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Logistics Challenges: Single Management System and Security

What are the next steps in the development of transit and logistics in the age of various challenges? How will it be affected by global innovations and which technologies created in Latvia will facilitate this development? Answers to these and other crucial questions were sought at the international conference “Global Transport Security and Safety for a Century” organised by the OECD International Transport Forum and the Ministry of Transport last week, gathering approximately 160 participants from 59 countries.

The development of new cargo corridors and logistics products, fighting for customers under intense competitive circumstances, searching for new niches and markets — these are the key matters on the agenda of players in the logistics sector. However, under changing market conditions, the situation also changes in the area of security. “Moreover, searching for new solutions is also carried out in order to satisfy growing customer demands, while ensuring the highest security and quality standards”, noted Uldis Augulis, Minister for Finance.

At the same time, Ansis Zeltiņš, CEO of the Freeport of Riga Authority, highlights: “Nowadays, various aspects of security, which we might miss in our daily life but which must be observed with regard to cargo flows, inevitably change. Likewise, if the situation is considered from the point of view of ports, we have always treated it seriously and will keep doing so”.

The logistics sector is traditionally considered to be a conservative business, but is becoming increasingly complex, knowledge- and technology-intense. IT infrastructure has already become just as important a part of business as lifts in a port or cars on a railway. Moreover, Latvia is among the sector’s pioneers in many fields. For example,state-owned Latvijas dzelzceļš Ltd. (LDz) is a step ahead of its European colleagues in introducing electronic waybills.

Edvīns Bērziņš, President of LDz, highlights: “LDz is currently carrying out active work on both the improvement of current systems and the development of new digital solutions. Our goal is to develop a “smart railway”, as the possibilities of applying technologies are vast — not only in organising logistics supply chains, but also in developing railway security solutions and providing day-to-day infrastructure maintenance work”.

However, 21st century technologies are not only possibilities, but also risks. The reliability and security of all the systems mentioned above is crucial, especially considering the fact that both “blockchain” technologies and artificial intelligence, which have both advantages and potential risks, are developing rapidly. Therefore, along with the development of convenient and effective-to-use solutions, investments must be made in their security, balancing it with business needs and interests.

As noted by Pino Musolino, Chairperson of the North Adriatic Ports Association: “Last year, I was at the cybersecurity conference in Geneva. One of its participants managed to hack the system of a ship standing in the port in under five minutes. Meanwhile, less than a year ago, the hacker’s “NotPetya” attack on the Maersk system caused losses of approximately EUR 300M to the world’s largest container carrier. If the largest player in the field of container transport can experience such an attack, think about how serious these concerns are with regard to the security situation in the transport sector”.

Edvīns Bērziņš added: “Hacking of any logistics IT infrastructure is a highly serious incident, the consequences of which might extend much further than substantial financial losses. This can lead to serious accidents, which we want to completely eliminate.”

The logistics sector must create a single and effective management system with high security standards, thus protecting both yourself and the market in general, as considered by conference participants.

Certain movement is already taking place at the European Union level: research is being carried out and several projects have been implemented, as well as legislative initiatives have been introduced; however, we will be able to see a rapid improvement of the situation in the area of cybersecurity only once all the largest logistics players are involved in resolving it. Pino Musolino highlighted: “The way of thinking must be changed and we must think in a way that cyber infrastructure is just as important as physical infrastructure”.