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Smart containers: a comprehensive guide to the future of shipping

Smart containers: a comprehensive guide to the future of shipping

May 8, 2024
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Aeler
May 8, 2024

In intermodal transportation, where goods are shipped vast distances via ship, rail, and road within a single container, the emergence of the "smart container" has been a game-changer, significantly enhancing efficiency and reliability. Facing the challenges of moving goods across such diverse modes of transport, the necessity for real-time visibility has become crucial. With multiple stakeholders involved, each needing accurate and current information on assets and cargo, traditional methods of tracking and managing these movements are no longer adequate.

As supply chain requirements have evolved, there has been a growing emphasis on improved visibility to track the inbound flow of goods accurately, meet increased demands, and swiftly respond to unforeseen challenges. Armed with advanced technology, smart containers offer a transformative solution, improving global logistics management, tracking, and security of goods transportation.

This article fully explores smart containers and their benefits, offering insights into how they are transforming - and will continue to transform - the logistics landscape.

What is a Smart Container and How Do They Work?

Smart containers are a revolutionary leap in the shipping and logistics industry, integrating Internet of Things (IoT) technology into traditional shipping containers. This integration outfits these containers with sensors that monitor and report real-time data on the container's location, temperature, humidity, and other critical environmental parameters. These sensors are part of self-powered IoT gateway devices that ensure continuous data transmission to a cloud-based platform, enabling real-time processing and global accessibility.

The functionality of smart containers extends beyond simple monitoring, providing comprehensive insights into the container's journey. This includes location tracking, environmental condition monitoring, and alerts for handling or potential tampering. Through intuitive web-based applications, stakeholders can make informed decisions by automating processes based on live data updates, such as Estimated Time of Arrival (ETA), transit times, and alerts for schedule deviations or unexpected environmental changes.

Furthermore, accumulating and analysing this data over time can identify patterns that drive operational improvements across the global supply chain. Smart containers enhance process efficiency and operational excellence by enabling advanced monitoring and management capabilities, revolutionising how goods are transported and managed worldwide.

What Types of Smart Containers Are There?

Smart containers have evolved into two primary categories, each designed to streamline and secure the global trade and transportation processes through advanced technology: Affixed IoT devices and embedded IoT smart containers.

Affixed IoT Smart Containers

Affixed IoT smart containers feature permanently attached or temporarily fixed devices to the container for a certain period. These containers are equipped with various tracking and monitoring devices that provide continuous, real-time data on the container's journey. This data includes GPS positioning, temperature, humidity, vibration, shock, and even radiation levels, offering a detailed view of the cargo's condition and location without requiring manual checks. The installation of these devices represents an additional logistic effort, as they need to be mounted and, if necessary, removed at the end of the service contract. Despite this, they present a cost-effective solution to enhance cargo tracking and monitoring, significantly improving shipping efficiency and security.

Embedded IoT Smart Containers

Embedded IoT smart containers are at the forefront of container technology, with IoT hardware integrated directly into the container's design during manufacturing or as a retrofit to existing containers. This integration ensures that the containers are "always smart," eliminating the need for additional logistic efforts to install IoT systems after construction.

Embedded IoT smart Containers can monitor various environmental and situational parameters, providing seamless, comprehensive management and tracking capabilities throughout the shipping process. As a result, stakeholders gain unparalleled control and insight over their supply chain operations, with no need for subsequent IoT device installation or removal.

An embedded IoT smart container (left) and an affixed IoT smart container (right).

What are the Benefits of Smart Containers?

The introduction of smart containers into the global supply chain has ushered in a new era of efficiency, security, and environmental responsibility. Here are the key benefits these innovative solutions bring to the table:

1. Accurate Prediction of Arrival Times

Smart containers, equipped with advanced sensors, provide unprecedented tracking capabilities. This feature allows all stakeholders, from customers to port operators, to precisely predict the arrival times of shipments, thus preventing disruptive bottlenecks at ports. By offering real-time updates on location and the physical condition of goods in transit, smart containers enable proactive adjustments to minimise risks of damage or delay, thereby enhancing the overall supply chain efficiency.

2. Reduced Detention and Demurrage Costs

Smart containers facilitate more efficient operations at ports and terminals by reducing container dwell time and decreasing detention and demurrage fees. This efficiency saves costs and maintains high standards of customer service.

