From digital twins to 5G to green energy, how Westports path to digitalisation is guided by ROI

• Exploring US$20mil digital twin implementation to solve operational pain points
• Investment in tech or 5G adoption is guided by a simple rule - what is the ROI 

When container ships were attacked by Houthi missiles in the Red Sea last year, the re-routing of ships caused a ripple effect across the world, including at Westports Holdings Bhd’s port in Port Klang, Selangor. While many ports might have buckled under the sudden pressure of an unanticipated surge in vessel arrivals, it was Westports' early investments in digitalisation that helped them manage the spillover traffic. 

There was nothing sexy nor was luck involved in its digitalization journey. Rather, it was the result of a decade-long strategy of measured technological adoption that has positioned the port operator as a leader in Malaysia's maritime sector. Westports' digital journey began with the implementation of e-billing, making them one of the first companies in Malaysia to embrace this technology. 

"We were also one of the first companies in Malaysia to implement E-billing more than 10 years ago," shares Eddie Lee, Managing Director of Westports Holdings Bhd. "Of course, we faced some challenges from customers initially, but we learned the importance of stakeholder engagement."

[Ed note: At the time of the interview, Eddie was CEO of Westport Malaysia Sdn Bhd and its acting CFO. He was promoted to Managing Director of Westports Holdings effective Feb 1.]

The company's approach to overcoming resistance was pragmatic – they reduced credit terms for customers who didn't adopt e-billing (they had a shorter window to settle their bills) , eventually leading to widespread acceptance. This early success in digital transformation set the stage for more ambitious technological implementations, demonstrating the company's ability to drive change through practical incentives rather than mere mandate.

Digital twins: The next frontier

Today, without fanfare, Westports is exploring digital twin technology to address critical operational challenges. The company has identified several pain points, including crane hang – where container cranes are left waiting for trucks – and yard congestion, where multiple terminal tractors converge on the same block simultaneously.

"Digital twin technology could be our breakthrough solution," Lee said. "We're looking at vendors like Realtime Business Solutions (RBS), Psychology Tech, and Westwell Technology. One vendor showed us quite impressive results, demonstrating real-time visualization capabilities similar to what Shanghai port has implemented."

The potential investment could reach up to US$20 million (RM89.5 million), but Lee emphasizes that ROI remains the key decision factor. "Every time we think about embarking on any capital expenditure, we look at ROI. You can spend RM100 million on something. The key is, if you're able to get returns in terms of operational efficiency and reduced costs, please go ahead and make the investment."

Lee said the digital twin technology will allow Westports to make more informed decisions about accepting ad-hoc vessel arrivals, particularly crucial during periods of regional port congestion. The system could predict implications up to a month in advance using big data and machine learning, potentially preventing costly operational bottlenecks.

While not on the scale of the digital twin system and its predictive capabilities, Westports has always valued technology that can enable it to deliver better value to customers. The Feb 2023 launched Remote Reefer Monitoring System (RMS) is one recent example. The RMS (pic) allowed Westports to establish a round the clock remote management of refrigerated containers with realtime visibility, accuracy and alerts from reefer containers related to temperature changes, container monitoring and well controlled operating conditions such as humidity and CO2 levels.

According to Lee, the adoption of the RMS enhanced Westport’s operational efficiency, cargo integrity and occupational safety through the provision of innovative solutions for clients and capture potential business related to the cold chain logistics market.

'Technology adoption is never about replacing staff'

One notable technological achievement has been the implementation of the Remote Physical-Check System (RPS) in July 2020. "We used to check every container discharged from vessels manually," Lee recalls. "Now, through our remote gate system, we've automated this process, improving both efficiency and accuracy." 

