community Systems Box 3. Examples of PCS Transparent Governance Portbase: The Dutch PCS, Portbase, is a non-profit organization providing ICT-based logistics services. Portbase is owned by the Port of Amsterdam and Rotterdam Authorities, which is a public body. The Dutch government has a role in setting the overall direction and policy for the organization. APCS: C-point is the facility that runs the PCS of the Antwerp Bruges port. It is an initiative of Antwerp Port Authority and Alfaport Antwerp. NxtPort is the logistics platform provider that powers the C-point technical platform. C-point offers confidentiality to ensure that data ownership remains with the sender of the data and cybersecurity standards. TPCS: Italy’s “Tuscan Port Community System” covers the Port Authority of the Northern Tyrrhenian Sea (Ports of Livorno, Piom- bino, Capraia, Portoferraio, Rio Marina and Cavo). It is managed by Autorità di Sistema Portuale del Mar Tirreno Settentrionale. Jamaican PCS: The Port Authority of Jamaica joined forces with the Customs Agency and is supported by the Shipping Asso- ciation of Jamaica to develop and run the Jamaica PCS. Polski PCS: The Polish PCS is owned by multiple Polish ports, namely the Port of Gdansk Authority S.A., Szczecin and Swinou- jscie Seaports Authority S.A. and PGZ System Sp. z o.o. in Radom. The Port of Gdynia Authority S.A. is expected to join Polski PCS. Each Port Authority will be the holder of an equal percentage of the shares in the Polski PCS. PCS 1.x, India: The Indian Ports Association runs India’s Port Community System currently called ‘PCS1x’ and will soon be part of the National Logistics Platform - Maritime. The Indian Ports Association (IPA) is a registered society established under the supervision of the Ministry of Ports Shipping, and Inland Waterways. The Chairpersons of major port trusts of India run the IPA. arrival, between the ship and the shore and port call co-ordination information exchange. On one hand, it ensures equal informa- within the facilities and agencies onshore. tion access and participation in the decision-making process to all stakeholders, preventing any group from gaining an unfair PCS functions as more than just a system of records management; it advantage. On the other hand, it promotes trust and cooperation integrates the activities of different actors into a cohesive port oper- among stakeholders, fostering confidence in the PCS’s impartial- ation. In its most advanced form, it aims for a level of integration that ity and guaranteeing the integrity and reliability of the information meets the information needs of all supply chain participants. PCSs exchanged. Box 3 presents examples of how the concept of serve as hubs for information exchange and operations for users neutrality is defined by different PCS operators. and clients of ports. In practice, most port community members use PCS modules. For example, a study in the Port of Antwerp18 revealed PCS’s neutrality has three key dimensions, namely the gover- that the ships’ agents used the most PCS modules, followed by nance the financial and the technological. shipping lines and freight forwarders (see Table 2). The interface with regulatory authorities may support crucial functions but they • A PCS must be neutral in governance. It must have policies are not the principal consumers of PCS modules. Nonetheless, a and guidelines that ensure an even handed and impartial regulatory authority’s mandate requiring shipping lines and freight administration PCS operating entities typically share three forwarders to use PCS as a gateway to submit the regulatory reports, common characteristics which allows them, particularly greatly facilitates PCS implementation. those led by port authorities, to foster trust: Another core characteristic of PCS is neutrality. Stakeholders I. they are predominantly non-profit, trust PCS operators to facilitate the exchange of their busi- ness-critical information. PCSs must transparently ensure that, II. often under the ownership or significant control of port as neutral entities, they have no affiliation with any stakeholder authorities, and group and no vested interest in the outcomes of the informa- tion exchange. Neutrality enhances equity, trust, and integrity in III. they usually collaborate with experts in digital logistics. 18 Carlan, V., Sys, C., & Vanelslander, T. (2016). How port community systems can contribute to port competitiveness: Developing a cost-benefit framework. Research in Trans- portation Business and Management, 19, 51–64. https://doi.org/10.1016/j.rtbm.2016.03.009 PCS Fundamentals And Trends 29 Port Community Systems probably be the arrival in the port. If it is a warehouse operator Box 4. Examples of PCSO’s expecting merchandise to arrive, this would probably be the emphasis on neutrality arrival in the warehouse. If it is the inspection agency, it may be the arrival in the inspection shed. It is imperative that all stakeholders understand the data in the same way to avoid Example 1: “Portbase is neutral, of and for the port any confusion. Aligning these to international standards can community and has no profit motive”. (From the Port- ensure interoperability with all partners referencing the same base website). data, the same way. Example 2: PCS SAVONA is a neutral and open infor- Apart from being neutral, another important feature of PCS is its mation platform, available on cloud computing and also openness. This means that its operations should be open to all accessible from mobile devices, which is aimed at intel- stakeholders, ensuring equitable access regardless of the size ligent and safe information exchange. (Website of PCS or type of the company. This inclusivity necessitates that the SAVONA - Ports of Genoa) system be open to participation by all entities, fostering a fair and competitive environment. By virtue of their formation (shareholdings, composition of PCS Benefits governing bodies), PCSs organized by port authorities can engender trust. A port authority’s motivations in setting-up PCS offer transformative advantages, in the realm of port digitali- or running a PCS will seldom be questioned, given its role zation, enhancing operational efficiency and improving regulatory shaping the port’s development strategy and as the conve- compliance through the strategic port automation and digital nor of the port community. With responsibility for the port’s systems’ integration. A wide range of stakeholders within the port safety, competitiveness and resilience, port authorities have community, including shipping companies, terminal operators, also significant influence over the decision process. In the border agencies, and freight forwarders, are the primary bene- digital front, port authorities have the responsibility to oper- ficiaries of these advancements. However, the impact of PCS ate ICT systems for the management of ports and harbors. is larger than initially thought as PCS are enduring, adapting to Therefore, stakeholders need to have confidence in the port the ever-changing landscape of global trade and technological authority’s capacity to serve as data-exchange managers advancements. and to guarantee the platform’s neutrality. Box 4 illustrates examples on the role of port authorities in providing trans- PCS leverage on cutting-edge technology to streamline complex parent governance to PCSs. processes, leading to vastly improved operational efficiency, enhanced regulatory compliance, and environmental sustain- • A PCS must be financially neutral to safeguard all stake- ability. These improvements are crucial for a variety of private holders’ interests. For similar usage of the facility, no stake- sector stakeholders in the port community. Furthermore, the holder should be financially disadvantaged when compared ripple effect of PCS extends beyond the confines of the port. to their peers. Some of the port authorities operate terminals Local and national governments benefit from improved trade and other port-related services that compete with private facilitation and economic growth, while environmental initiatives sector entities that also run such services in the port. The gain from more efficient resource use and reduced emissions. PCS must not favor the port authority-managed services This demonstrates the wide-reaching impact of PCS in modern over the private sector ones. To maintain neutrality, it is also maritime, port and hinterland logistics. necessary to implement safeguards and checks to prevent any one group from gaining an unfair financial advantage or The impact of PCS is dynamic and continually evolving. Stake- manipulating the system for their benefit. In a PCS’s govern- holders initially witness immediate improvements in day-to- ing documents, it might be useful to mention neutrality as a day operations, including faster processing times and reduced founding principle. manual errors. Beyond these immediate gains, PCS enhances predictability in logistics, significantly reducing supply chain • Finally, the technology for the data exchange with the PCS risks and the need to hold excess inventory. Over time, these also needs to be neutral. All information needs to be clearly benefits culminate in more