Columna De Expertos Deciphering the Supply Chain with Satellites Part 2

In Part 1, the utilization cases of satellite imagery were analyzed, particularly focusing on applications in ports. In Part 2, we will also review the utilization cases of satellite imagery, with a focus on ports and ocean supply chains, and examine cases where satellite imagery has been used in supply chain analysis, including in the agricultural sector and the field of humanitarian logistics. Finally, we will look ahead to potential areas within supply chain management where satellite imagery can be effectively utilized, concluding the article.

(Due to copyright issues, satellite imagery discussed in this paper has been replaced with images. The original source and link of these images are detailed in the references section, allowing readers to access the specific material.)

1. Utilization of Satellite Imagery in Ports Ten years ago, the European Space Agency (ESA) implemented the “I-PORT system” using GPS and satellite-based AIS (Automatic Identification System) to establish a seamless flow of container cargo and an efficient transportation system for container trucks within ports.^[1]. The I-PORT system aimed to adjust vehicle schedules early based on ship arrival schedules, thereby reducing non-productive waiting time for vehicles.^[2]. Now, to achieve these objectives more effectively, as mentioned in Part 1, satellite imagery analysis is also being utilized in ports. Monitoring work processes in ports using satellite imagery enables the assessment of congestion levels in yards and terminals, thus maintaining the efficiency of the entire port supply chain. Various research and applications are being conducted in this regard.

As an example of such research, Murata et al. (2023) conducted a study^[3]using high-resolution nighttime satellite imagery of eight terminals in Tokyo Port, Japan, to assess the operational status of container terminals. This study demonstrated the possibility of regularly observing the operational status of ports worldwide. With the capability of satellites to capture high-resolution images of nighttime lights (NTL), it is possible to evaluate the operational status of container terminals even during nighttime. Through such observations, it becomes feasible to identify terminals that are relatively less congested, thereby supporting decision-making in maritime supply chain networks. Additionally, analyzing the operation status of container handling equipment such as gantry cranes and transfer cranes at container terminals during nighttime becomes possible.

2. Utilization of Satellite Imagery in Maritime Transportation Recently, the Panama Canal, connecting the Pacific and Atlantic Oceans, faced a serious drought leading to lower water levels in the lakes, causing water shortages necessary for canal operations. Consequently, the number of ships able to transit through the canal was limited. This issue became crucial due to the potential implications of increased container freight rates and risks to the global supply chain. Satellite imagery has been employed to monitor ships waiting at sea to transit through the Panama Canal and analyze the trends in the number of ships on a daily basis. Furthermore, satellite imagery has enabled the analysis of changes in the surface area of the lakes supplying water to the Panama Canal^[4]. By combining satellite imagery data with historical information such as rainfall trends in the region, it becomes possible to predict the optimal operational periods of the Panama Canal. Shipping companies can now utilize this satellite information in their decision-making processes for vessel operations, considering factors such as the current number of waiting ships and prospects for transit availability, thereby adjusting the operational plans of vessels passing through the Panama Canal.

Similar cases to the grounding incident of the Ever Given in the Suez Canal in March 2021, which posed a threat to global supply chains, and the recent case of the container ship Dalli colliding with the Francis Scott Key Bridge in Maryland, USA, in March 2024, have also been vividly illustrated using satellite imagery. By utilizing satellite imagery, shipping companies have been able to verify and analyze the waiting and delay situations of ships in the vicinity, enabling them to make decisions on alternative routes and port utilization and to respond swiftly from a maritime transportation perspective. Furthermore, in regions with heightened geopolitical risks such as the Red Sea, where Yemeni Houthi rebels threaten the safety of ships, monitoring and analysis using satellite imagery can be valuable, indicating a potential increase in demand for satellite imagery in the maritime industry in the future. 3. Predicting Maritime Freight Rates Using Satellite Imagery Satellite imagery can be utilized not only for analyzing vessel operations but also for predicting maritime freight rates. Maritime freight rates are a significant factor influencing the global supply chain. Particularly in the dry bulk cargo transportation market, the Baltic Dry Index (BDI) is widely used, which fluctuates based on supply and demand dynamics.