3. Optimised Supply Chain and Reduced Ship Repositioning Costs

The data collected by smart containers enable hyper-accurate location tracking, which significantly improves fleet management. This optimisation reduces container repositioning, addressing the costly issue of transporting empty containers. Avoiding such unnecessary shipments could drastically cut carbon emissions, creating a more sustainable and cost-effective supply chain.

4. Increased Number of Trips per Container

Smart containers significantly reduce idle time by optimising routes, managing equipment efficiently, and facilitating seamless transfers across different transportation modes. This improvement in container utilisation allows for an increased number of trips per container, boosting the revenue for asset owners

5. Product Preservation

Sensors within smart containers can regulate internal conditions, ensuring that temperature-sensitive cargo, such as food or pharmaceuticals, is transported under optimal conditions. This capability is crucial for maintaining the quality and safety of perishable goods throughout their journey.

6. Ensuring Goods Remain Safe

Smart containers enhance security by detecting unauthorised access and movements, helping to combat illicit trade activities such as cargo theft and trafficking. Smart containers strengthen the global trade environment by providing real-time tracking and alerts for unusual activities, making it safer and more reliable for all stakeholders.

7. Enhancing the Sustainability of the Supply Chain

Smart containers have emerged as a crucial innovation in reducing the shipping industry's environmental footprint, significantly contributing to global CO2 emissions reduction. Embedded with advanced IoT systems, these containers enhance visibility over cargo conditions and offer precise location tracking, facilitating optimised fleet management and minimising the unnecessary transportation of empty containers. 

A standout feature of smart containers is their ability to provide accurate CO2 emissions data for each shipment. This crucial information enables businesses to make informed decisions in reducing their emissions, contributing to global efforts to combat climate change.

Furthermore, smart containers aid in alleviating port congestion by predicting ship arrival times more accurately and managing unloading processes efficiently. This enhances operational efficiency and supports more sustainable shipping practices.

Who Can Benefit from Smart Containers?

Smart containers bring various advantages to various stakeholders in the supply chain, enhancing efficiency, security, and sustainability from the first mile to the last. Here's how different players benefit:

1. Transport Operators

Transport operators gain significantly from smart containers through enhanced visibility and control over their operations, improving service quality and efficiency. Smart containers provide real-time data on cargo location and condition, enabling operators to optimise routes, reduce transportation lead times, and lower operational costs.

By identifying and addressing logistical bottlenecks, transport operators can better manage their fleets, minimise the transportation of empty containers, and ultimately offer more reliable and cost-effective services to their customers. This level of operational insight and efficiency directly contributes to the sustainability and profitability of their operations, making smart containers a transformative tool in the logistics and transportation industry.

2. Logistic Service Providers

Logistic service providers - including handling operators, freight forwarders, and fleet managers - benefit from smart containers by receiving timely and accurate information on consignment status. This data, compiled and analysed by host systems, enables faster identification of hazards or unexpected events, facilitating better risk mitigation strategies. Consequently, providers can ensure that goods remain secure and in good condition throughout their journey.

3. Consignors and Consignees

Consignors (shippers) and consignees (recipients) greatly benefit from smart containers, which provide more complete and timely information about their consignments. Traditionally, beneficial cargo owners (BCOs) have had limited visibility into the end-to-end transportation process, preventing them from actively managing or mitigating issues affecting their cargo. Smart containers change this dynamic by allowing BCOs to proactively address potential problems, optimise their supply chain, and monitor product quality.

The technology facilitates better inventory management, potentially avoiding stock shortages while reducing overall inventory levels. Improved visibility also contributes to shorter lead times, including faster customs clearance, and reduces risks such as cargo loss, packaging and legal costs, fines, insurance fees, and damage to goods. 

Additionally, smart containers enhance cargo security, improve service levels and on-time deliveries, and decrease operational delays. Overall, the data provided by smart containers helps increase consignment profitability by avoiding unforeseen expenses and stabilising unit costs.

4. Vessel Crews

Vessel crews, tasked with maintaining the correct temperatures for refrigerated containers and knowing the count of all containers on board, traditionally had to check each unit manually. Smart containers offer a significant operational improvement by allowing crews to remotely monitor refrigerated units' temperatures and verify that their cooling systems are functioning correctly. This remote capability provides early alerts, enabling crews to address issues promptly and potentially save cargo from damage.