substantial changes: improved global defined both at the data level (semantics) and the messaging supply chain connectivity, enhanced data-driven decision-making, structure level (syntax). Of these two the former is probably increased resilience against disruptions, and a more predict- more important. All parties need to understand the data in able supply chain environment. This predictability is crucial for the same way, so any variation or interpretation may create businesses to efficiently manage their inventory and resources, misinformation. For example, the date of arrival can be very further solidifying the role of PCS in modern logistics. Examples different depending on the stakeholder who is declaring it. of how Saudi Arabia and Benin measures the benefits of PCS If it is a vessel declaring the arrival of the vessel, this would is offered in Box 5. PCS Fundamentals And Trends 30 Port Community Systems Table 3. Categories of PCS Benefits Digital Economies Benefits Quantification Methods Economic Benefits Reduce the cost of information access Value of time and labour saved Reduce the cost of communication Previous cost of communication Extra revenue to government authority or administrator Value of revenue Correct taxation (port authority services) Difference between before and after tax revenue Prevention of illegal transactions Percent of illegal transactions reduction Increased Quality of Decrease in error rates Time and labour consumed to correct errors Information Elimination of data inconsistency / Decrease in data Time and labour consumed to sort and verify data redundancy Increased Performance Fast access to information Measurement of Increased Labour Productivity Efficient use of resources Better use of equipment capacities Community attendance benefits Quantification Methods Increased competitive- Increased access to information Savings in costs of information ness at Stakeholder level Added value services Revenue in Added Value services through PCS Increased efficiency Compliance with community standards and regulations Less investment needed through business growth Source: Carlan, V., Christa, S., & Vanelslander, T. (2016). Port Community Systems costs and benefits: from competition to collaboration within the supply chain. Hellenic Institute of Transport. The PCS helps the port succeed and preserve customer value. required documents/forms/licenses and the data that the By aggregating critical data from the information systems goods require. This can help to streamline the processes for of the community participants onto a single platform, a PCS the stakeholders, removing redundant information and harmo- streamlines interdependent logistics procedures. It also provides nizing similar data elements. This can also assist in aligning real-time visibility of shipments, allows for better coordination with international standards, making the portal interoperable between different stakeholders, and reduces costs associated with other solutions around the world using the same standards. with paperwork and manual processes. The PCS promotes inclusive trade. This is particularly relevant to At the beginning of their development, PCSs were more centered micro, small & medium enterprises (MSME) that can benefit from around the concept of a “data exchange hub” or “electronic mail- the use of the PCS n a number of ways summarized as follows: box.” Gradually, stakeholders realized its potential to offer a vari- ety of services that greatly enhance a port’s efficiency, reliability, • Single submission: When allowed by national legislation, and resilience. Table 3 summarizes PCS benefits and provides MSMEs just need to submit all the required information pointers to the quantification of those benefits. (e.g. customs, tax, inspection, logistics-related) once and do not need to submit information to different places. This A modern PCS emphasizes real-time visibility, providing instant can improve their efficiency in international trade and reduce updates on vessel movements, cargo status, customs clear- their costs. ances, and transport activities. It also focuses on exception management, offering immediate notifications for discrepan- • Easier clearance: MSMEs can rely on a PCS to help them cies, predictive analysis for potential issues, and collaborative to take care of the clearance process because it can facili- tools for resolution. Benefits include enhanced operational effi- tate the provision of complete and accurate declaration data ciency, reduced delays, increased transparency, and cost savings. to cross-border agencies, pay terminal fees, facilitate truck However, challenges arise from the need for system integration appointment, share shipping line and customs release infor- and ensuring data quality. mation with the terminal operator. The establishment of a PCS can help with the transition from • Better financial support: MSMEs can get better financial paper-based systems to an electronic environment. The move support from banks with the help of a PCS because a PCS towards a paperless system entails the identification of the may be able to facilitate increased trade finance collection PCS Fundamentals And Trends 31 Port Community Systems Box 5. Reaping the Benefits of PCS 1. PCS at King Abdullah Port, Saudi Arabia In the heart of the Red Sea, the King Abdullah Port thrived as one of the world’s most advanced and swiftly growing ports. But behind its towering cranes and vast berths was a technological marvel less visible, yet equally impactful: the Port Community System. Envisioned as a digital nexus, the PCS seamlessly integrated various operations within the port, connecting shipping agents, customs officers, terminal operators, and transport companies. The real-time data exchange fostered an environment of transparency, collaboration, and efficiency. Paperwork has been replaced by automated workflows and digitalized processes, allowing for faster cargo clearance and minimal dwell time. With PCS at its backbone, the port could promise not just swift transshipments but also accurate, secure, and predictable services. The benefits of digitalization are visible. King Abdullah Port has managed to secure high positions in the World Bank Container Port Performance Index (CPPI) rankings. Source: https://www.kingabdullahport.com.sa/port-technology/port-community-system/ 2. PCS at Port Cotonou, Benin Yet another example of benefit is that the PCS in Port Cotonou in Benin delivered through Just-In-Time processes for trucks. The PCS at Port Cotonou was implemented in 2011, and within a year, it reduced the average stay time of large trucks in the Port of Cotonou from 269 to 3 hours. Digitalization is also high on the agenda, with partners such as Webb Fontaine creating Single Window solutions for the clearance of goods, interconnecting all stakeholders involved in foreign trade and allowing them to perform trade procedures on one platform. This was not an effort of the PCS alone. Partners such as Benin Control and Benin Customs Service have also joined the effort in creating online and digital solutions for cargo declaration, valuation, and the tracking of goods. The Port Authority of Cotonou is expected to make further advancements to its PCS whereby all actors involved in the handling of vessels and goods will be electronically linked. The African Development Bank Group has approved further investments into the port infrastructure and digital solutions that link entry and exit points to the port’s database. An integrated center will be established at the port for trade and freight processing. The goal is to cut transit time in the port area to two hours and relieve congestion along nearby roads. Source: African Development Bank: https://www.afdb.org/en/news-and-events/press-releases/benin-african-development-bank-group-extends-eu80-mil- lion-loan-port-cotonou-upgrading-63154 security and provide better business risk control. Banks can develop and maintain expensive, dedicated ICT systems. It provide MSMEs with better credit ratings and access to trade lowers the entry barrier and encourages competition. finance instruments when information on trade transactions is readily available through a PCS. The PCS supports horizontal and vertical collaboration. The PCS answers these critical collaboration needs by automating • More efficient logistics: MSMEs can get more efficient and inter-organizational business processes and systems of the port. cheaper logistics and transport services because the portal In fact, the efficient sharing of information amongst shipping can offer a wide range of services connecting transport and lines, freight forwarders, truck fleet operators and others enables logistics chains. efficient time-sharing of the port’s infrastructure, such as berths, yard equipment, terminal gates, etc. • Reduced business transaction costs: With a PCS, MSMEs can interact with the standard import and export service eco-sys- • Vertical collaboration involves managing relationships up and tem with lower costs and higher efficiency. This may reduce down the supply chain and improving the overall performance, the recruitment needs of MSMEs within their own interna- strengthened by the collaboration of