Analyzing trends of vessels through satellite imagery can aid in predicting such freight indices. Taking a closer look at the three sub-indices that constitute the BDI—namely the Baltic Capesize Index (BCI), Baltic Panamax Index (BPI), and Baltic Supramax Index (BSI)—we see that in calculating the BDI, the BCI is given a weight of 40%, while the BPI and BSI each contribute 30% to the calculation of the BDI.

One of the important factors in predicting such freight indices is ship supply. To begin with, looking at the BCI, the prediction involves understanding the size and quantity of Capesize vessels operating worldwide. Capesize vessels mainly transport iron ore and coal and have relatively simple O/D (Origin/Destination) compared to other vessel types, making it relatively easier to track their routes.

The figure below depicts the status of Capesize vessels transporting iron ore in October 2019.

Through satellite data and imagery, it's possible to track the direction, position, and quantity of all Capesize vessels in operation on a daily basis. The types of Capesize vessels shown in the figure include Small Cape (100-139K), Cape Size (140-214K), and Large Cape (215-999K). As depicted in the left figure, during laden voyages, Capesize vessels loaded with cargo from Brazil and Australia can be observed transporting goods to Korea, China, and Japan. Conversely, the right figure illustrates the tracks and total number of vessels moving from Korea, China, and Japan to Brazil and Australia without cargo (unladen), in preparation for loading iron ore and coal.

On the other hand, demand for commodities such as iron ore and coal mainly originates from countries like South Korea, China, and Japan, with China accounting for a significant portion of this demand. The demand for iron ore and coal, crucial for predicting maritime freight rates (BCI and BDI), can be assessed and forecasted through satellite imagery, enabling more accurate demand predictions using real-time data. For instance, when China began importing large quantities of iron ore and coal from around the world in the past, the demand for vessels transporting these commodities increased, leading to a sustained rise in the BDI index. Consequently, China's demand for iron ore and coal is considered a key driving factor in the dry bulk maritime freight market. In the past, real-time monitoring of China's iron ore demand was challenging, but with recent advancements in the utilization of satellite imagery data in real-time or periodically, coupled with developments in image interpretation technology, it has become possible to monitor the inventory and turnover rate of iron ore and coal in Chinese ports.

The image depicts a satellite photo of Caofeidian Port, one of the prominent ports for iron ore imports within China. As indicated in the image, it becomes possible to monitor the size of the iron ore stockyard within the port and the quantity of iron ore stored in real-time. When the inventory of iron ore in the stockyard decreases or the turnover rate is high, it signifies an increase in China's demand for iron ore, which could lead to an increase in freight rates. Previously, China's iron ore demand was assessed using data on iron ore inventory in Chinese ports released by organizations like the China Iron & Steel Association (CISA). However, this data had a lag as it was not real-time and involved aggregation and publication delays. With satellite imagery, more accurate and real-time analysis of China's iron ore demand can now be conducted.

Another crucial aspect to consider is the supply situation of iron ore. For instance, the Corrego do Feijao mine in Brazil, operated by Vale, one of Brazil's largest mining companies (Brazil's Vale and three Australian companies (Rio Tinto, BHP, FMG) collectively account for over 70% of the world's iron ore supply^[5]). experienced a tragic incident in January 2019 when its tailing dam collapsed, resulting in numerous casualties (the location of the collapsed dam^[6]and satellite images^[7]before and after the accident can be referenced in the citations). This incident led to a decrease of approximately 50 million tons of Brazilian iron ore production compared to the previous year, equivalent to the capacity of 300 Capesize vessels. Consequently, the BCI plummeted due to reduced transportation demand, and a downturn persisted in the Cape spot market^[8]. (However, concerns arose about a potential shortage of iron ore supply following the dam accident, leading to a sharp increase in global iron ore demand and prices.) With satellite imagery enabling real-time monitoring of crucial variables for maritime freight rate prediction, such as information on vessels in transit and the demand and supply quantities of commodities at loading and unloading ports, more precise maritime freight rate predictions have become possible. 4. Agricultural Supply Chain Management Satellite imagery is being utilized in the agricultural sector as well. In agriculture, satellite imagery can be collected not only from satellites but also from unmanned aerial vehicles (UAVs) ^[9], ], enabling the estimation of crop cultivation areas and monitoring the vegetation growth status at satellite imaging sites. When viewed from a supply chain perspective in the agricultural and food sectors, various information needs to be managed throughout the entire process from farms to consumers, including raw material and origin information, production processes, traceability and history management, as well as logistics and distribution information. This management contributes to enhancing the efficiency of the supply chain and providing high-quality products to consumers. Satellite imagery is also employed in these processes.