Furthermore, smart containers allow vessel crews to remotely verify the count of full and empty containers during the voyage, ensuring accuracy against the stowage plan. This advancement streamlines operations and enhances cargo safety and management efficiency on board.

5. Container Owners

Container owners and leasing companies benefit from smart containers by gaining the ability to manage and verify their inventory efficiently. These advanced containers enable owners and leasing firms to conduct periodic (e.g., monthly) or on-demand inventory reconciliations with depot operators, leading to more effective fleet management.

6. Depot Operators

Depot operators tasked with reporting the daily inventory of containers can significantly benefit from smart containers by streamlining the accuracy and efficiency of their inventory management. Smart container technology allows for precise, efficient daily or on-demand inventory checks, significantly reducing the likelihood of errors associated with manual counts.

7. Inland and Sea Terminal Operators

Inland and sea terminal operators benefit substantially from smart container technology, which is crucial in transitioning containers between transportation modes. This technology allows them to efficiently locate each container within their premises in real-time, enhancing operational efficiency. Smart containers can also provide accurate Estimated Times of Arrival (ETAs) for containers arriving by truck, rail, or barge, facilitating smoother terminal operations.

Smart containers also improve the handling and management of dangerous goods. They provide precise, real-time data on container location and contents directly to the

8. Cross-Border Regulatory Authorities

Smart container solutions offer cross-border regulatory authorities, including customs and sanitary agencies, enhanced efficiency and security in managing container movements. By providing accurate data about a container's physical journey before arrival, these solutions can enable authorities to perform advanced risk assessments, comparing declared versus actual routes. Potentially accelerating the clearance process and allowing for pre-arrival clearance, smart containers can lead to the creation of a "fast lane" for expedited processing.

Additionally, smart containers can alert authorities to any breaches of acceptable physical parameters, such as temperature for perishables or pharmaceuticals, flagging those containers for inspection. This improvement in data quality enhances inspection predictability, possibly reducing the number and duration of inspections.

The technology also increases safety for inspection agents through alerts on specific physical parameters, like fumigation or dangerous goods. Tracking features assist in identifying suspicious consignments by monitoring unusual stops or deviations from planned routes, while unexpected door openings could prompt inspection requests, impacting advance clearance.

For cross-border agencies operating inland or overseeing free-trade zones, smart containers can verify cargo crossing and help prevent tampering, facilitating coordinated border management and seamless crossings without physical checks. This system supports automatic customs declarations and related duties or relief claims as containers enter or leave a territory, streamlining the clearance process for all trade stakeholders.

9. Port Authorities

Port authorities are tasked with ensuring the port's infrastructure, such as roads, bridges, rail tracks, and terminals, is adequately maintained and optimised for future use. Effective planning requires detailed, reliable data on infrastructure usage, such as the volume of containers on specific roads or rail tracks. Smart containers can offer a solution by providing real-time, accurate data that can support decisions on infrastructure investment and improvements.

Additionally, the insights gained from smart container data can help manage traffic flow within the port, reducing congestion and contributing to lower carbon emissions, thereby making the port environment more eco-friendly. Moreover, smart containers can supply port authorities with comprehensive statistics on container volumes, aiding in communication with government bodies and facilitating comparisons with other ports, overcoming the current challenge of piecing together data from multiple sources.

10. Banks and Insurance Institutions

Banks and insurance institutions, integral to the logistics and supply chain processes, stand to benefit significantly from the data provided by smart containers. This data enhances decision-making, offers increased transparency throughout the cargo voyage, and supports comprehensive risk analyses. For banks, real-time tracking and geospatial information facilitate timely document issuance, compliance verification, faster payment processing, and improved control over operational costs. This is particularly valuable in international trade, where the ability to monitor cargo positions can expedite payment releases and streamline the supply chain.

Insurance companies can now assess compliance and risks directly, enabling swift action in case of claims or contract breaches. Smart container data detailing environmental conditions and potential impacts on cargo supports accurate claims resolution and risk mitigation strategies. This precise monitoring at the cargo level allows for developing tailored insurance products and more efficient end-to-end risk management.

