According to the World Shipping Council, cargo and liner ships transport more than $4 trillion USD worth of goods annually, representing a material of the gross domestic product (GDP) of just about every country on the globe. To fully understand the scale and scope of ocean shipping, consider this:
- Ocean shipping industry transports over 80% of consumer goods.
- International shipping industry carries 90% of global trade by tonnage according to the International Chamber of Shipping.
- In 2014, containers handled by all ports world-wide (including empties, transshipment and port handling) was more than 680 million TEU (twenty-foot equivalent unit containers), according to the World Shipping Council.
- The top 100 ports accounted for 588 million TEU in 2017, according to Lloyd’s List.
Yesterday’s Innovation is Yesterday’s Innovation
The main building block of the shipping industry is the shipping container itself. First invented in 1955 by Malcom McLean, a US trucker, the modern inter modal container is an effective and efficient cargo system for loading and securing cargo onto ships for long sea voyages. They revolutionized the modern shipping and port industry.
But the revolution has failed to keep pace with technology. Most containers and cargo are still tracked the old-fashioned way, by hand and visual confirmation by someone with a clipboard or hand scanner. “Maritime trade and logistics are often a very manual operation which greatly inflates supply chain expenses for exporters and importers. In the past, exotic tracking technologies were complex and expensive propositions, beyond the economic or comfort level to many in the industry,” says Kenneth O’Brien, COO of Gemini Shippers. According to the World Economic Forum, 20% of the cost of shipping goods is administrative paperwork expenses.
IoT Disruption is Coming
New chipsets, transmission protocols, long-life batteries, AI, block chain and Internet of Things (IoT), together via API’s and EDI’s, can greatly simplify and secure the supply chain, reduce the amount of paperwork, and enable a holistic, real-time, data-analytic rich management and operational view of the entire supply chain. IoT at the center of this new model is looking to disrupt and help the shipping industry and its clients by answering three high-priority questions:
- Can we lower operating and capital costs? IoT solutions like mobility, asset tracking, ship capacity automation, berthing + loading analytics, environmental monitoring, smart metering and ecosystem predictive insights greatly reduce (or eliminate) manual tracking and human-error while increasing productivity, efficiency, and cost reductions.
- Where’s my cargo? IoT enables real-time tracking and monitoring of cargo at all levels (ship, truck, train, container, pallet, etc.) to determine location, settlements, and when and where cargo was delivered or compromised (temperature, humidity, velocity, altitude, light, etc.). This will enable transport companies, clients, and insurers to accurately monitor assets in motion.
- What’s the condition of my cargo? IoT enables data-rich, event triggered alerts and tracking of numerous metrics (temperature, humidity, velocity, altitude, light, vibration, wetness/dryness, etc.) to ensure cargo is transported and delivered as agreed. IoT will, for example, determine a shipment of electronics got wet after it was delivered to the client (as opposed to during shipping), a pallet of frozen food thawed while on a specific loading dock at 10:02 am to 2:34 pm, or a delivery of medicine in glass vials was ruined at 11:15 pm by excessive vibrations at a specific port (likely dropped). This will validate cargo delivery terms are met and streamline any disputes and settlements.
In the race for greater efficiencies and competitive advantage, many of the larger shipping players are actively pursuing these new technologies such as IoT, AI, data analytics and block chain. A complete digitalization of shipping trade paperwork in the APAC region alone could raise yearly exports by $257 billion USD, according to the UN, which would be a huge boost for regional exporters. The race is on for all players large and small to implement a strategy leveraging IoT to increase efficiency, remain competitive and move up the value chain. Many in the industry are looking externally to get a jump start on their IoT initiatives.
“Being in the business of creating IoT focused start-ups to solve industry problems, we see the maritime trade and logistics vertical as a perfect partner to jointly develop and deploy new IoT solutions,” says Thom Jordan, Managing Director, Rocket Wagon Venture Studios. “The partnership is mutually beneficial, will help the industry as a whole, as well as its client industries and economies via reduced costs and efficiency increases.”
