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Telematics can expedite decarbonisation of the container sector

Supply chain stakeholders recognise the commercial advantages conferred by container telematics, but its potential contribution to decarbonisation is consistently underestimated, says ORBCOMM’s Christian Allred, Executive Vice President and General Manager of International Sales.

Shipping practices are currently evolving to comply with progressively stricter and complex regulations as the industry seeks to decarbonise and reduce its 3% share of global GHG emissions. However, in the gradual switch over to zero emission fuels, leaders should look to technologies such as the Internet of Things (IoT) to supercharge their decarbonisation journey.

In recent years shipping has seen a host of increasingly ambitious regulations introduced to wean shipping off heavy fuel oil. Since 1 January 2023 reporting measures (EEXI and CII) have been introduced to reduce international shipping’s average carbon intensity—which links GHG emissions to the amount of cargo carried over distance travelled—by 40% by 2030, compared to 2008. Meanwhile, the adoption of the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, with enhanced targets to tackle harmful emissions, at MEPC 80 in July, added further impetus to IMO’s aim to reach net-zero GHG emissions from international shipping by or around 2050.

However, while shipping takes the time needed to tackle the major safety, technical, and logistical challenges posed by switching to alternative fuels, the pressure is on to find innovative ways to achieve green operations and meet 2030 and 2050 emissions targets. This is where IoT- enabled telematics can step in.

Container telematics 101

While telematics is well known and has been widely adopted by many carriers in the reefer segment over the last 15 years, equipping dry shipping containers, at scale, had been deemed cost prohibitive and too laborious. However, the latest offerings from telematics providers, such as ORBCOMM, have changed the narrative. It is now possible to equip entire fleets of containers, both reefer and dry, with affordable telematics in short order.

The operational benefits of harnessing telematics, including greater visibility of assets throughout the supply chain, efficiency gains, enhanced security and reduced spoilage of goods in transit are increasingly understood. What is less known is that such insights can also help the container sector to achieve its decarbonisation goals.

Optimising supply chain efficiency

Cargo owners are facing customer and investor expectations to decarbonise their operations at every stage of the supply chain. As a result, many are building decarbonisation targets into their business strategies. For example, Walmart and Amazon each ask ship charterers to justify using particular ships on the basis of their ESG data. This places greater emphasis on transparency, accountability and emissions reporting throughout the supply chain. IoT data, such as distance travelled, time taken, route and trip duration, use of shore power and diesel genset power, allows cargo owners to calculate CO2 emissions over the course of an entire journey, which helps them to assess performance against their own decarbonisation targets.

The visibility and transparency afforded by IoT solutions also enables shippers, port operators and transport companies to collectively optimise route planning and coordinate container loading and unloading processes. Real-time data on container locations, inventories and demand can provide notable operational efficiency gains. It allows stakeholders to streamline processes, avoid congestion-prone routes and reschedule arrivals at congested ports, reducing dwell time, delays at distribution centres and unnecessary carbon-intensive vehicle movements.

Such sharing and transparency of telematics data could also enhance intermodal connectivity, as stakeholders across road, rail and inland waterways would be able to exchange data, using API standards, to enhance efficiency and help shippers to choose greener transport options.

Asset utilisation

Telematics data can be used to analyse container utilisation rates, enabling companies to make objective assessments about the optimum size of their container fleets and reduce the numbers of units they lease, rent or purchase. Data can also be used to monitor and balance asset usage, thereby extending the average lifespan of a container (which is proportional to the distance it travels) and reduce the need for new containers. From an environmental perspective, this reduces the carbon footprint of container production and disposal.

Increased visibility of container location and status, as provided by telematics, could ultimately encourage container sharing and pooling arrangements among shipping lines. The current practice of transporting empty containers back to a terminal prior to them being dispatched to the next stuffing point—a process known as triangulation—is both inefficient and extraordinarily wasteful across the entire supply chain. Instead of each shipping line managing its own containers, coordination could allow assets to be shared between multiple companies, optimising container utilisation and reducing empty container shipping and repositioning. Collaboration of this sort, based on information sharing, is already used in the haulage industry and ‘dead heading’, where drivers collect a load rather than returning empty after making a delivery, has led to considerable cost savings, efficiency gains and reduced carbon emissions.

