Are on-premise TOS systems
costing terminals their future?

Increasing demand, digital transformation, and a need for modernization have put a spotlight on the TOS systems terminals rely on. AI is becoming crucial for terminals to boost flexibility, efficiency, and scalability. In this article, you’ll get a breakdown of the costs and considerations involved in running an AI-enhanced TOS at your cargo terminal.

Many terminals are held back by on-premise TOS setups, which require heavy upfront investments, regular maintenance, and specialized expertise. As the industry accelerates towards AI-supported operations, on-premise systems may not only be a hurdle – they may be costing terminals their future.

The financial reality of on-premise systems

Before we jump into the costs of artificial intelligence for on-premise TOS systems, here’s a breakdown of the different cost aspects of an on-premise and cloud-based TOS.

Initial setup vs. cloud investment

Setting up an on-premise TOS comes with significant initial costs. Terminals need to build a data center, buy and configure servers, and ensure data backup. Beyond hardware, customization, onboarding, and user training all add layers of cost and time. An on-premise TOS setup can quickly run into hundreds of thousands of euro, and terminals have to bear all of it upfront.

Cloud-based TOS platforms, such as omoqo’s TOM, offer a different approach. Subscription or usage-based pricing models that are predictable and stable throughout time, lowering the initial financial barrier. This pay-per-use model allows terminals to keep capital free for other investments rather than sinking it into on-premise infrastructure.

Maintenance costs

The costs don’t stop once an on-premise TOS is up and running. Routine hardware upgrades, rising energy consumption, software patches, and cybersecurity requirements are all ongoing expenses.

With cloud-based solutions, however, the burden of maintenance shifts to the provider, giving terminals access to the latest technology without the hassle and expense of managing it themselves.

Specialized talent shortage

Running an on-premise TOS requires specialized IT skills, cybersecurity know-how, and experience managing server infrastructure. Yet attracting and keeping these experts can be challenging. In a job market where tech talent is in high demand, the maritime industry often struggles to compete with other sectors seen as more modern or “sexy.” Terminals that can’t recruit or retain these specialists may find themselves at a disadvantage, forced to rely on costly and time-consuming contractors or third-party vendors.

But these aren’t the only costs you need to consider, when deciding what kind of TOS you should invest in.

The future of terminal operations: AI and automation

AI and automation are reshaping how terminals operate. From predicting equipment breakdowns to optimizing cargo flow. Predictive analytics can detect maintenance needs before problems arise, while automation and real-time traffic management eliminate bottlenecks and improve efficiency.

With a cloud-based TOS, terminals can adapt to these new tools and stay competitive without large infrastructure overhauls.

However, adding artificial intelligence to a TOS system located on the terminals can bring a lot of power to terminal operations. At the same time, it also requires specialized hardware that isn’t necessary for a typical TOS. Here’s a breakdown of the costs and considerations involved in running an AI-enhanced TOS at your cargo terminal, even if technology isn’t your daily focus.

Cost of servers and graphics units for AI

1. Servers: Servers used to run a regular TOS system at your terminal may cost between 5,000€ and 20,000€ each. But to support AI, you’ll need servers with advanced capabilities, costing closer to 50,000€ per server. These servers are designed specifically for the heavy demands of AI tasks, like real-time decision-making or advanced data analysis.
   
   
2. Graphics processing units (GPUs): For AI applications, a special type of processor called a GPU is needed. GPUs are designed to handle large amounts of data at once, which makes them perfect for AI tasks. Each GPU can cost between 10,000€ and 30,000€, and many AI setups need multiple GPUs per server. This extra cost can make running AI on-site an expensive investment.
   
   
3. Cooling and backup power: High-powered servers and GPUs produce a lot of heat, so they need specialized cooling to keep them from overheating. This can be costly to install and maintain. Additionally, to ensure that the AI system can keep running smoothly, you’ll need backup servers and energy sources, which add to the overall cost.