Overall, the insights offered by smart containers can lead to productivity gains for financial and insurance institutions, potentially leading to lower financing rates for supply chains and the creation of new insurance products.

Challenges in Using Smart Containers

1. The Absence of Global Standards and Data Sharing

Adopting smart containers offers significant improvements in supply chain management, but the lack of global standards for their data complicates integration and limits their potential. These standards are critical for seamless data analysis across different transportation modes.

Effective data sharing is crucial, as it enhances operational efficiencies and streamlining processes. However, challenges such as non-standardised data formats and concerns about data privacy hinder open exchange. A secure, standardised data-sharing framework is necessary to fully leverage smart containers, promoting confidentiality and trust among all stakeholders.

2. Initial Costs

Moreover, the initial costs associated with adopting tech-enabled containers pose a significant challenge. These containers, equipped with sophisticated sensors and communication technologies, represent a considerable investment compared to traditional shipping solutions. However, it's important to note that sensor technology continues to advance, promising decreased costs over time, making smart containers more accessible to a broader range of businesses.

3. Impact on the Workforce

Integrating these sensors into the supply chain also has implications for the workforce. Automated data collection and transmission can lead to redundancy for staff previously tasked with these duties. This shift toward automation could demoralise segments of the workforce and impact brand reputation. Nevertheless, this transition also presents an opportunity to upskill employees, equipping them with the necessary knowledge to manage and interpret the data from smart technologies.

4. Cybersecurity

Cybersecurity is another critical concern. Smart containers rely on cloud services and a complex network of satellites for instant data transmission, presenting a risk of hacking and data tampering. Businesses must invest in robust security measures to prevent breaches while staying informed about government cybercrime and data protection legislation.

5. Sensor Interference

Finally, the physical characteristics of shipping containers and the environments in which they operate can interfere with sensor functionality. The thick steel construction of containers and the storage conditions within large vessels may hinder the sensors' ability to transmit data effectively. This can result in delays and inaccuracies in the data received. Ensuring reliable data transmission over long distances requires a dependable communication network, necessitating partnerships with trusted network providers with a robust global infrastructure.

Future Developments in Smart Container Technology

The landscape of cargo transportation is undergoing a profound transformation, propelled by the rapid adoption of smart containers. Maritime research and consulting firm Drewry highlighted that by the end of 2021, approximately 3.6% of the global container fleet was equipped with smart technology. This adoption rate is poised for significant growth, with projections suggesting an eight-fold increase in the smart container fleet over the next five years. This surge underscores a pivotal shift in the industry's approach towards more data-driven, efficient cargo transportation methods.

The trajectory for smart containers is set for continuous innovation, aiming to greatly enhance the customer experience through advanced data collection and connectivity solutions. Efforts are being channelled into integrating a broader array of sensors, including those capable of measuring gases and expanding the use of wireless sensors to gather more comprehensive data on cargo conditions.

A critical focus is also being placed on overcoming global connectivity challenges. For instance, certain countries' roaming restrictions, which necessitate network switching to maintain container connectivity, are a hurdle actively being addressed. Solutions to facilitate seamless network transitions in these regions are under exploration.

Finally, in the future it is hoped that more smart containers can be directly linked to satellites to ensure uninterrupted communication capabilities.

Conclusion: The Impact of Smart Containers on Global Logistics

In conclusion, smart containers have the potential to revolutionise the global logistics and shipping industries, offering transformative benefits extending far beyond traditional cargo transport methods. By leveraging Internet of Things (IoT) technology, these advanced containers enable unparalleled visibility, efficiency, and security across the entire supply chain, from the initial loading of goods to their final delivery. The adoption of smart containers promises to mitigate longstanding challenges such as port congestion, inefficiencies in fleet management, and environmental concerns, paving the way for a more sustainable, responsive, and resilient global trade ecosystem.

As we navigate the complexities and opportunities presented by smart containers, it becomes evident that collaboration across industries, governments, and technological domains is essential. Developing global standards, addressing cybersecurity risks, and fostering innovation are critical steps toward unlocking the full potential of smart container technology. Moreover, as the adoption rate of smart containers continues to rise, the focus on upskilling the workforce and integrating advanced data analytics into supply chain operations will become increasingly important.

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