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Wholesale Banking

How emerging technologies can help shipping companies cut costs, reduce risks and adapt to shifting market demands.

Shipping of goods via air fright

If the transport and logistics sector scales up the internet of things (IoT), sensors, and blockchain, it could dramatically reduce time-loss in the transport of critical items – during the pandemic and beyond.

Consider the race to get Covid-19 vaccines to the public: one of the biggest obstacles could be transportation. Studies show that about 25% of vaccines deteriorate due to mistakes made during transport, including insufficient temperature controls, which makes them unusable (1). That scenario would lead to huge losses and delay our ability to rebound from the pandemic.

Tools for transparency and timeliness

But the IoT and other smart technologies could reduce that risk dramatically. These tools give companies real-time transparency into the location and condition of their shipments and drivers, which enables them to prevent errors and accelerate delivery. IoT sensors send constant updates about load temperature, humidity and other condition data, providing alerts if parameters fall out of alignment. AI-driven tags, meanwhile, can be attached to loads to monitor their exact location and timing for delivery. And all of this data can be stored in a blockchain, providing shippers and recipients with an immutable record of exactly how that shipment has been handled. That kind of access to real-time shipment data has the power to transform the transportation and logistics industry at a time when transformation is critical. “We already saw before the crisis that companies are looking at how to reposition themselves in this new environment,” says Jules Kollman, Managing Director at ING Structured Finance. “This transformation will accelerate through the crisis as well.”

Raising the global standard

Many transport and logistics providers are now using IoT sensors to monitor warehouse stock in real time and understand what they have, where it is located and how fast certain products are moving. This level of insight drives operational efficiencies and helps organisations to respond rapidly to shifting customer demands. Once products are en route, companies are using sensors and AI analytics to track progress and mitigate risks. Analytics tools can also complement efforts to reduce environmental impact in the supply chain by optimising transport routes, which reduces fuel use and accelerates delivery times.

For Arno Storm, COO of APM Terminals Rotterdam in the Netherlands, the aim is to streamline the business. “The goal is to ship a container as easily as a private parcel,” he says. “So the simplification of the trade and the digital solutions that enable that simplification are really picking up pace now.” The process includes providing the end user with global apps they can use to track containers and the status of the delivery, and book containers on a platform from anywhere in the world. “It sounds simple,” says Storm. “But the [digitalization] standards throughout the industry vary with all the local specifics and all the parties in between, so that's a huge achievement. And it will take the future of global trade to the next level.”

Establishing a global standard in this way brings competitors together. In October, global shipping companies MSC and CMA CGM joined Maersk’s logistics platform for containerised freight. Run on IBM Hybrid Cloud and IBM Blockchain, the platform allows its members to share data and collaborate digitally (2).

When stakeholders combine that shipment data with external data sources, such as weather patterns and traffic conditions, they can optimise route plans in real time. And that will accelerate delivery and reduce potential delays.

A cargo ship

Traceability with blockchain

Used as a data storage option, blockchain is another technology that is helping many commodities shippers to meet traceability requirements required for food safety regulations, organic and fair-trade certifications, and ethical harvesting practices. Consider the World Wildlife Fund’s partnership with blockchain venture studio ConsenSys to trace wild tuna caught in Fiji. In the initial project, fishermen tagged the fish with digital sensors that projected data to a central database throughout the supply chain journey – from ship, to truck, to market, to restaurant. Every fish sold was fully traceable (3).

That kind of blockchain application has the potential to enhance control over valuable products like these, create trust in the supply chain, and produce greater insights into the end consumer.

A smart future

Whether a company is shipping tuna or vaccines, these smart technologies can give it the data it needs to create better, faster and more adaptive shipping operations. And that will be essential in the future. “If we don't provide a more resilient supply chain, it will cost us again in the case of a crisis,” says Jens Brokate, ING’s VP for the automotive sector. Resilience is what our transport and logistics sector needs to get us through repeated crises, and these smart technologies will help it get there; the time to deploy them is now.