Why more servers are needed

AI-powered systems rely on massive amounts of data to provide insights and make predictions. These predictions can be: spotting maintenance needs before equipment breaks down or managing busy traffic flow effectively.

To process this data continuously, additional servers are needed to keep up with the constant flow of information. A standard TOS only needs to handle basic transactions and data storage, but an AI-powered TOS is constantly analyzing information and requires extra computing power. Without enough servers, the AI system could slow down or even fail, which would interrupt terminal operations.

Cloud-based AI as alternative

For many terminals, using a cloud-based AI system might be more practical and cost-effective. Cloud-based TOS solutions, like omoqo’s TOM, allow terminals to access powerful AI without the need for buying and maintaining all this specialized hardware. The cloud provider handles all the heavy lifting and maintenance, which can save terminals on upfront costs and reduce the need for constant system upgrades.

In short, while AI can bring significant efficiency and predictive power to terminal operations, setting up an AI-capable TOS on-site involves considerable investment in hardware and infrastructure. For many, cloud-based options provide a more manageable and scalable solution.

Cloud concerns

Switching to a cloud-based system doesn’t completely eliminate concerns, though. Some operators worry about data sovereignty: Will they retain control over sensitive information? What happens if the internet connection goes down? What about backups and confidentiality? With data privacy laws tightening worldwide, compliance is another challenge for terminals moving to the cloud.

We’ve collected a few of them right below.

1. Data sovereignty and confidentiality

Concern: Terminals may worry about losing control over their data, especially with sensitive or proprietary information. This includes concerns over competitors accessing data or breaches affecting operational security.

Solution: Cloud providers often offer “data localization” options, allowing terminals to choose specific regions or data centers for their data storage, ensuring compliance with local regulations. Additionally, advanced encryption (both in transit and at rest) and strict access controls prevent unauthorized access, ensuring that only authorized personnel can view or handle sensitive data.

2. Data compliance and privacy regulations

Concern: Compliance with data protection laws, such as GDPR in the EU or other regional privacy requirements, can be complex when data is stored off-site. Terminals must ensure personal identifiable information (PII) is handled securely.

Solution: Major cloud providers are certified with compliance standards (such as GDPR, ISO 27001, HIPAA), ensuring they meet strict regulatory requirements. They regularly audit their systems and provide transparent compliance reports, allowing terminals to confidently meet legal obligations and maintain customer trust.

3. Internet dependence and system availability

Concern: If the internet connection goes down, critical TOS functions could be disrupted, impacting terminal operations.

Solution: To mitigate downtime, cloud providers incorporate redundancy across multiple data centers, along with disaster recovery measures to quickly restore services. Some providers offer hybrid cloud options, where crucial data or functionality is stored locally at the terminal, ensuring core operations continue without interruption during internet outages.

By addressing each of these areas with built-in features and customizable settings, cloud-based TOS providers help terminals confidently transition to the cloud while maintaining control, compliance, and reliability.

Breaking down barriers to innovation with the cloud

Cost efficiency and scalability

A cloud-based TOS, such as omoqo’s TOM, allows terminals to pay only for what they need. This flexibility is critical for terminals, which can adjust their TOS usage based on operational demands and integrate new technology like AI without disrupting their entire infrastructure. Without the burden of unpredictable maintenance costs, terminals can scale efficiently and keep up with industry changes.

Improved reliability and business continuity

Cloud solutions bring built-in redundancy and disaster recovery, reducing the risk of downtime or data loss – common concerns with on-premise setups that rely on single-point data centers. This reliability is essential for terminals, where even short disruptions can have costly ripple effects.

The question you need to ask

In a rapidly evolving industry, traditional on-premise TOS systems may be more of a liability than an asset. With their flexibility, cost efficiency, and scalability, cloud-based TOS platforms like TOM offer a path forward for terminals that want and need to innovate.

As terminals face rising pressures to modernize, the question is:

Are you ready to invest in the future or willing to risk getting left behind?