In the second interview of 2021 in our exclusive series in partnership with Port Technology, INFORM’s Matthew Wittemeier caught up with Rich Ceci, Senior Vice President Technology and Projects at Virginia International Terminals (VIT), to explore what the future, near and far, might hold for the industry. Building on where we left off, Rich’s ideas are edgy and thought-provoking but also distinctly built upon his decades of experience within technology and the maritime industry.
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MW: We’re going to kick off in the year 2020. Rich, thank you so much for joining us. We learned at the beginning of 2038 that the Port of Reykjavík is a fully automated terminal with limited onsite personnel. Given your background in automation and what you’ve managed to achieve at the Port of Virginia, is this a possibility? And if so, what are the key steps to getting there?
RC: Just so it’s on your record, I would first like to commend you and your colleague for the effort on the paper because it’s very good. It’s very entertaining, and I think it has some interesting points in it. I believe when you look at the time frame, it’s somewhat optimistic to expect we’ll be that far along by 2038. I think by 2050, you might be closer to the storyline. Here’s what I’ll use to frame my comments: I joined the terminal industry in 2004, and it’s now 2020. I’ve been in the industry for about 16 years. The time span you’re talking about is 18 years. The time span from 2004 to 2020 is close enough to the one from 2020 to 2038. So, it is easy to extrapolate and say, if we’re going to make a certain amount of progress in the next 18 years, it should be at least somehow related to what’s happened in the previous 16 years
I realize it could accelerate rapidly. That said, I believe comparing the technology, as it relates to the terminal industry, doesn’t show the same rate of acceleration. I remember visiting the Hamburg facility in 2004 and seeing your software managing their hinterlands components. I believe it worked very well. If I flip forward, imagining myself as a member of the team that did the Vancouver project, and we saw your software doing a similar function there, I would say that the software advanced over that interval, but not at the rate required to account for the 2038 storyline. Do you see what I’m saying?
MW: Yes, absolutely.
RC: I believe this is the problem: Too few development opportunities come up that allow you to grow the technology. By that, I mean there just aren’t enough opportunities to put a system in place for someone willing to take the risk associated with a brand-new, game-changing, paradigm-shifting technology. Without those development opportunities, we have to rely on them coming from a different source. If you don’t have a terminal that can do a project like that, you rely on researchers doing that kind of work in a lab. And then there’s always the issue of whether the lab translates into reality. In the lab, the question is, is the work the researchers are doing significant given the smallness of the industry?
I think a researcher will want to talk about autonomous cars as opposed to autonomous AGVs.
The problem is the terminal market is fairly small. The risk-averseness of terminal operators is also a nontrivial issue, and I find it a major concern every time we do a project. We just did $800 million of work here in the port. The technology elements we assembled are not drastically different from the elements we picked in 2005 to do the original projects here. That’s because there weren’t many different technologies to pick from. There are also other constraints. A key aspect mentioned in the story is the notion of how labor relates to this. I think you’re right that people could evolve to that level of concern, and you captured that element of it fine. I don’t think the labor people here would be quite as inclined to put themselves in jeopardy as they were in the story. Nonetheless, they’re very vocal.
MW: We’re going to circle back to the anti-techs a bit later. I want to stay focused on the technology side for now.
RC: That’s fine. Let me describe what I think is happening, how the technology might evolve, and in what context it might evolve. I had several visits from a group building a new green-field project. They have very ambitious thoughts but almost no people available to do the work, so the lack of technical resources to apply to the problem is significant. Should they put the future of their organization at risk to construct a super-high-technology terminal, or should they take on something less risky and be confident of an acceptable result?
I think what I’m getting at is that the green-field sites have too much at stake to tackle a super-high-tech-step increment. Having said that, a port like ours might be able to do that. To emphasize the positive, let me tell you some things we’re doing here. We have two projects running with the US Department of Transportation. The first one is all about improving communications between the trucking community and our facility so we can become more agile in delivering containers to truckers over the road. Included in that is an element from a company you probably don’t know yet, which is building an AI-based housekeeping system to sit on top of Navis’s TOS product. It will look at trucker reservations for the next day and do a more complete job of housekeeping the boxes, improving organization to improve delivery capability.
That’s our plan. We have a strategy, and we can implement it in a beneficial way. If it works, it will help a lot of people because that same technology could be deployed in all the automated facilities.
MW: And if it doesn’t work?
RC: And if it doesn’t work, we blew some money. Don’t misunderstand – it’s a 50:50 match grant, so half of any loss is out of our pocket!
MW: Sure. It comes back to the industry’s idea of risk avoidance, and you guys are willing to take calculated risks.
RC: Exactly. We made our case with the Department of Transportation, and they see the value because if we succeed, we help the truckers on the road and reduce road congestion. They have some money – not a lot, but some – and they’re willing to help out. Our risk is cut in half, so for us, it’s worth taking. Working with that same group, on December 31, we signed another deal with the Department of Transportation to spend four years on a proof of concept that would allow one of our terminals to handle autonomous, over-the-road trucking transactions. That involves a number of universities, and it’s fairly significant, about a $4 million investment project.
