Home to one of Europe's busiest ports, the German city of Hamburg is often snarled up in traffic. Authorities reckon about 10 million containers passed through the docks in 2014. The number is expected to double by the end of 2025. Yet hemmed in by the rest of the city, the port has little room to grow.
Instead, authorities have been making use of emerging technologies to relieve congestion. A "connected logistics" service developed in partnership with Deutsche Telekom AG (NYSE: DT), Germany's biggest telecom player, and SAP AG (NYSE/Frankfurt: SAP), its software giant, employs sensors, wireless connectivity and cloud computing to give port operators an overview of traffic and container movements in and around the facility. It has already led to a reduction in waiting times for parking spaces, claims SAP, and allowed trucking companies to plan their routes more efficiently. "If you can use IT to facilitate faster loading of ships it would actually allow greater exports of German material," says Steve Bell, a senior analyst with Heavy Reading .
The Hamburg port project illustrates how digital technologies can be used to modernize and benefit a traditional industry. But Germany still features too few examples of such digitalization. Its Mittelstand, a term coined to describe the large sector of small and midsized enterprises (SMEs), is made up heavily of old-school manufacturers that have yet to embrace Internet-era technologies. "Manufacturing is more relevant in Germany than in other industrialized countries, like the UK," says Helmut Figalist, the head of advanced technology for the digital factory division of Siemens AG (NYSE: SI; Frankfurt: SIE), one of Europe's biggest engineering companies. "To stay competitive in this field we need to cope with digitalization challenges."
The overriding fear is that a Germany ill-equipped for the demands of the digital age will fall behind Internet-savvy newcomers in Asia, according to Robin Duke-Woolley, the CEO of analyst firm Beecham Research. That could have dire consequences for Germany's economic prospects. Local hi-tech companies, meanwhile, do not want to see Germany and Europe beaten in the industrial arena as they were in the consumer technology space. "In football terms we feel we gave the first half to the US," says Ingo Marten, the senior vice president of the Internet of Things (IoT) for T-Systems International GmbH , Deutsche Telekom's IT services division.
Germany hopes to safeguard its industrial competitiveness through an initiative it calls Industrie 4.0. The expression draws on the concept of a fourth industrial revolution following previous upheavals that saw the emergence of the steam engine, the development of the assembly line and the arrival of the computer. In the latest revolution, digital and IoT technologies will sweep through the workplace and the factory floor and change them beyond recognition, or so the thinking goes.
While the anglicized term Industry 4.0 is now being used in other parts of the world to describe these forces, Germany's Industrie 4.0 initiative was originally conceived by associations representing specific national interests -- including VDMA (machine builders), ZVEI (electronics) and BITKOM (IT) -- and is now being steered by the German government. Stakeholders including Deutsche Telekom, SAP and Siemens hold regular meetings with government authorities. Working groups have been set up to explore issues such as standardization, research, security and the legal framework. Universities and companies pursuing an Industrie 4.0 agenda can also apply for government funding, says Figalist.
Next page: Spanners in the works