suppliers, manufactur- tional trade staff, saving human resources and management ers, distribution centers, customers, and logistics service costs. Providing the MSME with a presence on the web page providers. As the saying goes: “Supply chains compete, not allows it to interact with the community without the need to companies.” The benefits of vertical collaboration are well PCS Fundamentals And Trends 32 Port Community Systems Figure 9. Port Community Members Collaboration prior and post PCS adoption FROM TO Warehouse Warehouse Operator Road Operator Road Empty Empty Haulier Haulier Container Container Yard Yard Consignee/ Consignee/ Terminal Importer Terminal Importer Operator Operator Customs Customs Broker/ Broker/ Freight Freight Forwarder Forwarder PORT Carrier Carrier COMMUNITY SYSTEM Customs Customs Ship’s Ship’s Agent Agent Port health Port health Exporter/ Authority Exporter/ Authority Consignor Consignor Immigration Immigration Stevedore Stevedore Port Port & Port Port & Authority Maritime Authority Maritime Security Security Source: Carlan, V., Christa, S., & Vanelslander, T. (2016). Port Community Systems costs and benefits: from competition to collaboration within the supply chain. Hellenic Institute of Transport. known and the tight integration within global value chains A study which was carried out in the context of the Antwerp PCS, (GVCs) is well documented.19 documented the benefits of horizontal and vertical collaboration in the implementation of the PCS module for the “Export Control • Horizontal collaboration refers to cooperation and coordi- System (ECS) - Arrival notice of export cargo at terminals”. Under nation among companies at the same level of the supply the EU legislation, a trader must file an export declaration elec- chain, and sometimes, even competitors must collaborate20. tronically through the ECS under the EU’s operational model and Scholars have posited that PCSs promote horizontal collab- messaging system to control consignments exported out of the oration, a trend that will be accelerated with the development EU. Terminal operators at the port of Antwerp began reusing of the concept of the physical Internet. The opportunities for the ECS data as the advance notice of arrival. What began as horizontal collaboration in a PCS include reduction in empty an initiative between one terminal operator was taken-up by the hauling, improved usage of storage facilities, joining forces to PCS and extended horizontally to several terminals that oper- bid as a consortium for larger shipping contracts, participat- ate parallel supply chains. Currently, terminal operators, freight ing in online marketplaces, sharing of resources (e.g., trailers forwarders and customs use it across most of APCS terminals. and trucks) and field agents. The collaboration structure between port community members prior and after PCS adoption, is shown in Figure 9. 19 Marchi, Valentina De, Eleonora Di Maria, and Stefano Micelli. “Environmental strategies, upgrading and competitive advantage in global value chains.” Business strategy and the environment 22.1 (2013): 62-72 20 PCS Fundamentals And Trends 33 Port Community Systems 5. Global trends in PCS implementation The Four Waves of PCS Implementation ISO, this era marked a substantial progression in standard- izing data interchange. In addition, IMO’s contribution was One of the objectives of this study revolves around examining pivotal as it produced the IMO Compendium on Facilitation the progression of PCS projects and highlighting their evolution and Electronic Business (2001 edition), a critical document across distinct phases. We use an inventory of implemented PCS that consolidated data standards for the electronic reporting projects, originally collated by IAPH21 and which draws parallels from ship operators to shore-based regulatory authorities and with a compendium seen in contemporary academic literature22. terminal operators. An in-depth analysis of this database categorizes the implemen- tation of PCS into four distinct waves. Each of these waves is • This period also witnessed increased collaboration between distinguished by a unique timeframe of deployment, along with international organizations worked together with industry geo-economic and socio-technical settings. Moreover, each wave bodies, such as the SMDG24 and PROTECT Group, which has capitalizes on a particular combination of legal instruments, been working with the industry since the 1990s to build data regulatory imperatives, and technological advancements.23 standards. The WCO produced the WCO Data Model capturing the foundational customs and cross-border regulatory data This approach underscores the dynamic interplay between legal, requirements. These efforts converged to produce electronic regulatory, and technological dimensions in the evolution of PCS data standards known as UN/EDIFACT, which are universally projects and not only sheds light on the historical progression adopted by the industry. Technological developments such as of PCS but also offers insights into the underlying factors that the n-tier, loosely coupled architectures, distributed web-ap- have shaped their development over time. plications, and service-oriented architectures were the main driving force during this period. The role of the Internet Engi- The four waves of PCS are described below. neering Task Force (IETF) was crucial as it produced multiple internet-based protocols to support EDI, which had hitherto • The first wave of PCS development, spanning from 1982 to used privately leased data networks. On the regulatory front, 2000, heralded a pivotal shift in port logistics. This phase the European Union’s directive (EMSA, 2002) on maritime leveraged the widespread use of the technical and legal safety required all ports to implement Vessel Traffic Manage- instruments crucial for the EDI implementation, particularly ment Systems spurring several European ports to adopt PCS. influenced by global data standards developed set by ISO and Prominent examples of ports that developed PCS during this the UN. This era saw a significant move towards paperless period are the Spanish ports of Valencia and Bilbao, Port processes and digitalization of customs declarations. The of Rotterdam, Port of Sines in Portugal, the Italian ports of European common market played a key role in shaping-up this Ravena, Genoa and La Spezia, the Israel PCS, the Chinese wave with its dynamic economies were heavily reliant on inter- ports of Shanghai and Dalian, Port Louis (Mauritius), the Port national trade. These economies were supported by large, of Cotonou in Benin, among others. competitive, and high-performing gateway ports that invested heavily in port mechanization, multimodality, and digitaliza- • The third wave (2012 to 2017) brought significant legal and tion. The earliest PCS in Hamburg Dakosy (1982), Le Havre technological advancements. The EU regulatory framework SOGET (1983), Felixstowe MCP (1984) were quintessential required member states to adopt eCustoms solutions, such products of this environment. In Asia, the Singapore PCS as the EU Single Window environment for customs and EU emerged driven by similar motivations and circumstances but e-Maritime Single Windows. These impacted not only Euro- also with aspirations to become the leading transshipment pean ports but also set a precedent for the rest of the world. hub in the region. In parallel, this era was marked by the proliferation of Web 2.0 technologies, steering ICT architecture towards more • The second wave occurred between 2001 and 2011, building open, flexible, and user-centered systems. Key developments upon the achievements of the previous two decades. This included an: period was characterized by the significant growth of regu- latory data standards largely driven by initiatives from key I. Increased use of Application Programming Interfaces international organizations. Championed by UN/CEFACT and (APIs), making it easier for different applications and 21 Port Community Systems Benchmark Survey, International Association of Ports and Harbors, Trade Facilitation and Port Community Systems Committee (2011) (https://www.iaphworldports.org/n-iaph/wp-content/uploads/2020/11/ReportOnPCSBenchmarkSurvey_TFPCS_Jun2011.pdf) 22 Moros-Daza, A., Amaya-Mier, R., & Paternina-Arboleda, C. (2020). Port Community Systems: A structured literature review. Transportation Research Part A: Policy and Prac- tice 133, 27-46 23 UN Recommendation 26 provides a harmonized model agreement for electronic data interchange (EDI) in commercial transactions. 