In the context of agricultural supply chain management, a notable case of utilizing satellite imagery is the sustainable palm oil supply chain established by Unilever. Since 2014, Unilever has been monitoring palm oil production areas and related deforestation sites using high-resolution satellite data, tracking distribution networks, and integrating satellite imagery with AI, geolocation data, data science, and other technologies to enhance traceability and transparency and promote the development of a deforestation-free supply chain^[10]. Additionally, Unilever, in collaboration with Orbital Insight, collects various supply chain information such as deforestation status, soil modification status, and fire occurrences at palm oil factories in Indonesia and mills in Brazil. This allows them to have a comprehensive view of activities within the supply chain, predict and immediately address issues^[11]. ]. like deforestation, and improve the coffee supply chain through the utilization of technologies like wireless sensor networks, cloud computing, IoT, and image processing^[12], Furthermore, the integration of satellite imagery and blockchain technology shows potential for redesigning supply chains to address issues in the fish supply chains of developing countries^[13]. 5. The Fields of Humanitarian Logistics and Relief Supply chains Satellite technologies can assist relief actors in addressing key logistics issues they face^[14]. Indeed, during the 2010 Haiti earthquake, artificial satellite imagery was utilized to assess damages and prioritize the allocation of relief supplies for reconstruction efforts. Drones and satellite imagery can aid in damage assessment, search and rescue operations, allowing for faster and more accurate responses to disasters after their occurrence^[15]. Furthermore, during the 2018 floods in Kerala, India, dubbed as the worst in a century, real-time weather information and geospatial data were analyzed based on satellite big data, enabling the establishment of logistics plans and execution of rescue missions, thus enhancing the agility of relief and logistics supply chains in India.^[16]. 6. Management of Core Mineral Supply Chains Efforts and initiatives to utilize satellite imagery in mineral resource exploration continue to progress, and advancements in processing technology for remote sensing imagery, coupled with the development and enhancement of artificial satellite-based remote sensing, are increasing the likelihood of success in mineral resource exploration. The utilization of satellite imagery allows for the exploration of mineral resources, understanding of mining sites, and observation of mineral resource transportation activities. Furthermore, by analyzing changes in production and stockpiles of minerals and metals, it is possible to conduct analyses linked to global demand data, not only for the supply of mineral resources but also for global demand data^[18].

Furthermore, with the increasing importance of securing critical raw materials for implementing technologies related to the Fourth Industrial Revolution, efforts have been made in various countries to ensure stable supply and procurement of essential critical raw materials for advanced industries and renewable energy technologies. In the United States, four key items—semiconductors, large-capacity batteries, pharmaceuticals, and critical minerals (rare earth elements)—have been selected for continuous review of the supply chain situation to establish a stable supply chain (as of 2021). In Europe, the adoption of the EU Critical Raw Materials Act (effective April 2024) aims to reduce the dependence on raw material imports from third countries, including China. This legislation seeks to strengthen manufacturing capacity within Europe and promote diversification of supply sources to lower raw material dependence by 2030^[19]. In this context, the utilization of satellite technology for mineral exploration is expected to become even more active. Mineral exploration can be conducted not only through artificial satellites but also through aircraft, unmanned aerial vehicles (UAVs), and drones. These technologies can analyze hundreds of wavelengths and rays emitted by different minerals to identify their types and locations^[20]. Therefore, satellite imagery information will play a crucial role not only in exploring critical mineral supply chains but also in managing the supply chains of mineral resources. 7. Establishment of Green Supply Chain The satellite imagery is also being utilized for tracking carbon emissions. Climate Trace, an environmental organization, utilizes artificial satellites to directly aggregate greenhouse gases emitted from individual supply chains such as component suppliers, or to track the actual carbon footprint (CFP) of steel plants. Additionally, with information collected through satellites, it becomes possible to track methane emissions from oil and gas production facilities worldwide and monitor changes in emission patterns over time. By the end of 2025, it is anticipated that methane emissions from major oil and gas production zones worldwide will be clearly identified. ^[21]. While efforts have been made in the past to analyze and optimize logistics routes using past satellite data to reduce fuel consumption, now satellite imagery enables the optimization of the locations of factories, warehouses, and distribution centers. By minimizing overall transportation distances, satellite imagery can ultimately help reduce carbon emissions. Given that carbon emission reduction is considered a crucial task in the field of global supply chains for sustainability, satellite imagery is expected to be utilized for tracking emissions along the supply chain in the future.