In 2015, Boston Consulting Group estimated that for shipping alone, empty container movements represent around 5% to 8% of a shipping line’s operating costs, which can be as much as $15 billion to $20 billion per year industry wide. However, its negative impact is not restricted to the bottom line, and the research estimated that avoiding such activities could allow shipping to reduce carbon emissions by six million tons per year—a figure that will be even more significant today. In May 2023, a Container XChange blog estimated that every third container now being moved is empty, equating to at least 60 million empty container moves every year.

IoT solutions make it easier to consolidate empty containers at strategic locations with high demand for exports, meaning that shipping companies can maximise container usage, reduce the number of unnecessary journeys made solely to relocate them and use the additional deck space to transport revenue-generating cargo. Optimising the use of vessel capacity would ultimately decrease the total number of vessels needed, reduce the number of vessel journeys, improve cargo-to-container ratios and optimise the fuel efficiency of each voyage, thereby helping shipping lines to meet their EEXI goals.

Leveraging telematics data and analytics to provide accurate information about container availability and, in the case of reefers, their operational status, would enhance asset control and optimise utilisation. IoT solutions are, therefore, an essential component of improving the environmental credentials of the container supply chain.

Optimising reefer performance

Telematics can remotely monitor and regulate the atmospheric conditions within shipping containers. With this data, shippers can ensure that temperature-sensitive goods, such as pharmaceuticals or perishable food items, are maintained within the required parameters throughout their journey to market. By preventing spoilage or damage to goods during transit and reducing rejections or returns, IoT solutions can contribute to minimising waste and carbon emissions associated with product loss along with the need for shipping replacements.

IoT-enabled reefers autonomously monitor and adjust heating, cooling and ventilation settings. This ensures optimal conditions while minimising energy consumption and wastage, such as continuous running versus stop-start of the reefer, which reduces reefer fuel usage. Through minimising refrigeration when not required, or setting the reefer to idle when the internal temperature requirement is met, it is possible to significantly cut energy waste and carbon emissions and reduce operational costs.

IoT solutions that offer door sensors can also prevent potential energy loss by sending alerts in the event that doors are opened, left open for extended periods or not properly closed, or if there has been ‘hot loading’ of cargo (when cargo temperature at the point of stuffing is higher than the temperature setting according to the bill of lading).

The real-time performance monitoring of telematics can also significantly reduce the number of pre-trip inspections (PTIs) needed. It is estimated that up to 70 – 80% of unnecessary PTIs could be eliminated, meaning that far fewer reefers would have to be plugged in for the test and haulage emissions would be cut as the reefers would not have to be moved to designated PTI areas.

Predictive reefer maintenance

The usage patterns and serviceability of IoT-enabled containers can be continuously monitored in real-time. Potential maintenance issues, for example compressor alarms that could indicate a pending failure, can be detected early, enabling proactive intervention to prevent breakdowns or equipment failures or enable a swift response to reduce downtime in the event of sudden outages. By collecting data on performance parameters like temperature, humidity and vibration, poorly performing reefers can be identified and replaced, which helps to reduce cargo spoilage and the need to ship a new consignment, saving time and fuel.

Eyes on the prize

The maritime industry is working hard to reduce its environmental impact and contribute to global decarbonisation efforts and should use all the tools it has available. IoT solutions can enhance supply chain efficiency, optimise fleet management and utilisation and promote sustainable and collaborative practices. The potential impact is sizeable: they could cut millions of tons of GHG emissions from the container network.

The adoption, at scale, of container telematics requires a collective effort from shipping companies, port authorities, hauliers, regulators and technology providers, but the impacts can be game changing —harnessing the power of telematics can propel the container supply chain towards a decarbonised future.

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