24 Ship Message Design Group (SMDG) is registered non-profit industry association. PCS Fundamentals And Trends 34 Port Community Systems services to communicate with each other and exchange on MSW, the introduction of privacy legislation, such as data, and enabling development of more complex and inter- General Data Protection Regulation (GDPR), and adoption of connected ICT architectures; Legal Entity Identifiers (LEIs) in the maritime industry. Several new ports have started adopting these technologies, includ- II. Greater reliance on cloud computing platforms, which allow ing the traditionally active PCSs in Europe but also US West PCS applications to scale and handle large amounts of Coast ports and ports in Asia. This trend indicates a growing traffic and data and the shift towards distributed and highly global commitment to adopting advanced technologies and available ICT architectures; regulatory practices in favor of more technologically robust yet agile PCS solutions. III. Adoption of microservices, which are small, independent units of functionality that can be developed and deployed independently; and Lessons Learnt from Four Decades of PCS Experience. IV. Greater focus on design and user-centered approaches in ICT architecture. For more than four decades, the PCS concept has been at the heart of digital port innovation. Its contribution has been pivotal in • During this period, PCS expanded into Asia, Africa, and the enhancing the fluidity of international maritime trade, while also Americas. In Asia, the ports of Jakarta, Abu Dhabi (United streamlining and optimizing supply chain flows. In the preceding Arab Emirates) and the major public sector ports of India section, we analyzed the evolution of PCS, identifying four distinct introduced PCS. African ports that introduced PCS include waves of development. In this section, we aim to distill essential the ports in Djibouti (Djibouti), Tangier Med and Casablanca lessons learned from these developments. (Morocco), the ports of Kinshasa, Boma, Goma, Kisangani, Matadi (Congo), and the port of Lomé (Togo). In Europe, the Each developmental wave of PCSs has offered unique insights, ports of Trieste (Italy) and Odessa (Ukraine) introduced PCSs critical for understanding their evolving role in global trade. while, in the Americas, similar systems were developed in the ports of Valparaiso (Chile) and Jamaica with ongoing • Firstly, the initial phase of PCS implementation highlighted the projects Montréal and Port Prince Rupert (Canada) and Port importance of digital integration in ports, laying the ground- of Santos (Brazil). work for subsequent advancements. • The fourth wave of PCS development, which commenced in • Secondly, the progression into more sophisticated systems 2018 and continues presently, marks a significant shift in the underscored the value of real-time data and analytics in digital logistics and is expected to revolutionize the port and enhancing operational efficiency. maritime industry. This period is marked by a significant shift towards multimodal service offerings of PCS. The trajectory • Thirdly, the expansion of PCS functionality demonstrated the indicates an increasing reliance on cloud-based PCS solu- benefits of interoperability among various stakeholders in the tion, seamlessly integrating with external digital logistics maritime sector. platforms, some of which may utilize blockchain technology. • Finally, the latest advancements have emphasized the signif- • This wave will witness the transformation of the maritime icance of sustainability and resilience in PCS design and sector due to the adoption of Industry 4.0 technologies, a operation, aligning with the broader goals of environmentally trend that is expected to improve the efficiency and effec- conscious and robust global trade networks. tiveness of global logistics and supply chain management. The current trend of port automation and data exchange is In summary, the journey of PCSs reflects a continuous quest for expected to be further reinforced by the adoption of artificial efficiency and sustainability in maritime trade. The below lessons intelligence (AI) techniques which leverage ‘big data’ from not only chart the past achievements but also illuminate the supply chain platforms and the Internet of Things (IoT)25. path forward, guiding future enhancements in PCS development. Technologies such as autonomous vehicles, sensors and tracking systems, augmented reality, and digital twins are • EDI is the driving force behind port innovation and PCS. becoming increasingly prevalent, signifying a future where Port terminal operators realized that EDI was critical to these innovations are standard. manage the growing volumes of container traffic. It simply took a lot of work to handle paper documents to load and • On the regulatory side, the measures that would influence PCS discharge cargo. Initially, EDI exchanges between the port adoption include obligations under the IMO FAL convention stakeholders used a value-added private data network but 25 Insert a Reference on UN/CEFACT Smart Containers BRS PCS Fundamentals And Trends 35 Port Community Systems PCS Fundamentals And Trends 36 Port Community Systems without necessarily providing a central database and an IT management in handling dangerous goods, and advance application. It was also the start of standardization initiatives cargo information (following 9/11) introduced new obliga- on electronic data exchanges, particularly with UN/CEFACT, tions on shipping lines and ship operators. Shipping lines which produced the EDIFACT standards for B2B information now have a binding obligation and the capacity to transmit exchanges. Modern methods of communication emerged, electronic data on safety and security in advance. On the with ports increasingly adopting APIs and data payloads that strength of these government mandates and capacities, the were defined more nimbly using standards such as XML and port’s administrative and regulatory authorities can build JSON. Notwithstanding these improvements, the data stan- consensus around the need to develop a PCS. dards underpinning UN/EDIFACT remain the cornerstones of trade. For port and terminal automation, these standards are • Existing single windows can be leveraged as a springboard still recognized and used extensively by the shipping indus- for PCS development. Governments have also taken steps try. The rapid, and extensive adoption of EDI by the maritime to facilitate international maritime trade, with the Maritime industry was the basis to the digitalization of the industry. Single Window (MSW) environment proposed by the IMO Despite the growth of alternative technologies, the adoption (mandatory from 2024) and by the European Union (compul- of EDI remains foundational to port modernization, including sory since 2015). Governments must ensure the introduction PCS implementation. of the MSW across a country to harmonize vessel formalities worldwide through IMO’s recommendations and standards • The importance neutral management in port data exchanges. for dealing with electronic data between private declarants The maritime industry consortia and international bodies and all authorities involved in the maritime sector. The MSW further improved the data standards in the 1990s to ensure provides a single electronic interface to fulfil regulatory the dematerialization of cargo procedures between differ- requirements. In parallel, the WTO TFA requires countries to ent stakeholders, such as Customs, port authorities, ship- implement a ‘Trade Single Window’ providing the trade with a ping companies and freight forwarders. In many cases, a single point interface for all import, export and transit related central database was set up as a trusted third party between regulatory requirements. For cargo vessels, the IMO and WTO stakeholders, sometimes with the establishment of a dedi- mandates intersect and must be harmonized to avoid any cated company to operate it for the entire port community. In duplication. This is simply done by ensuring that the pipeline these cases, the port stakeholders founded a neutral entity to of cargo data originating from the maritime industry that is assure the port community’s neutrality on data and system supplied to the MSW is reused alongside the Customs goods governance. These new systems were called Cargo Commu- declarations submitted to the TSW for the regulatory control nity Systems (CCS) and represented investments often made of goods and for risk management purposes. That is why by private companies in Europe to strengthen the competitive- today, the IMO and WCO have collaborated to produce the ness of the port. In a few years, the industry and governments IMO Compendium on Facilitation and Electronic Business recognized CCSs as key for accelerating goods’ passage containing a data set. Besides, there also exists a comprehen- through ports and useful for Customs to target containers for sive partnership agreement between the WCO, IMO, the United security or illicit traffic controls. CCSs have shaped up to be Nations and ISO to work together on that compendium and labelled as Authorized Economic Operators (AEOs), bringing comprehensively address the best way to reuse data between them into the trusted circle of entities operating at the port TSWs and MSWs. The PCS relies on these standards and in a country. When the ambit of electronic data exchange goes a step further than TSW and MSW combined, because it grows beyond exchanges between shipping lines and termi- deals with both cargo and vessel information. The obligations nal operators, the industry feels the need for a neutral party, on governments under the WTO TFA and IMO FAL convention necessitating the establishment of a PCS. to implement the TSW and MSW respectively would serve as an excellent opportunity to initiate