- Digitalization of the shipping industry in a post-pandemic world will improve supply chain sustainability and efficiency.
- The transportation of cargo around the world is routine business for the shipping industry, but delivering about 11 billion tons of goods a year is a process that is fraught with risk.
- Collecting such data can help to optimize the supply chain.
Digitalization of the shipping industry in a post-pandemic world will improve supply chain sustainability and efficiency, says an article published on fast company website.
Lost containers, Challenge of cargo transportation
The transportation of cargo around the world is routine business for the shipping industry, but delivering about 11 billion tons of goods a year is a process that is fraught with risk.
In November 2020, the ONE Apus container ship travelling from southern China to the U.S. lost more than 1,800 containers due to severe weather in what is thought to be the second-largest loss of cargo in history.
And in January 2021, shipping giant Maersk lost 750 containers while on a similar course and then lost a further 260 containers a month later.
Lost containers are not the only challenge of cargo transportation. 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 but also raises questions about the sustainability of the way goods are shipped.
Make containers smarter
Smart containers are one way to create a more efficient, safe, and sustainable shipping supply chain. These are much like regular containers, but are pre-installed with sensors.
“A smart container is just a regular container, but you put a little chip in it that has a connection with a network,” explains Jules Kollmann, managing director, Containers and Logistics, ING.
The idea behind equipping containers with an array of sensors is that they can collect real-time data about everything from the temperature inside a container to its exact location—thanks to GPS tracking.
This big data approach promises a lot, so what exactly are the advantages of collecting all that data?
Big data means more efficient, more sustainable outcomes
Collecting such data can help to optimize the supply chain. Sensor data provides hyper-accurate information about the location of a container, allowing for optimized fleet management that results in less repositioning and more efficient use of fuel.
Often, energy is wasted as a result of the shipping and repositioning of empty containers: estimates suggest up to $20 billion a year is spent on this activity that leads to unnecessary fuel consumption.
A report published in 2019 described, for instance, how container losses can represent “a highly diverse source of pollution,” posing a threat to ecological life and habitats if goods spill into the sea. Such was the case when a nearly 28,000-tonne container vessel sank while carrying around 720 tonnes of highly corrosive and toxic material.
The existing manual method of tracking the progress of containers means information shared with customers or port operators is usually outdated, which makes it difficult to predict when ships might arrive at their destination.
This can lead to disruptive bottlenecks in the supply chain that can cause unnecessary delays and congestion during the unloading process. This can result in a significant shortage challenge, which countries are increasingly having to face as a reality. Critically, these issues can be avoided in part if data is fed into digital shipment records on time.
“Smart containers create a lot of data, which can ultimately optimize the supply chain,” says Kollmann. “Estimates suggest that there can be a $7 billion cost-saving by creating a more optimized process.”
Logistic must become digital
Smart containers are not the norm yet, but a number of companies are ramping up production. In April 2020, for instance, Swiss startup SkyCell raised $62 million to build smart containers specifically for pharmaceutical goods.
In 2020, the European Union approved new regulation on electronic freight transport information, in a bid to support the digitalization of the industry, with a view to enhancing sustainability by reducing paper usage, and bolstering the energy efficiency of operations by ensuring all stakeholders have access to the most relevant data.
Meanwhile non-governmental organizations such as the Digital Container Shipping Association are aiming to establish “standards for a common technology foundation” with open protocols.
Digitalization and big data will be 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, of course, but digitalization of the entire logistics network will also play a vital role.
Kollmann is optimistic. “In the future, you will have a supply chain that is completely digitalized,” he says, “where all communication is between smart assets.”
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