3PL Perspectives
Manohar Patwardhan | Intelistics Corp.
Beginnings of Modern Containerization
The idea of using some form of a shipping box is not entirely new. Boxes like modern containers were used for combined rail and horse-drawn transport in England as early as 1792¹. However, for at least another century, cargo was loaded and unloaded from odd-sized wooden pallets, crates and barrels. The process was slow, laborious, expensive, and probably prone to loss due to theft. After observing this slow and inefficient process, Malcolm McLean developed a standardized way of loading cargo from trucks onto ships and into warehouses².
McLean bought his first truck in 19352, and by 1955 owned one of the largest trucking companies in the United States. Looking to move cargo as efficiently and economically as possible, in the early 1950s, McLean began work on his own “container concept,” and patented the original working design in 1956³. That same year, he purchased a company called Pan Atlantic Tanker Company which owned a fleet of rusting tanker ships. The tankers were repaired and refurbished to transport containers on deck using his new container concept, and the shipping company was later aptly named Sea-Land Shipping. On April 26, 1956, the first such converted tanker, named the Ideal-X, sailed from Port Newark, New Jersey to Houston, Texas with a load of 58 35-foot containers⁴. McLean persisted and in the early 1970s standardized the ISO container in use today.
Since then, domestic and ocean-going containers have evolved and are available in a variety of lengths from 20 to 53 feet. To cater to the demands of the global marketplace, containers are available for use as dry containers (original container), flat racks, insulated containers, open tops, refrigerated containers, etc., to transport goods overseas. Until recently, the ocean-going containers have remained dumb (non-computerized) for the most part, i.e. these containers have not been able to communicate their identification, status (empty or loaded), location, etc. However, innovative and pioneering efforts are transforming the standard ISO container into a digitalized “smart” container with solutions that can address the challenges freight forwarders and logistics providers face daily.
Challenges in the Freight Ecosystem
It is important to understand the challenges in the global freight ecosystem that contributed to the development of the modern smart container.
1. Too many (but necessary) stakeholders – On average, between 10 and 15 various stakeholders are needed to move cargo from its origin to its correct destination with the least amount of process resistance.
2. Fragmented ecosystem leading to complicated and sometimes contradictory decision making – Each silo tends to improve its own performance without thinking of cross-company trade-offs. This may accidentally generate negative values for other stakeholders in the supply chain, making the overall supply chain partially inefficient.
3. Technology adoption has been relatively slower in the logistics industry compared with technology adoption in some of the other industries (Banking, Airline, etc.) – However, times are changing, and various initiatives are underway to move the needle faster on digitization for the logistics industry.
4. Powerful human tendency to prefer the status quo and to want the future to look and behave much like the recent past – A large percentage of the human population does not like change.
5. Lack of sufficient visibility in supply chains – This is probably one of the most important challenges, as visibility refers to location, status (empty or loaded), direction of travel, stationary or moving, etc.
6. Majority of the supply chains are international or global in nature – Hence most of the supply chains involve complex processes.
Smart Containers
The United Nations Economic Commission for Europe (UNECE) recently issued a United Nations publication titled Trade Facilitation White Paper on Smart Containers. This white paper was prepared under the leadership of Hanane Becha and with guidance from several representatives from the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), while under the supervision of the Chief of the Trade Facilitation Section⁵. The aim of the white paper is to promote a common understanding of smart container solutions.
What Is a Smart Container?
Any container that has an electronic device installed within it becomes a smart container. The said electronic device will normally consist of, or be coupled with, electronics, sensors, connectivity and software, so that the device is able to provide actionable intelligence and situational awareness to the user. The electronic device could identify itself and determine its location. Sensors could determine if the container is loaded or empty and detect intrusion by leveraging light/motion sensors. Various other sensors could be deployed to determine temperature, humidity, vibration and shock, etc., depending on the mission.
The data collected from a smart container will provide the user with actionable intelligence and situational awareness. Actionable intelligence, depending upon the data, will allow a user to improve efficiency and reduce costs, whereas situational awareness will possibly provide information related to “risk analysis and threat assessment vis-à-vi cargo/container theft” and safety as well as security.
Smart container electronics can be built-in during container manufacture, retrofitted later, or embedded within the contents for specific cargoes. A smart container could have more than one sensor embedded in it, depending on the mission.
Stakeholder Benefits
Serious efforts are underway to develop smart containers. Interested customers and leading companies in this domain are piloting smart containers with electronics and various sensors that generate actionable intelligence and situational awareness while cargo is moving.
In the future, I expect smart containers will play a critical role in international/global trade and transportation, and have a serious impact on our business processes, in turn, generating tremendous value proposition.
As adoption grows, the intermodal containers with electronic devices embedded with software, sensors, and connectivity, as well as supported by back-end application, will deliver greater value and services by exchanging data within the logistics network.
Container Manifest Data on a Smart Container
I was part of several discussions at a maritime organization, after the tragic events of 9/11, concerning the development of ISO 17363. The standard contained recommendations about a containerized cargo supply chain RFID system, based on shipment tags, with specific recommendations about mandatory non-reprogrammable as well as optional, re-programmable information on the shipment tag⁶. My recommendation to the group was to not store cargo information on the tag for cost and security purposes. That recommendation is still valid; we should not store cargo information on the electronic device in a smart container. If you store cargo information on such a device, it will most likely be hacked during an end-to-end voyage.
To conclude, currently the focus of the industry has been to deploy electronic devices on mostly refrigerated containers often referred to as reefers. The reefers have either their own self-contained power source or are often married to gensets, which can provide the necessary electric power to operate the reefer. Various trucking companies have also deployed electronic devices on some of their dry trailers while using solar cells to power such devices. The customers’ missions, for the reefers and dry trailers, are about gathering actionable intelligence and situational awareness in order to enable them to make sound operational decisions that improve efficiencies and reduce costs. I think it is only a matter of time, as we develop sustainable sources to power smart containers, before we are able to deploy such electronic devices with sensing capabilities at reasonable costs across a fleet of dry containers to generate end-to-end visibility.
Manohar Patwardhan is a SME in Logistics and is the President of Intelistics Corp which provides IT consulting services to customers in the logistics industry. He may be reached at 609-423-3190 or
[email protected]
References
¹ World Shipping Council
² Container Home Association
³ Container Home Association
⁴ The Geography of Transport Systems
⁵ Trade Facilitation White Paper on Smart Containers
⁶ www.iso.org
Images credits: ISTOCK.COM/CRISPYPORK, Image courtesy of Intelistics, Corp., SASINTIPCHAI/SHUTTERSTOCK.COM