the development of a • Discrete digital initiatives may lead to a gradual transition PCS project. to PCS. In the 2000s, European and international regulations required port and maritime authorities to improve marine • Public authorities realize the potential of utilizing PCS data. safety and security, particularly related to goods or passen- The PCS covers all regulatory authorities concerned with ger transportation. These regulations have led ports to cargo and vessel clearance, including the customs, harbor develop digital solutions to process administrative declara- master, police, border control, port state control, coast tions related to ships, goods, or passengers. Many of these guard, health services, immigration, maritime affairs and systems became PCSs because they focused on the whole other agencies. PCSs are designed to collect comprehensive port management process and no longer only on goods. They administrative data from the shipping lines. The PCS can have seen their role strengthened, bringing together all port also serve as an efficient and operational gateway to feed stakeholders to meet the new challenges of monitoring a MSW or TSW with electronic data, avoiding reinventing the ship’s calls at, and between ports, and dealing with hazard- wheel with additional IT applications. PCSs play a genuine ous goods, waste, health and even security formalities. The role in connecting the ‘Single Windows’ to the supply chain mandate to implement the ISPS code, the role of information stakeholders because they already deliver facilities for ship PCS Fundamentals And Trends 37 Port Community Systems entry into and exit out of ports. They can easily transmit The pursuit of improved predictability increasingly relies on the administrative data to national authorities without imposing utilization of advanced data sources, particularly those detailing any administrative burden on users. Therefore, this exchange supply chain events. PCS, along with other logistics platforms, may enable the smoother implementation of trade compli- are storehouses of extensive supply chain events data, offering ance programs, such as the coordinated border management valuable insights and solutions when disruptions occur. The role It may also allow port and maritime authorities to use avail- of PCSs during these disruptions involves: (i) assist the efficient able data to design and introduce improvements to vessel relocation of resources in affected ports; (ii) deliver timely and and port security The PCS project could serve as an excellent actionable information to its stakeholders in real-time, especially opportunity to serve the mandates of trade and transport to freight forwarders and shipping lines, to improve the predict- regulatory authorities,. ability of supply chain operations; and (iii) enhance operational visibility and predictability for to shippers and cargo owners. Global Trade Challenges & PCS A 2011 study27 on the role of PCSs in supply chain risk manage- ment suggested that the information offered by a PCS to freight In today’s global trade setting, several key challenges including forwarders was not sufficient and PCSs were not yet geared for high trade costs, the need for stronger supply chain resilience, collecting, packaging, and distributing data on supply chain risks and the environmental impact of maritime transport are crucial within the port community. Since then, PCS have evolved and areas of focus. These challenges are closely interlinked and have combined the growth of digital logistics platforms provide more a significant impact on the functioning of GVCs. High trade costs, and more information to freight forwarders from an array of data often caused by logistical inefficiencies and bureaucratic hurdles, sources. Enhanced integration of PCS with each other and with can hinder the smooth flow of international trade. Additionally, other supply chain platforms can further increase their value, the resilience of supply chains is increasingly important, as recent providing more comprehensive information and insights not only global events such as pandemics and geopolitical tensions have to freight forwarders but also to shippers, consignees, and other shown how vulnerable these networks can be to disruptions. important member of the port community. IPCSA’s initiative in Alongside these issues, the environmental impact of maritime establishing a network of trusted networks is a significant step transport is a growing concern, with the sector facing pressure towards this direction. to reduce its carbon emissions. To navigate such uncertainties, ports must remain agile, adaptive, and resilient to the change- Lastly, ports themselves are vulnerable to disruptions, as able mix of cargo and demand patterns. For ports to remain evidenced by the 2020 incident at the Port of Beirut. Developing competitive, they must coordinate with the leading players in a detailed risk profile, encompassing various potential disruption international supply chains to strengthen their interconnectivity scenarios and their impact on business continuity, is a vital step with the physical and digital networks. This approach implies a forward managing unforeseen events. The collective effort of high degree of alignment between port and logistics processes port community members can form a robust defense against in which PCSs have a significant role to play. major supply chain disruptions, significantly contributing to the resilience of global supply chains. This highlights the integral role of PCSs in bolstering the strength and reliability of international Strengthening Supply Chain Resilience trade mechanisms, ensuring continuous support, and fostering a more resilient trade environment. In a rapidly evolving global trade environment, PCSs play a pivotal role in enhancing supply chain resilience, particularly in the face of unforeseen events such as the COVID-19 pandemic, PCSs and Green Maritime Logistics the running aground of the container ship ‘Ever Given’ in the Suez Canal, and the Ukraine conflict. These challenges have The maritime sector, contributing a significant 8 percent of the underscored the critical dependence of the global economy on world’s carbon emissions, faces an imperative to drastically efficient maritime supply chains. The maritime logistics industry reduce its dependence on fossil fuels. To this end, Port Commu- must respond to these challenges by introducing operational nity Systems (PCSs) have become pivotal in adapting maritime elements to ensure agility in redeploying its resources to restore and port operations for enhanced efficiency and environmental the flow of goods quickly. Consequently, the trading industry sustainability. To meet these strategic challenges, these systems demands agile and resilient supply chains that rapidly adapt to are evolving to integrate comprehensive processes related to disruptions and restore predictability26 in deliveries schedules nautical and port operations, thereby sharing more accurate and timelines. and reliable data. This advancement enhances the predictability 26 Mthembu, S. E., & Chasomeris, M. G. (2021). A systems approach to developing a port community system for South Africa. Journal of Shipping and Trade, 7(1). 27 Thesis, M., & Treppte, S. (2011). The Role and Scope of Port Community Systems in Providing Data that Enhances Supply Chain Risk Management A Case Study for Freight Forwarders in the Port of Rotterdam. Total Quality Management. PCS Fundamentals And Trends 38 Port Community Systems of vessels’ berthing and cargo operations. In the context of the incoming vessels and their hinterland operations. In addition climate crisis, the concept of ‘low emission supply chains’ has to ships, ports themselves are significant contributors to pollu- become a paramount consideration of every shipping company’s tion, particularly in large port cities. Ports house a plethora of strategic agenda. diesel-powered machinery such as straddle carriers, terminal tractors, and reach lifters, which produce high levels of emis- Leveraging cutting-edge technologies, PCSs are transform- sions. When combined with shipping emissions, the pollution ing maritime logistics into a more sustainable practice. New from these port operations becomes substantial. PCSs can technologies, such as AI, 5G, IoT, Big Data, and advanced web play a crucial role in mitigating this impact by optimizing port services such as JSON API, have equipped PCSs with additional operations, leading to reduced usage of these diesel-powered capabilities to meet the energy optimization challenge on shore machines and consequently, lower emissions. and at the high seas. PCSs assist shipping lines and logisticians with granular data on administrative, commercial, and nautical In the near future, PCSs will be able to exchange voyage and aspects of a port operations. By applying AI and Big Data analyt- passage planning in electronic format29 providing fleet oper- ics, these systems generate indicators to forecast the actual ators and other supply chain players with accurate data and vessel arrival times and cargo delivery more accurately, thus guarantees about the readiness of the port ecosystem. These enhancing