When we’re done, we’ll have a very clear picture of what it takes at the terminal. What do the trucks need to look like? What are the interactions? How does 5G affect it? That’s a step in the right direction, again, but managed so that we can lower the risk but still make significant progress. And then, in conjunction with that, we’re working on two other research projects, and they fit nicely into your story because they involve securing communications between autonomous vehicles and infrastructure elements.
Multiple universities in Virginia are also working on this. The idea is to find out what we can do to encrypt the transactions, ensure they can’t be hacked, and make other security improvements. And the last project is about simulating cybersecurity-related events in conjunction with autonomous vehicles. In that case, predictive technology, AI-based algorithms, will monitor the vehicles, detect when the vehicles are doing something unusual, and potentially shut them down.
MW: That fits in well without giving away too much of what happens in the story. I’m going to come back to the timeline because I think you’ve ticked over 2025, looking at some of the technologies that we’re seeing now and where they might be headed. I’ll go straight to 2030, which talks about the impact of technology being used as a frame in 2038 to look at many broader social, economic, environmental, business trends and issues. What trends do you think will shape the future outside of the terminal environment, and what could we be doing today to influence them?
RC: It’s really interesting. One thing that struck me was the notion that the availability of technology would be viewed as differentiating classes of people. That was a little surprising, and I had to consider it. I don’t know that it will happen that way, although there may be some tiers of technology, and the super-rich might have access to superior products.
But what struck me here is, if you’re a technology developer, why would you want to limit your range of exposure by developing a product that’s priced out of the range of the larger consumer market? There may be very poor people who are homeless and don’t have cell phones. But it would be nearly pointless to develop something for the super-rich because the extra functionality is almost free to deliver, so why wouldn’t most of the technology be priced to reach a bigger market? Based on this logic, I don’t see the anti-tech people growing as extreme as they did in your story because I doubt the technology will be as differentiated across the socioeconomic spectrum in society.
MW: If we pull back from just technology, I guess the question also focuses on other trends beyond just technology. I want to avoid the obvious question of the COVID-19 pandemic and the impact of this unique situation that none of us really saw coming. The handful who did see it coming were probably marginalized and told they were crazy, but obviously, it’s had very significant impacts on our industry in particular. If we look at maritime as a whole, such as at the guys who are stuck out on ships and can’t come to shore to swap out, there are very severe potential side effects of these sorts of things. Are there things we should be planning for or looking at that are beyond technology?
RC: First, I’ve watched this unfold but have not been infected with the virus, so when I say I’ve been impacted, it hasn’t been health-wise. But I commute, making 24 trips home to Michigan in a typical year. Last year I made only three, which meant I was stuck, not in Detroit, but in Virginia, for as long as 100 days at a time as opposed to my usual 14. I sympathize with the people stuck on a ship. And although I had advantages like getting to watch TV. I do feel it. What I’ve told my family and my coworkers is that this is a learning exercise.
I believe the virus will teach us a lot of different things, particularly humility about what we thought we knew or could execute. Nonetheless, I fully expect there’ll be mechanisms in place to deal with those kinds of problems so that the next time around, it will be stopped sooner and won’t become as severe as quickly. There has been a lot of talk about space exploration lately. In the 1960s, the race to the Moon contributed significantly to technological advancement.
What struck me here is maybe we don’t need to go to the Moon again. Maybe we need an extremely capable response for dealing with pandemics. There’ll be a huge investment in those capabilities, so no one is stuck at sea, so the population can allow them to come ashore, so we deal with the scenario more humanely. I think the lessons will evolve out of this disaster and create a whole new branch of science. The world will tackle it. One good thing is that, because the pandemic affected everybody, it has the potential to be a world-unifying event. That’s because once we get past the question of whose fault it was, we will recognize that everybody has a problem and that a solution will necessitate collaboration, and that’s good. Anytime people are working together, it’s a great thing!
MW: I fully agree. Although there’s a point I could argue against on that, I’ll do that after the interview and just take a note for now. In 2035, maritime doesn’t exist in a bubble as automation disrupts our industry. Much like the anti-techs in 2038, unions around the world are pushing back against automation. As an industry, how should we be addressing the impacts of automation on the human workers in our organizations?
RC: I’ll tell you now because I think you’ve heard this story when I’ve talked at other conferences, when we started this project here, there was only Hamburg and Rotterdam. There were no other terminals, and the US maritime unions are very militant and very organized. There’s a union on the East Coast and one on the West Coast. Their power extends beyond regulating whether you can have civil disruption and picket at the entrance to the terminal, which has happened here. I’ve looked out my window at the gate and seen people picketing over issues associated with our technology in the last 36 months. They don’t get in the way, but they’re there.
Truck reservations were an important obstacle and success story. The trucking community was dead set against having to tell us that they were coming to the facility. Imagine running a high-tech facility and having no idea what’s happening from minute to minute. That just doesn’t work. Now, fortunately, our performance eased their concern because where they used to take 68 minutes at the terminal, they now get in and out in 29 minutes. You can imagine what that does for their ability to earn a living. We’ve converted them by performing, and that’s a major feat. I don’t think we’ll see the same results with the labor unions. When we did this project originally, the US East Coast adopted semi-automated terminals instead of fully automated because a concession was made to the union to keep them from blocking the whole project, and they would have.
