Why smart containers are the future of shipping

The transportation of 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 is full of 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 in what is considered the second.biggest freight loss in history. And in January 2021, the shipping giant Maersk lost 750 containers while taking a similar course, 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. It 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.

“A smart container is just an ordinary container, but you put a small chip in it that has a connection to a network,” 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 per year is spent on this activity this leads to unnecessary fuel consumption. Research from the Boston Consulting Group has previously estimated that avoiding the shipment of empty containers “for carrier-specific reasons” could allow the industry to reduce carbon emissions of 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 describes, for example, how container losses can represent “a very diverse source of pollution”, posing a threat to life and ecological habitats if the goods flow into the sea. Such was the case when an almost A 28,000-ton container ship 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 major shortage challenge, which countries are increasingly faced with as a reality. Importantly, these problems can be partially avoided if the data is entered into the digital shipping records on time.

“Smart containers create a lot of data, which can ultimately optimize the supply chain,” 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 must 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 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 the use of paper and boosting the energy efficiency of operations by ensuring all stakeholders access to the most relevant data. Meanwhile, non-governmental organizations such as the Digital container transport association aim to establish “standards for a common technological basis” 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. “In the future, you will have a fully digital supply chain,” he says, “where all communication will be between smart assets.

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