The European Union's (EU) supply chain and environmental regulations, including the Critical Raw Materials Act (CRMA), Corporate Sustainability Due Diligence Directive (CSDDD), and Net-Zero Industry Act (NZIA), are being enacted, and various environmental regulations are emerging worldwide. Here too, satellite imagery and analysis are expected to play an important role. With the introduction of the EU's Corporate Sustainability Due Diligence Directive, global food companies are already striving to comply with it, not only for palm oil but also for other commodities like cocoa, coffee, meat, and beans sourced from third-world origins, in efforts to protect human rights and the environment. Nestlé, the world's largest food company, has employed satellite imagery to investigate whether raw materials for its approximately 8000 products are causing deforestation. The system, evaluated as the world's first "satellite-based supply chain monitoring system," has been collaborating with the Starling platform, an artificial intelligence tool for forestry conservation, since 2018. By monitoring forests near palm oil farms, Nestlé aims to produce palm oil without deforestation and is monitoring its supply chain with data^[22]. 8. The Future Potential Applications in Supply Chains Currently, satellite imagery is already used to monitor disasters such as floods, earthquakes, and wildfires, enabling the rapid detection of phenomena and signs that could disrupt supply chains. Additionally, satellite imagery is utilized for various purposes in fields such as detecting oil spills, tracking illegal fishing vessels, and identifying suspicious activities at sea. In the agricultural supply chain, ongoing advancements in satellite technology, particularly in agri-satellites, enable the capture of information on crop growth status, soil properties, nitrogen levels, photosynthesis rates, and more across wide geographical areas. ^[17], This information, combined with weather patterns and market trends, allows for comprehensive analysis. The synergy between this analytical technology and other technologies like smart farming can further enhance efficiency. Moreover, leveraging this information enables proactive management throughout the entire supply chain, from predicting production volumes and adjusting supply quantities to planning current inventory, future procurement, and even sales strategies for perishable goods such as meat, seafood, and fruits. Ultimately, this facilitates the establishment of robust supply chains from a supply chain perspective.

As observed in this paper, satellite imagery is observing economic activities and is projected to play an increasingly crucial role in global supply chain management. Many governments and businesses are paying attention to the utilization and value of satellite imagery as it enables real-time monitoring of consumer trends, economic situations, environmental changes, and more. With the integration of advanced technologies such as artificial intelligence (AI), machine learning, and big data, image analysis techniques are being advanced. Applying these technologies to supply chain management and operations can provide valuable decision-making tools for businesses. In line with this trend, as mentioned in Part 1, the global satellite imagery market is forecasted to grow at a compound annual growth rate of 17.93% from 2022 to 2028. Many companies worldwide have already embarked on satellite imagery businesses, and there are also many companies aiming to transition into platform companies to enable the diverse utilization of satellite data.

