What makes a container 'smart'?

A 'smart' container is a container that has been fitted, either at the time of manufacture or retroactively, with an internet connected device or devices which monitor and transmit, in real- or near-time, various data points regarding the container and its contents. A smart container can also receive instructions, allowing for remote adjustment of parameters such as temperature.

The data points that these devices can capture include: 

• Temperature, including unexpected fluctuations
• Humidity
• Door openings / closings
• Location
• Shock detection

There is a growing variety of available devices but generally they consist of a series of sensors, plus a source of power (including solar) and a means of connecting to the internet.

The business case for adopting smart containers

Several of the largest global shipping lines have begun to offer smart containers to their customers, including CMA CGM, Maersk and MSC, for both dry and refrigerated cargoes. As the cost of smart devices continues to reduce, the business case for adopting smart containers has become ever more compelling, offering broad benefits to shipping lines, including:

• Better visibility of operations including data about asset use, container turnaround times, positioning and repositioning.
• Increased collection of reliable, accurate data, aggregated across all vessels, containers and trade lanes. This enables better business analytics which can in turn inform better decisions regarding asset utilisation, operational efficiency and better understanding of specific pain points in the supply chain including port performance.
• Cost reductions through automating manual processes, enabling predictive maintenance of reefer containers and a decrease in claims for loss and damage.
• Better customer service through increased visibility, more accurate predictive ETAs, exception monitoring and the ability to pre-emptively intervene to manage exceptions before they result in cargo damage or loss.
• Increased security against theft, smuggling and cargo tampering.
• ESG applications including power consumption tracking for reefers, and enabling reductions in food wastage.
• As adoption progresses and the shipping industry becomes more comfortable with adopting harmonised data standards to facilitate data sharing, the potential for automatic transmission of relevant, reliable data about a container between all stakeholders in the maritime supply chain including ports, in-land hauliers, customs, consignees, receivers, freight forwarders etc. This would not only improve the accuracy of data transmitted between ship and shore allowing for smoother cargo operations but would also reduce the administrative burden on ships and their crews.

Ultimately, those shipping lines who invest in smart containers and provide their customers with easy access to the data collected are likely to achieve significant competitive advantage compared to non- or late adopters. Further, certain IOT manufacturers are now offering removable devices that beneficial cargo owners and shippers can install in containers at the time of stuffing. A carrier will have little or no control or access to the data collected by such a device and will therefore be at an information disadvantage should the carriage of the container result in a claim for loss or damage.

Legal and operational considerations

The adoption of smart containers raises several interesting legal questions which a shipping line may wish to consider as part of its overall risk management process when implementing the new technology:

1. How will the adoption and use of the smart containers work with my existing VSA / slot charter agreements and will they require any amendments relating to e.g. data ownership and sharing?

2. Do I need to revise my bill of lading or other standard terms and conditions that apply to cargo carried in smart containers to e.g. deal with access to the data / the platform on which the data is displayed, the failure of the smart equipment installed in carrier-provided containers or the use of shipper-fitted devices?

3. Contracts for the procurement, installation and / or maintenance of the IOT equipment will need to be entered into and will need to be carefully reviewed to ensure they contain sufficient warranties as to the quality, durability, security and integrity of the equipment and the data it collects.

4. Where containers are leased, do the lease agreement terms require amendment to allow for the fitting of the IOT equipment?

5. Does the proposed IOT device comply with relevant ISO and any other applicable standards?

In addition to legal considerations, the adoption of smart containers will require shipping lines to consider operational questions such as:

1. How will the new equipment integrate with existing systems onboard and ashore?

2. What additional training will crew require to access and use the new IOT equipment and data?

3. If the shipping line will manage the maintenance of the smart equipment, will this require any extra downtime or additional skills at their container depots?

4. Will PTI checklists need to be amended to include checks on the smart equipment as well as cooling equipment, and how will dry containers fit into this maintenance schedule?

5. As with all digital transformation projects that involve greater connectivity and use of IOT, cyber security considerations must form part of the implementation plan to ensure that any increased cyber-risk from the adoption of smart containers is properly guarded against.

6. To the extent that the data collected from the smart containers allows for a move to predictive maintenance for reefer containers, what amendments need to be made to internal policies / container depot agreements and instructions regarding maintenance cycles?

7. To ensure broader ecosystem benefits through seamless exchange of data between all stakeholders, what are the best data standards to adopt to ensure interoperability between the IOT systems and third party systems?

Conclusion

The greater adoption of smart containers is a huge step towards greater visibility across the supply chain, benefitting shippers and shipping lines alike and providing second order benefits relating to important ESG objectives. Adopting any new technology is not without risk however, and the successful installation of smart containers across a fleet calls for consideration of legal, operational and cyber-security issues to ensure the necessary contractual and policy frameworks are in place to support the change.