This article is published by IoT Evolution Magazine, 4th quarter 2016.
Column: Analyzing IoT
Posted with permission.


Connected Shipping at Sea: An IoT Value Path

to Global Supply Chain Integration


By Sal Yazbeck

 

Transportation of cargo at sea represents a significant part of the global supply chain. Analyst firm Berg Insight estimates that “more than 80 percent of international trade goods are carried by sea,” and that remote tracking of active intermodal containers is set to increase from 700,000 by the end of 2015 to 2 million units by the end of 2019. Adding further to this growing trend is stakeholder interest in end-to-end transparency in the supply-chain process.

Intermodal containers, in particular, are those that may be moved across several transportation modes as ships, trucks, and trains, and represent the second largest of the total installed tracking base behind trailers and swap-bodies, according to Berg Insight.

Given such impressive stats and what we’re learning about the Internet of Things in general, this article attempts to briefly explore: What new opportunities for value creation may exist in the maritime transport and logistics industry? What might such value look like? And what path could related use cases take over time across the global supply chain?


Connectedness

A primary area the IoT fosters is the ability to connect an object, over the internet, to cloud services for a particular purpose. In T&L, that object may include a vehicle, such as a sea vessel, or the containers or cargo it carries. For ships at sea, traditional connectivity has mainly been about utilizing machine-to-machine telematics, for instance, for track and locate services to enhance ship operations. And similarly, the tracking of intermodal containers, as a subset of asset tracking, has also focused on monitoring for a variety of metrics as temperature, humidity, location, and more.

However, such M2M systems have historically been closed loops, and lacking in-transit container data availability. Today, the IoT presents opportunities to add new value to this industry with transformational possibilities.


A Path to IoT Value Creation

Insightful research from Deloitte highlights that where the IoT is concerned, value creation may take on three different categories in scope, depending on the goal sought. According to the firm’s T&L IoT framework, these are sensing and shaping, adaptive supply, and new business opportunities, which are briefly highlighted next.

  • Narrow Scope: Sample applications for connected transport and cargo such as track and locate, as noted above, focus primarily on sensing the environment and therefore correspond with the first category, Sense and Shape. This category, according to the Deloitte report, being narrow in scope for IoT applications, can be applied with the least changes to business practices, presents comparatively small new value creation and limited risks, and is where most of the use cases are. And by application, sensing implementations establish a logistical supply-side infrastructure with few challenges.
  • On the Broader Side: Casting a broader net for new value creation, the next two categories, adaptive supply (being wide in scope to integrate suppliers and distributors), and new business opportunities (the widest in scope to integrate customers) are where a more strategic approach to value creation is needed, the Deloitte report adds. Though, consideration for such higher levels of scope also means dealing with broad logistical complexity.

What makes moving into higher value creation categories difficult to achieve in particular, the report notes, is that progress is part technical, part strategic. Notably, it highlights that “systems that track supply-side availability are disconnected from those that deal with customers on the demand side.” And by their nature, IoT applications require cross-industry partnerships, which further add to the challenges of deploying such solutions. Such an effort would require inclusion of areas as logistics firms, suppliers, customers, and many more, according to the report, and this is pretty tough to harness across the ecosystem.


Looking Ahead

Already, several companies are actively playing in the maritime cargo container tracking market. Berg Insight research refers to companies such as AT&T, ORBCOMM, Savi Technology, and others. And among device type offerings now available are disposable low cost units from vendors such as Locus Traxx.

It will be interesting to see, particularly, how such developing IoT business models evolve to further integrate this industry. For instance, as new use cases emerge, could such connected transformation create new value across the global supply chain that translates into new sources of revenue? Might new revenue-sharing models emerge among partnerships? And which types of entities might the partnership ecosystem include? Those are just a few thoughts on a broad topic.



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