stakeholders’ planning capabilities. improvements will result in fewer empty runs, more return loads, and shorter waiting times, thereby saving time for fleet and termi- PCSs are also instrumental in reducing unnecessary fuel nal operators, but significantly reducing emissions in maritime consumption by shipping lines and port operators. There is transportation and port operations. . evidence that shipping lines conserve fuel by ensuring that ships do not ‘rush to wait’ at ports. With more accurate real- Through fostering collaboration between PCSs and logistics time predictions, ships can adjust their cruising speeds to systems, the maritime industry is set for a transformative shift optimal, fuel-efficient levels therefore reducing idle times at towards sustainability. Vessels, guided by PCSs, will adjust their the anchorage. The just-in-time model for port calls, enabled sailing speeds to arrive ‘just in time’, picking up cargo efficiently by PCS capability to ‘multi-synchronize’ operations between and reducing time spent in ports. This enhanced synchronization stakeholders, minimizes maritime emissions on route and of operations not only streamlines port activities but is also a on anchorage 28. This approach ensures a reliable welcoming critical component in the global effort to decarbonize maritime window at ports, where all resources available and planned for transportation. 6. Challenges of Implementation Even though PCSs can significantly streamline and optimize the implementation with broader port sector reforms. A good flow of information and goods in and out of ports and hold the example of this approach is the case of Israel where PCS potential to revolutionize port operations, their implementation is was embedded into the 2005 port sector reform (see Box 6). not universally embraced. Several countries, including advanced economies, have found their PCS journeys towards effective • Legacy Systems & Infrastructure: A significant number of implementation rather challenging. ports operate with legacy systems and infrastructure that were not originally designed to integrate seamlessly with Some of the reasons behind these challenges are outlined below. modern digital technology, central to PCS. Upgrading or replacing these legacy systems can be a massive undertak- • Fragmented Stakeholder Interests: Ports are intricate ing both financially and operationally. It requires meticulous ecosystems involving a multitude of stakeholders, each with planning, significant investment, and a willingness from all distinct interests and priorities. Achieving a consensus and stakeholders to adapt to new technologies. The integration motivating these diverse groups to commit to a PCS project is of new PCS technology with old systems often presents tech- a daunting task. This challenge is compounded by the varying nical challenges, requiring tailored solutions that can be both degrees of technological readiness and financial capacity time-consuming and costly to develop. among these stakeholders, making it tough to find common ground. To address this challenge, some countries linked PCS 28 The International Taskforce on Port Call optimization (ITPCO) has developed a new paradigm that tracks 17 times stamps associated with a port call. The expected (ETA), Predicted (PTA), Requested (RTA) and Actual (ATA) are tracked for a Just in time Port Call. 29 The Singapore Rotterdam Green & Digital Corridor is a pilot to test the concept of digital exchange of passage plans to form the world’s longest green corridor to enable low and zero carbon shipping. PCS Fundamentals And Trends 39 Port Community Systems Box 6. PCS Development via Port Sector Reforms in Israel Israel is one of the few countries in which there is a nationwide PCS offering free of charge PCS services to maritime supply chain stakeholders. At the heart of this approach is the 2005 Israeli Port Sector reform, which divided the Israeli Port Authority into four government-owned companies and one administration. The three companies are Port of Haifa, Port of Ashdod, and Port of Eilat. Their roles are to operate the Israeli commercial ports. The fourth company is Israel Ports Company (IPC), the landlord of the ports, responsible for the development of the Israeli ports infrastructure and managing the port’s assets. The Administration of Shipping and Ports (ASP), the national regulator, is part of the Ministry of Transport. The companies faced a “tower of babel” problem, with each potentially “speaking” their own language and having different procedures and data requirements from the maritime community. Such a situation would have been problematic for the industry and an obstacle to free competition. To prevent it, IPC management decided to take the digital developments to the next level and set up the Israeli Port Community System (IPCS). To achieve the highest levels of cooperation from the stakeholders it was decided that: • The body, which will approve the IPCS roadmap and annual plans, will be a steering committee jointly headed by the head of Customs and the head of Foreign Relations at ASP. • The members of this committee are the high-level managers of the various organizations that represents the main maritime supply chain stakeholders and appointed by the Minister of Transport: Port Operating Companies, the Chamber of Shipping, the Export Institute, the Chamber of Commerce, and the Transporters Association. • At the beginning, this committee met twice a year but in the recent years only once. In addition, the steering committee heads receive periodic updates. • A working forum discussed the procedures, harmonized them, set the standards to digitalize them and coordinated the implementation steps and timing with the stakeholders. • The members of this forum are representatives from the various organizations that represents the main maritime supply chain stakeholders, mainly from the operations and IT divisions. Since 2005 this forum meets once a month. • IPC was assigned to design, develop, operate, and support the PCS. The IPC’s Chief Information Officer (CIO) was assigned as the project manager and presents to the steering committee and acts as the head of the working forum. • Regulatory Compliance: Navigating a complex web of regu- particularly those handling sensitive or proprietary informa- lations and standards set by trade and port authorities is tion, may be hesitant to share data due to fears of commercial a complex task for the trade and transport industry. These espionage, data theft, or other breaches. Developing robust regulations are often intricate and multifaceted, designed cybersecurity measures and convincing stakeholders of their to ensure safety, security, and fairness in trade practices. effectiveness is a crucial challenge in PCS implementation. The introduction of a PCS could potentially disrupt existing compliance management systems, leading to a period of • Collective Inertia: Implementing a PCS requires paradigm adjustment where new risks might emerge. Ensuring that the shift in how port operations are conducted. This change PCS is compliant with all relevant regulations and that it can involves moving away from traditional, often manual adapt to changes in the regulatory landscape is a significant processes to more automated and digitized workflows. Such challenge. a shift can be met with resistance, especially from stakehold- ers who are comfortable with the status quo or skeptical of • Commercial Secrecy, Privacy & Data Protection: The imple- new technologies. Overcoming this inertia involves not only mentation of a PCS requires the exchange of sensitive data introducing new technologies but also ensuring adequate among multiple stakeholders. In an era of increasingly training, demonstrating the tangible benefits of the PCS, and sophisticated data breaches and cyber threats, ensuring the fostering a culture of innovation and adaptability among all security and privacy of this data is paramount. Stakeholders, port stakeholders. PCS Fundamentals And Trends 40 Port Community Systems • Existing Efficient Digital Facilities: Customs, Port Authorities, Therefore, the path to technological advancement in port and Terminal Operators are dominant players, each with a communities is intricate and layered, demanding not only the significant footprint of systems and interfaces, each providing seamless integration of cutting-edge systems but also the unifi- a range of digital services to facilitate trade. For example, cation of varied interests amidst significant challenges. This a Terminal Operating System (TOS) may include features transformational journey is marked by a spectrum of obstacles, like a truck appointment system and some other extended encompassing both financial burdens and operational complex- digital facilities. The presence of these pre-existing digital ities. Moreover, it involves navigating through a dense regulatory interfaces between dominant players can sometimes weaken environment while assuring the utmost security of sensitive data. the argument for a PCS. Yet, the potential benefits of this endeavor are undeniable – from heightened efficiency and streamlined coordination to a substan- • High Financial and non-Financial Costs: While the benefits tial advancement in operational prowess. These potential gains of a PCS can be significant, it requires considerable financial offer a strong incentive to undertake this challenging journey. investment and resource allocation. It requires not only finan- Crucial to the success of this venture is a collaborative spirit and cial resources but also a commitment to collaboration, and a comprehensive strategy that acknowledges and adapts to the stakeholder commitment. The process involves extensive unique characteristics of each port’s environment. Embracing planning, training, and potentially restructuring of existing change and fostering innovation are imperative in realizing the operations, all of which contribute to both direct and indirect collective goal of elevating the maritime trade industry to new costs. heights of efficiency and capability. 