Its introduction reduced the need for RPS clerks as one staff can multitask and perform the verification work of three staff previously. This allowed Westports to redeploy and train staff for other areas of operations to support its growing requirements. This redepoyment of staff whose roles have been affected by Westports ongoing digitalisation is actually a key promise made by Westports founder, the late G. Gnanalingam, to staff, that they would be working in a safer, more efficient environment with roles that would help them grow their skills. It is a promise that Rueben Gnanalingam, Westports Executive Chairman has reiterated in the past. "Our technology adoption is never about replacing staff, but to augment the work they do."

The RPS system has now evolved to include damage assessment capabilities using artificial intelligence and machine learning. The AI system learns from experience, improving its ability to identify and classify container damage over time. This has significantly reduced disputes and improved operational efficiency.

Innovation in safety and security

Westports is also leveraging technology to enhance port safety and security. With over 600 terminal tractors in operation, the company is implementing AI-driven systems to detect driver fatigue. "After years of safety campaigns and defensive driving training, we realized we need to use technology," Lee says. "We're working with a Korean company on artificial intelligence and machine learning solutions to detect driver fatigue."

The company is also exploring innovative solutions for cargo security, including drones with heat detection capabilities to identify misdeclared dangerous cargo. This initiative comes in response to recent incidents of container fires caused by incorrectly declared dangerous goods, representing a proactive approach to risk management.

5G and network infrastructure

While many ports rush to implement 5G technology, Westports maintains its ROI-driven approach to network infrastructure. "We are okay with our current WiFi infrastructure, but we recognize that 5G might be needed in the future, particularly for very high uplink speeds," Lee notes.

The company's careful evaluation of 5G implementation stems from several key considerations. As Lee explains, any future 5G deployment would need to be a private network due to the volume and sensitivity of data involved. "What we need eventually for the future has to be a private network," he emphasizes, noting that public 5G infrastructure wouldn't meet their specialized requirements.

Cost remains a critical factor in this decision. The company is conducting detailed cost-benefit analyses comparing 5G implementation against existing fiber optic solutions for their Malaysian operations. With the government still finalising details around the dual networks Malaysia has changed to, Westports is using this time to thoroughly evaluate the technology's practical benefits against its implementation costs.

"All these had to be studied and evaluated in terms of return on investment," Lee emphasises, maintaining the company's characteristic approach of ensuring technology investments deliver tangible operational benefits before implementation.

Record performance amidst digital evolution

With container volumes reaching a record 10.98 million TEUs in 2024 and revenue of US$522.9 million (RM2.34 billion), Westports' operational approach appears to be paying off. The company achieved not only record annual throughput but also hit a new monthly high of 1.01 million TEUs in December 2024, alongside strong growth in their conventional cargo segment which handled 12.19 million metric tonnes of bulk cargo.

Their success, marked by a 15% increase in net profit to a record RM898 million in financial year 2024, demonstrates that in the race to digitize port operations, the winner isn't necessarily the one who adopts technology the fastest, but rather the one who implements it most strategically. 

[RM1 = US$0.223]

These financial results validate Westports' measured approach to technological adoption, proving that careful evaluation of ROI in digital investments can lead to sustained growth and operational excellence.

Sustainability initiatives with strategic implementation

Westports' commitment to sustainability is equally measured and strategic. The company has announced its goal to achieve net-zero carbon emissions for Scope 1 by 2050, but their approach is deliberately staged to ensure practical implementation.

Recent initiatives include the installation of solar panels at their TSG Hall, with plans to expand to new warehouses. "When we analyzed solar panels 10 years ago, the payback period was about nine years," Lee notes. "Now, with reduced costs, we're seeing returns within four to five years."

The company has invested RM17 million in their initial solar installation and is planning further expansions. However, they maintain their disciplined approach to investment, particularly regarding battery storage technology. "Even if we invest in storage now with a 10-year payback period, in two years time the technology might be much cheaper. We've learned this lesson from our experience with solar panels," Lee said, explaining why it is waiting for further advancements in battery storage before investing.

This patient approach towards adopting any technology and innovation has served Westports well and Lee has no intention of changing an approach that has helped deliver record financial results for the port.