Here’s how it works in the US, although I’m not sure whether it works this way in other countries. The unions on the US East Coast represent terminals from Nova Scotia, Canada, all the way around to Corpus Christi, Texas, and into the Caribbean. A line operator signs the deal with the union, not the terminal. The line operator says, “We’re going to use union labor.” Now, imagine you build a terminal, and that line operator comes into your terminal. If the union says, “No, we don’t agree with your technology,” and they can tell the line operator, “If you go to that terminal, we won’t serve your ships on the entire coast.”
If that happens, you can’t come to the US East Coast anymore, which is a serious risk. That risk drives us to be more mindful of the labor aspect of the terminal. We have actually found ways to leverage the continued use of people and, in most cases, are outperforming the fully automated terminal.
The number of vessel operators is shrinking. If you consider the alliances as a single entity, there are probably only five of them today. How long does it take for Maersk and MSC to evolve into one company? How long does it take for the ONE alliance of three lines to evolve into one company? Not that long. All of a sudden, there are fewer people doing this. What you have is conveyance from one part of the world to another. The question is, what will the contract for cargo movement look like in that case? I think it could change drastically. Instead of booking with one line, the cargo operator will need to move cargo from one spot to another, considering specific interests – its origin and destination. They’ll book anyone who is willing and available.
That changes the dynamic considerably. Now, all of a sudden, all the pressure related to what line is transporting the cargo goes away. So what is the value proposition for the union in the Port of Virginia? They want their jobs. At the end of the day, we are not focused on eliminating jobs. In fact, we’re focused on employing people across the entire state. That’s more important to us than how much we make on a single container. We’ve grown our business without adding jobs, but we’ve kept everyone employed. They don’t want to see employment numbers fall, so a fully automated terminal presents a problem for them. But, at the same time, if the business doesn’t come to them, it goes elsewhere, and how does that help them? It has to be a win-win scenario that ultimately balances the socioeconomic concerns.
MW: That’s a really in-depth answer and probably one of the most ambitious answers to the question on unions that I’ve heard in the four years I’ve been in the industry. Most people avoid it like the plague, Rich.
RC: But we see ourselves as a partner with labor, and we’ve tried to do that from the outset. In response to the question, “Why did you do semi-automated?” this is the main reason. There are also some performance issues associated with it due to technical challenges, and I believe we have the better solution.
MW: Rich, we’ve reached the end of our interview, which means we’re rounding the year 2038. And sadly, that means we need to draw our interview to a close in a minute or so. What’s the one thing our readers should take away from this interview?
RC: Primarily, that high-technology projects intersecting in the terminal business space are challenging. Having done four of them, and almost $2 billion worth of projects, I didn’t find the last one much easier than the first one. When we talk about the significance of the effort, I would say it shouldn’t be underestimated. My team often works seven days a week. It’s common to see people here 12 hours a day, and a big team (lots of people) is not necessarily a good thing. You want to keep team size to a manageable level. Take the project seriously, make sure you consider the risk versus reward of every decision, and plan to ramp up effectiveness. You won’t see everything on the first day.
MW: Rich, thank you very, very much.
Who’s Rich Ceci?
Rich Ceci joined VIT in May 2016 as Senior Vice President of Technology and Projects. He is responsible for the major expansion projects in the Port of Virginia. Rich and his team have completed expansions to two of the port’s largest terminals that have increased capacity by 40%. These expansion projects include advanced technology focused on improving both safety and productivity in the port. Previously, Rich was VP of Information Technology for GCT USA in Bayonne, NJ, where he managed the Global Expansion Project, winner of several industry awards. The GEP was completed on time and on budget and is one of the most technically advanced terminals in the United States. In addition, Rich was the IT lead on the APM Terminals Virginia project. This facility opened in August 2007. This trend-setting terminal has been a technical benchmark in the industry for over a decade.
What is 2038: Future Visions?
2038: Future Visions is a series of interviews with leading maritime logistics professionals who share their view of what our industry will look like in the year 2038. It is brought to you in partnership with Port Technology. 2038: Future Visions builds on the award-winning book 2038: A Smart Port Story, which INFORM published in 2019.
What is 2038: A Smart Port Story?
2038: A Smart Port Story explores the terminal of the future and the intricacies of technology and its impact on both the port industry and society. Join Douglas as he unravels the mystery around an incident at the Port of Reykjavik, which sees an AGV collide with a human, leaving their life hanging perilously in the balance.
Haven’t read 2038: A Smart Port Story yet? Get started with Part 1 today!
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The Athena Interviews is a series run in 2019 in which INFORM’s Matthew Wittemeier interviewed Athena, the main AI character from 2038: A Smart Port Story, about a broad range of topics surrounding AI. In an interactive video format, readers/viewers are introduced to Athena as together they explore thought-provoking questions about the future of logistics, technology, and AI.
Missed the beginning of The Athena Interviews? You can pick it up from the start at PTI Exclusive: Athena Q&A Part 1.