Digital technology can be a game-changer in shipping of the future, helping to create a more sustainable and efficient industry.
Global supply chains have increasingly come under scrutiny in recent times, with the Covid-19 pandemic, Ukraine war, and climate disasters causing massive disruptions and highlighting vulnerabilities. This perfect storm of external factors has highlighted the fact that while transporting cargo around the world is routine business for the shipping industry, delivering 11 billion tons of goods a year is a process fraught with risk. (source: ICS Shipping)
In 2020-2021, 3,113 containers were lost at sea compared to 779 in the period 2017-2019 – a significant increase. There have been few incidents involving containers lost at sea so far this year, but the industry is “deeply concerned” by the rising numbers. (source: World Shipping Council)
Lost containers are not the only challenge of cargo transportation though. Often, goods arrive damaged or spoiled at their destination because of poor conditions – unpredictable weather can be disastrous for food transit, for instance. It can lead to millions of dollars in losses, (source: Conner Industries) but also raises questions about the sustainability of the way goods are shipped.
How can the industry fix these problems?
Make containers smarter
Smart containers are one way to create a more efficient, safer and more sustainable shipping supply chain. These are much like regular containers, but are pre-installed with sensors that are connected to a network. These sensors can collect real-time data about everything from the temperature inside a container to its exact location – thanks to GPS tracking.
Collecting such data can help to optimise the supply chain. Sensor data provides hyper-accurate information about the location of a container, allowing for optimised fleet management that results in less repositioning and more efficient use of fuel. Often, energy is wasted on shipping and repositioning empty containers: estimates suggest up to $20 billion a year is spent on this activity that leads to unnecessary fuel consumption. Research from the Boston Consulting Group has previously estimated that avoiding empty container shipping “for carrier-specific reasons” could allow the industry to reduce carbon emissions by six million tons per year. (source: BCG)
Sensor data also ensures fleets avoid potentially hazardous patches of weather that could result in cargo being thrown off board or damaged, an issue that can cause significant environmental damages.
Another benefit of sensors is that the progress of containers can be tracked. This allows customers or port operators to predict when ships might arrive at their destination, preventing disruptive bottlenecks in the supply chain that cause unnecessary delays and congestion during the unloading process.
“Smart containers create a lot of data, which can ultimately optimise the supply chain,” says Jules Kollmann, managing director, Containers and Logistics, ING. “Estimates suggest that there can be a $7 billion cost-saving by creating a more optimised process.”
The sustainability advantages go further. Sensors can also analyse and regulate conditions within the containers. This can ensure that cargo sensitive to temperature, for instance – like food – is not spoiled during the journey.
Logistics must become digital
Smart containers are not the norm yet, but their numbers are growing following the pandemic and the massive supply chain disruptions we’re seeing. By the end of 2021, around 3.6% of the global container fleet was fitted with smart technology. And the smart container fleet is expected to grow eight-fold over the next five years. (source: Drewry)
We still have a way to go though. According to Kollmann, it will require the rest of the transport and logistics industry to undergo a digitalisation process that will allow data to be shared effectively between all parts of the supply chain. In practice, this means the shipping industry needs to overcome some ongoing barriers to digitalisation; experts point to limited bandwidth, a lack of standardisation of infrastructure and an overly protective culture around data sharing. (source: Dualog)
Digitalisation and big data have become increasingly important in a post-pandemic world in which the industry’s customers are focusing on the sustainability and efficiency of each part of their supply chain. Much of shipping’s sustainability will come down to its willingness to reduce carbon emissions, but digitalisation of the entire logistics network will also play a vital role.
Kollmann is optimistic. “In the future, supply chains will be completely digitalised, with all communication taking place between smart assets,” he says.