7. The Future of PCS Most advanced industrial nations have PCSs. However, almost • Growing Industry Demand: Trade logistics industry associ- 80 percent of the newly industrialized countries and 90 percent ations and international bodies are seeking to speed up the of the ports in small and medium income countries do not. This implementation of digital solutions. For instance, DCSA has decade presents a unique opportunity for developing countries called upon the acceleration of end-to-end digitalization of to fully digitalize their ports. The spread of simpler and cheaper container shipping documentation. Carriers that are DCSA technology, standardization, regulation, and industry demand members have committed to a 100 percent adoption of elec- is putting PCSs at the heart of smarter and more sustainable tronic Bills of Lading by 2030; a goal also supported by the shipping. ICC through its Digital Standards Initiative (DSI). Based on the above, a combination of factors are expected to • Recognition of Digital Benefits: In the wake of the COVID- drive the acceleration of PCS implementation in the short to 19 pandemic, the port and maritime sector has recognized medium term. The most vital of them are presented below: the benefits of embracing digitalization and remote opera- tions. The pandemic has served as a catalyst, transforming • Technological Advancements: The implementation of Smart digital aspirations into tangible realities within the industry. Ports, the spread of IoT in the maritime supply chain, the Amid these unprecedented times, numerous digital business roll out of customs automated systems and trade single practices have adopted remote working methodologies. The windows, the growth in digital trade and logistics platforms, port logistics community is ready to seize the opportunity to use of cloud, mobile computing devices and the widespread digitalize maritime trade and transport logistics, leveraging and ubiquitous availability of high-speed internet, are all cata- the lessons learned during the pandemic. lysts for wider adoption of PCSs. • Reduction in Implementation Costs: PCS costs have fallen • Regulatory Mandates: The IMO introduced mandatory elec- thanks to greater use of digital technologies in emerging tronic reporting of all ship-to-shore declarations in a single markets and less developed countries. PCSs are increasingly window by January 2024. Countries that have an MSW, or are being offered as modular and scalable applications that can planning to develop one, can take advantage of this opportu- be deployed on ‘pay as you go’ infrastructure and utilizing nity and potentially scale-up at a port community level. The cloud computing technologies. PCSs have their own benefits same applies to countries that have or are in the process of but also provide the plumbing for the broader digitalization implementing trade single windows, in compliance to the of the maritime sector. WTO-TFA. Steps towards improved regulatory compliance to TSW and MSW can pave the way for further PCS development. • The Role of International Organizations: Multilateral devel- opment banks, intergovernmental organizations, interna- tional organizations, and industry bodies have a crucial role PCS Fundamentals And Trends 41 Port Community Systems to play in promoting and supporting the rapid adoption of the momentum for digitalization in the port and maritime sector PCSs through the provision of financial support and technical is undeniable. With growing industry demand and a newfound expertise. Their collaborative efforts are indispensable for recognition of the benefits of digitalization, the stage is set for catalyzing the digital transformation of the port and maritime accelerated progress. However, success in PCS implementation sector and their backing is essential for overcoming barri- hinges not only on technological advancements but also on ers and driving the necessary changes within the maritime understanding the critical success factors and reasons behind industry. failures. Therefore, it is imperative for all public and private stake- holders to identify insights from past experiences and tailor In light of the multiple factors propelling the PCS implementation, solutions to their unique contexts. By doing so, we can ensure the there is a tangible sense of optimism. As technology continues successful global scale-up of PCSs, paving the way for a more to advance and regulatory mandates drive trade compliance, efficient, resilient, and digitally driven port and maritime industry. PCS Fundamentals And Trends 42 Port Community Systems Appendix 1. The Port Community & Port Services The idea of a port community reflects the realities of today’s Port Management Services (Vessel-related): A port provides major ports. Ports are industrial nodes that connect businesses various services to ensure vessels’ safe and efficient move- with their global partners. They are also logistical nodes that ment in and out of the harbor. It begins with the port registering join international shipping lines and their partners in the hinter- vessels that seek to call. After that, the shipping lines announce land. The ports serve as value-adding transit points for nearby the schedule of voyages. Ships arriving from the foreland drop enterprises. The range of logistical and transport infrastructure anchor at the outer harbor and wait for their turn to access the facilities a port provides determines its reach and importance. port. The port provides pilot services for safe navigation through Ports come in different sizes and deal with a variety of cargo the channels in the harbor, tugboat and mooring services that operations (containerized, dry, and liquid bulk, break-bulk, Ro-Ro) push or tow the vessels quickly and efficiently into and out of and shipping services. Some large ports can be the size of a city. the berth, bunkering services to refuel, waste disposal services and vessel repair and maintenance services. Regardless of the size and type of a port, its users constitute a community of businesses, regulatory authorities and govern- Regulatory Services: Port authorities are public bodies responsi- ment agencies that share a unique economic relationship with ble for managing the whole port. The Customs authority is respon- it. Because of the port, these enterprises, their employees, and sible for collecting duties and taxes on goods cleared through the surrounding economy thrive. The port is an integral part of the port for import and (sometimes) exports. It also ensures the global value chain. The entities that contribute to the creation that goods fulfil the country’s border regulatory requirements. and preservation of economic value constitute a community Customs collaborate with other cross-border regulatory agen- with unique bonds and relationships. A useful way to describe cies accountable for enforcing legally mandated prohibitions, the port community is by grouping its members into categories restrictions, or other conditions on trading certain commodities. of services they provide. Customs have extensive powers to control movements into and out of the port. Customs are empowered to conduct patrolling, Transport services: A port acts as a node that joins transport enforcement, and other preventive measures. Similarly, immigra- services from the maritime and hinterland sides. On the maritime tion authorities control the movement of passengers and crew. side, it serves ocean-going vessels - shipping lines, the ship’s Health authorities are responsible for the inspection of ships and operators, and their agents. On the hinterland side, it provides the issuance of Ship Sanitation Certificates. Health authorities cargo facilities that connect transport service providers that are also responsible for issuing the Free pratique – which is use highways, railways, and coastal and inland waterways. “the permission for a ship to enter a port, embark or disembark, Thus, operators running fleets of trucks, trains, and barges are discharge or load cargo or stores.” Sanitary and Phytosanitary members of the port community. authorities control of risks of disease and invasive species. There are authorities responsible for inspecting and certifying a vessel’s Cargo & Terminal services: A port is often understood to safety and seaworthiness. Authorities controlling