Through this paper, we have observed that satellite imagery is being utilized to mitigate supply chain risks and enhance supply chain efficiency. While the acquisition of satellite imagery still poses challenges from a cost perspective, it enables the early identification of potential obstacles and risks in the supply chain, allowing for proactive responses even in global crisis situations, thereby contributing to stable supply chain operations. Satellite imagery analysis can integrate various factors such as weather patterns, transportation routes, and geopolitical events comprehensively. Furthermore, satellite imagery not only enhances the agility and resilience of supply chains but also plays a crucial role in environmental regulatory compliance, significantly contributing to the improvement of supply chain sustainability. As a result, the future utilization and analysis of satellite imagery will continue to be crucial in supply chain management. # Reference [1] European Space Agency https://business.esa.int/projects/i-port-0
[2] Meyer-Larsen, N., Müller, R., & Köhler, T. (2015). Optimisation of Intermodal Transport Using Satellite-based Services. In Operational Excellence in Logistics and Supply Chains: Optimization Methods, Data-driven Approaches and Security Insights. Proceedings of the Hamburg International Conference of Logistics (HICL), Vol. 22 (pp. 379-389). Berlin: epubli GmbH.
[3] Murata, H., Shibasaki, R., Imura, N., & Nishinari, K. (2023). Identifying the operational status of container terminals from high-resolution nighttime-light satellite image for global supply chain network optimization. Frontiers in Remote Sensing, 4, 1229745.
[4] Chosun Biz, “[Economy seen from satellite] Panama Canal disrupted by drought”, (2023.07.10)
[5] Posco Newsroom, ““Why POSCO invested in Australian iron ore mines”, expert report, (2020.09.24)
[6] [Tailings dam collapse area (Feijao mine location))] New York Times, “A Tidal Wave of Mud”, (2019. 02.09)
[7] [Satellite images before and after the Tailings dam accident] The Weather Channel, “Before and After Images of Brazil's Disastrous Dam Collapse”, (2019. 02.07)
[8] Korea Maritime Institute, “[Shipping Market Status 2020] Capesize Market Outlook for 2020”, (2020.01.03)
[9] Arkeman, Y., Hidayah, N. J., Suharso, A., Adhzima, F., & Kusuma, T. (2023). Implementation of artificial intelligence and blockchain in agricultural supply chain management, 29(1), 135-149.
[10] Unilever, “How we’re using tech for more transparent, traceable supply chains” (2022.11.25)
[11] Impact On, “Unilever combines AI and data to monitor Indonesian supply chain”, (2020.08.31)
[12] Kittichotsatsawat, Y., Jangkrajarng, V., & Tippayawong, K. Y. (2021). Enhancing coffee supply chain towards sustainable growth with big data and modern agricultural technologies. Sustainability, 13(8), 4593.
[13] Sengupta, T., Narayanamurthy, G., Moser, R., Pereira, V., & Bhattacharjee, D. (2022). Disruptive technologies for achieving supply chain resilience in COVID-19 era: An implementation case study of satellite imagery and blockchain technologies in fish supply chain. Information Systems Frontiers, 1-17.
[14] Delmonteil, F. X., & Rancourt, M. È. (2017). The role of satellite technologies in relief logistics. Journal of Humanitarian Logistics and Supply Chain Management, 7(1), 57-78.
[15] Faster Capital (2024), “The Role of Technology in Enhancing Community Resilience Initiatives” (2024. 04.24)
[16] Nagendra, N. P., Narayanamurthy, G., & Moser, R. (2022). Management of humanitarian relief operations using satellite big data analytics: The case of Kerala floods. Annals of operations research, 319(1), 885-910.
[17] ' Saefarm’s agricultural and forestry satellite technology brings smart changes to open field farming
[18] DEEPBLOCK, “How AI Revolutionizes Asset Management and Market Research”, (2023.08.16)
[19] EU, “European Critical Raw Materials Act”. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan/european-critical-raw-materials-act_en
[20] Kyunghyang Shinmun, “New mission for ‘old soldier reconnaissance plane’ after taking off military uniform.” (2023.11.19)
[21] Korea Economic Daily, “Moonshot” satellite that will thoroughly identify the main culprits of methane emissions will be launched next month” (2024.02.15)
[22] https://www.lgcns.com/blog/cns-tech/blockchain/2498/

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