New Threats, New Challenges
The challenge with any digitization is it can introduce new opportunities for abuse and data crimes if not architected correctly and managed with a robust governance. In its 2019 report on IoT in Enterprise, Zscaler examined 56 million transactions in enterprise networks using 270 different types of IoT devices from 153 different manufacturers over a 30 day period and found nearly half (41%) were communicating over unencrypted channels, with many being targeted by malware and exploits, including Mirai, Gafgy and Hakai.
“As is often the case with new innovations, the use of IoT technology has moved more quickly than the mechanisms available to safeguard these devices and their users. Within only one month of traffic, our threat research team saw an astronomical amount of traffic stemming from both corporate and personal IoT devices,” said Amit Sinha, Executive Vice President of Engineering and Cloud Operations, Chief Technology Officer, Zscaler.
With increasing use of IoT, however, the shipping industry faces higher security risks. In 2017, Maersk suffered a computer virus attack that froze its port operations in multiple countries, resulting in $250 million in losses. This attack didn’t involve any IoT technology, but highlights risks involved when using technology over manual processes where a technology, including IoT devices, can be the entry point to launch cyber-attacks on a company’s network.
“Traditional IT security techniques will not work for all IoT services,” added Jordan, “which calls for additional measures. LPWAN devices, for example, do not operate via an IP address and therefore must utilize various authentication and encryption methods (AES-128, LTE encryption), authentication keys or other cryptographic algorithms. World-class IoT solution will provide end-to-end security and privacy capabilities included in their architecture.”
Security is only one of the challenges of a successful IoT deployment. Privacy and compliance has to also be ensured, as well as how the data is collected, curated, enhanced (with third party data, and shared (with partners, clients, regulators, etc). API integration to legacy systems for seamless platforms as well as new Web + App based interfaces create their own challenges, which IoT solutions must also deal with.
“A winning IoT solution is only attained from a thoughtful architecture incorporating platform security, privacy guardrails, data ownership and governance including the robust management of data from first receiver to subscriber.” Jordan added, “This is a complex challenge which will change the industry for the better.”
New Opportunities via IoT in Shipping
IoT technologies are being developed and deployed throughout the shipping vertical. These new solutions will dramatically change the industry for the better. IoT-connected shipping devices generate mountains of robust data, which can be used to extract insight, trends and predictive patterns.
“The Import-Export industry has been historically slow to embrace leading-edge technology and is still very manual in its operations,” says O’Brien. “But all that is changing, and fast. I personally am very excited to be involved in these innovations and feel IoT will dramatically transform the trade for the better.”
Acting on those insights will enable the shipping industry to create new opportunities and optimizing operations. Here are a few ways IOT has become a game-changer for the shipping industry:
Arti Loftus is an experienced Information Technology specialist with a demonstrated history of working in the research, writing, and editing industry with many published articles under her belt.
- Cargo Tracking: End-to-end supply chain solutions with location, security, status, and settlement data of cargo for customers, clients, shippers, ports and landline partners.
- Online Booking: Instant self-serve booking, as opposed to waiting hours for a confirmation.
- Container ROI: Increased container utilization.
- Automatic Settlement: Online payments and automatic settlements based on IoT triggers. For example, cargo was delivered to a client loading dock with no damage sensor alerts such as water, humidity, etc.
- Transformation of Trade insurance: Insurance-triggering events can be pinpointed (did an iPhone shipment get wet in the originating port, at sea, or after it was loaded on a truck for final delivery?).
- Smart Ports: Rotterdam, Europe’s largest port, will host connected ships by 2025. Sensors will collect, process and analyze real-time data to check availability of berths and other data points such as weather, tide, clearance heights, etc. This collection and curation of robust data sets will allow more efficient communications and decision-making to realize operating cost reductions. “Shipping companies and the port stand to save up to one hour in berthing time, which amounts to about $80,000 USD in savings for ship operators and enables the port to dock more ships each day,” according to a recent Port of Rotterdam press release.
- Autonomous Shipping
Edited by Ken Briodagh