the operational comprise the terminals it houses. A port can have multiple termi- and occupational safety of ports also have a significant regula- nals that serve as locations for the loading and unloading of tory role. Security agencies are responsible for monitoring the people and cargo. Terminals are among the most prominent enti- security certification and secure operation of vessels, besides ties connecting different transport modes and serving as cargo ensuring the security of people and property within the port area. management hubs. Ports equipped with cruise terminals and ferry terminals also handle domestic/international passengers. Logistics Services: Logistics service providers ensure that their Connected to a Port Terminal are satellite cargo management clients - businesses that use the port to import and export- can facilities such as storage yards, tank farms and warehouses for efficiently plan, implement, and manage their supply chains. bulk, breakbulk and containerized cargo. Inland Container Depots Numerically, they constitute the bulk of the members of the port are an extension of ports’ terminals in the hinterland. Container community. Freight forwarders serve their clients in a variety of Freight Stations are used as facilities for stuffing and stripping ways. They help select transport services, including the first- containers, and empty container storage yards. Operators of mile carriage and last-mile carriage, negotiate freight rates, and these facilities are also members of the port community. consolidate and deconsolidate shipments. They prepare trade-re- lated documents necessary for importing or exporting goods. PCS Fundamentals And Trends 43 Port Community Systems If required, they maintain inventories on their client’s behalf Financial Service Providers: Commercial banks perform two and file insurance claims when necessary. Freight forwarders vital functions. (i) They finance the trade transactions, acting as are often on the front, interacting with shipping lines, terminal providers of trade credit, as participants in a trade agreement, operators, and Customs brokers. Customs brokers are entities and in the formalities related to the settlement of a trade trans- licensed to prepare trade-related documents and interface with action. Many jurisdictions require commercial banks to keep the all cross-border regulatory agencies to ensure compliance with country’s central banks informed of trade-related remittances. trade-related regulations. Freight forwarders often also fulfil the (ii) They help collect payment for services described above and role of Customs broker for their clients. Surveyors and insurance assist with the performance and payment guarantees. As banks firms provide assurance and verification services to the trader digitalize the trade finance operations and begin to participate and transport service providers. in the concept of a negotiable/transferable record in the form of an electronic Bills of Lading, the insurance firms will increasingly Traders /Beneficial Cargo Owners (BCOs): Participants in inter- interact digitally with other members of the port community. national trade transactions (buyers, sellers, and their agents) and Insurance companies often require detailed assessments of the transport contract (the carrier, consignor, and consignee) cargo’s value and the potential risks during transportation. are seldom present physically at the port but are nonetheless vital members of the port community. The community’s most Claims Management: In the event of damage, loss, or theft, insur- influential members are the businesses that own the goods ance companies handle claims made by the insured party. This traded through the port. Ultimately, a port is founded to serve involves assessing the extent of the damage or loss, determining their interests and property. the compensation amount, and processing the payout. PCS Fundamentals And Trends 44 Port Community Systems Appendix 2. Operational Logistics And Regulatory Procedures Are Intertwined The following description of a trucker reaching a port to take delivery of goods illustrates the relationship between the underlying logistical and regulatory procedures and systems: Table 4. Cargo clearance at ports involve simultaneous processes occurring in transport, logistics and Customs systems The visible process Port and Terminal Systems Customs Systems / Trade Single Window 1 Arrival at the terminal gates at the desig- Freight forwarder presents documents e.g., Customs broker submits Customs/ single nated time. Bill of Lading (BL), bank’s release, etc., pays window declaration. Check-in with the terminal. delivery order charges and obtains delivery Shipping lines file advance cargo informa- order from the shipping line. tion to secure release on arrival. Pays port terminal and relevant handling Trader or Customs broker: charges. (i) Submits the required documentation Freight forwarder selects trucker, generates including licenses, certificates and permits. the transport order, books truck appoint- (ii) Pays duties taxes and fees. ment, provides necessary documentation. (iii) Online confirmation of release status. 2 Presentation of needed documents. Register arrival at gate; obtain pick-up Present to Customs authorities any instructions online. documents demanded, including Customs Present vehicle and driver ID systems in declaration, proof of release, and supporting compliance with ISPS code; driver’s license, documents. (including the required endorsements), vehi- cle registration, and proof of insurance. 3 Goods unloaded from the ship and Check online the location and container/ Customs and OGA officials inspect cargo, inspected by Customs officials, if necessary. packages and Customs status of goods; examine goods; screens documentation; move to location at the yard/truck-docking examines scan images. bay for delivery Check the location of inspection/ screening. Customs officials rely on risk management systems and technical means of Customs control. 4 Loading the Customs cleared goods onto Inspect goods or containers to ensure Customs updates release, notifies declarant, the truck. they are in good condition and match the advises terminal operator or warehouse. documentation. 5 Sign any necessary paperwork to acknowl- In the case of containerized cargo, receive Customs system updates physical release edge receipt of the goods. the ‘Equipment Interchange Receipt’. / exit notes. Secure the goods in the truck and prepare Confirm the terms of interchange as the for transport. “receiving party” online or in hardcopy. The above table explains how regulatory and administrative procedures and logistics operations occur synchronously, how they are linked to one another, and how they involve various ICT systems. These procedures utilize similar datasets and rely heavily on the transfer of information between the stakeholders via the exchange of electronic messages. The data received may be similar but there is a difference between how the regulatory /administrative authorities and logistics operators use the data. The following table provides a rough illustration of this concept. PCS Fundamentals And Trends 45 Port Community Systems Table 5. How different stakeholders use the information provided by shipping lines and freight forwarders etc. in different ways Information/ Message Customs Port/ Maritime Terminal Operator SPS/ Health Authorities Authorities Vessel Info.; Berth Info.; Risk Assessment, Control Port State/Flag State Scheduling; Planning; Risk Management, Vessel Security info of vessel-related declara- Controls/ Port Services Unloading and Loading Controls related to health tion, Rummaging, Vessel (pilot/tugboat services), Operations. and safety of the vessel, Boarding formalities. Ship Chandlers; Port dues; crew and cargo; Free Vessel Security. Pratique and Quarantine. Cargo Report/ Dangerous Cargo Control and release; Operational Safety, Cargo operations, Opera- Risk Assessment; Control; Cargo risk assessment; Cargo Charging of port tional safety, special proce- Fumigation services. accounting. services; management dures linked to Dangerous of operational services. goods; Charging of Stevedoring terminal services; Cargo accounting; Management of unclaimed/uncleared cargo. Customs Declaration & Customs control goods Bonded Stores to ships; Terminal gate manage- Risk Assessment & Response, Cargo Release and release. Bunker fuel supply. ment; loading and unload- Controls. Collection of duties, taxes, ing operations. and fees. The above table illustrates how members of the port community use selected data submitted by trade and transport participants for very different purposes. The alignment of data requirements prepares the ground for the port community members to develop and implement the principles of data collaboration.30 30 See UNECE Recommendation 34 on Data Simplification and Standardization for International Trade, 2013: http://www.unece.org/fileadmin/DAM/trade/Publications/ECE- TRADE-400E_Rec34.pdf 46 Port Community Systems Port Community Systems 47 T H I S W O R K W A S S U P P O R T E D B Y T H E T R A D E FA C I L I TAT I O N S U P P O R T P R O G R A M ( T F S P ) I N PA R T N E R S H I P W I T H :