Why smart containers are the future of shipping
Transporting goods around the world is a routine activity for the shipping industry, but the delivery of approximately 11 billion tonnes of cargo per year is a process that involves many risks.
In November 2020, the ONE Apus container ship traveling from southern China to the United States lost more than 1,800 containers due to extreme weather conditions, which is considered the second largest cargo loss in history . And in January 2021, shipping giant Maersk lost 750 containers on a similar journey, then lost another 260 containers a month later.
Lost containers are not the only challenge in freight transportation. Often, goods arrive damaged or damaged at their destination due to poor conditions – unpredictable weather conditions can be disastrous for the transit of food, for example. This can lead to millions of dollars in losses, but also raises questions about the sustainability of the way goods are shipped.
How can industry solve these problems?
MAKE CONTAINERS SMARTER
Smart containers are a way to create a more efficient, secure and sustainable maritime supply chain. These look a lot like regular containers, but come pre-installed with sensors.
âA smart container is just an ordinary container, but you put a small chip in it that has a connection to a network,â explains Jules Kollmann, Managing Director, Containers and Logistics, ING.
The idea behind equipping containers with a range of sensors is that they can collect real-time data on everything from the temperature inside a container to its exact location, using GPS tracking.
This big data approach promises a lot, so what exactly are the benefits of collecting all of this data?
BIG DATA MEANS MORE EFFICIENT AND SUSTAINABLE RESULTS
Collecting such data can help optimize the supply chain. Sensor data provides hyper-precise information on a container location, enabling optimized fleet management that translates into less repositioning and more efficient use of fuel. Often, energy is wasted due to the shipping and repositioning of empty containers: estimates suggest that up to $ 20 billion a year is spent on this activity which results in unnecessary fuel consumption. Research from the Boston Consulting Group previously estimated that avoiding the transport of empty containers “for carrier-specific reasons” could allow the industry to reduce carbon emissions by six million tonnes per year.
It can also ensure that fleets avoid potentially hazardous weather areas that could lead to the dumping or damage of cargo, an issue that can cause significant environmental damage.
A report published in 2019 described, for example, how container losses can represent “a very diverse source of pollution”, posing a threat to ecological life and habitats if goods flow into the sea. This was the case when he container ship weighing nearly 28,000 tonnes sank while carrying around 720 tonnes of highly corrosive and toxic materials.
The existing manual method of tracking container progress means that information shared with customers or port operators is generally out of date, making it difficult to predict when ships might arrive at their destination. This can lead to disruptive bottlenecks in the supply chain that can lead to unnecessary delays and congestion during the unloading process. This can lead to a significant scarcity challenge, which countries increasingly have to face as a reality. Importantly, these problems can be partially avoided if the data is entered into the digital shipping records on time.
âSmart containers create a lot of data, which can ultimately optimize the supply chain,â says Kollmann. “Estimates suggest there can be a savings of $ 7 billion by creating a more streamlined process.”
The benefits of sustainability go further. The sensors can also analyze and regulate the conditions inside the containers. This can ensure that temperature sensitive goods, for example, like food, are not spoiled during the journey.
LOGISTICS MUST BECOME DIGITAL
Smart containers are not yet the norm, but a number of companies are increasing production. In April 2020, for example, Swiss startup SkyCell raised $ 62 million to build smart containers specifically for pharmaceuticals.
But success will depend on more than startups. According to Kollmann, this will require the rest of the transportation and logistics industry to go through a digitization process that will allow data to be effectively shared among all parts of the supply chain. In practice, this means that the shipping industry has to overcome some permanent obstacles to digitization; experts point to limited bandwidth, a lack of infrastructure standardization and an overly protective culture around data sharing.
Fortunately, steps are being taken at the regulatory level to facilitate this process and support the sustainability of the process.
In 2020, the European Union approved a new regulation on electronic freight transport information, with the aim of supporting the digitization of the industry, with a view to improving sustainability by reducing paper consumption and strengthening the energy efficiency of operations by ensuring all stakeholders have access to the most relevant data. Meanwhile, nongovernmental organizations such as the Digital Container Shipping Association aim to establish “standards for a common technology base” with open protocols.
Digitization and big data will be increasingly important in a post-pandemic world in which industry customers are focusing on the sustainability and efficiency of every part of their supply chain. The sustainability of maritime transport will largely depend on its drive to reduce carbon emissions, of course, but the digitization of the entire logistics network will also play a key role.
Kollmann is optimistic. âIn the future, you will have a fully digital supply chain,â he says, âwhere all communication will be between smart assets.