<![CDATA[ When will they get it right? Peak season challenges and how providers are handling the 2018 Christmas period ]]> Whilst online retail sales growth is through the roof, the peak season presents a series of challenges for LSPs.

]]>
Peak season for the retail sector is back, and online sales are through the roof once again. In the US, Black Friday sales have already been strong, with growth of 23.6% from last year. This is likely to continue – over the last peak season, in the United States, 76% of shoppers purchased at least 25% of their gifts online. A stronger US economy this year has clearly boosted consumer spending power, but similar shopping trends are also seen in Europe.

The results are generally positive for retailers but present significant challenges for logistics service providers. Coping with the additional volumes is tough and doing so whilst maintaining strong margins is even more difficult.

In the US, UPS and FedEx are both continuing strategies implemented in 2017. However, both have substantially increased peak season surcharges, passing on additional costs to retailers. FedEx has tried to keep its surcharges to unauthorised parcels (increasing these by 211% over last year) whereas UPS has applied them mostly to residential shipments using ground services (increasing these by 104% over last year).

UPS expects to handle 800m packages between Thanksgiving and Christmas, up 50m from last year. Jim Barber, Chief Operating Officer of UPS, said, “In the past couple of years UPS has been constructively dissatisfied with peak performance and the investments and upgrades in the most comprehensive peak plan ever are meant to address those shortcomings.”

Christmas of 2013 was particularly difficult for UPS. “Overpromising and Underdelivering” was the headline used by Forbes, after UPS failed to forecast demand properly. To rectify its mistakes, in September 2014, UPS nearly doubled its seasonal hiring and spent around $500m on measures such as automated sorting systems and package re-routing systems in the event of bad weather.

Further investments, to the tune of billions of dollars, have been spent on upgrades and expansion specifically for peak season; 2018 has seen UPS invest in nine aircraft in anticipation of another record year. The Wall Street Journal has reported that UPS can now handle 350,000 more pieces per hour in the US compared with last year. UPS has noted its shortcomings and over the last few years has been investing greatly to overcome them, in time for peak season.

Like UPS, after years of struggling with demand, FedEx has hired around 55,000 workers for 2018, 10% more than last year in expectation of a record Christmas period. Since 2017, FedEx has been working more closely with retailers to forecast demand and understand volume input into its network. The addition of new facilities and employment of further seasonal staff is also aimed at avoiding volume problems in the run up to Christmas.

The USPS meanwhile has been under severe margin pressure even before peak season. President Trump has made his unhappiness with the service’s finances clear and it will hike rates for the 2019 fiscal year. In the week beginning December 17, it expects to deliver nearly 3bn pieces of mail and packages.

Some early reports show that the investments made by the large US express providers are working. According to ShipMatrix Inc., a software provider that analyses shipping data, combined, the three providers logged the best on-time delivery performance since 2013 for packages shipped during the Thanksgiving week. UPS delivered 98.3% of packages on time, compared with 89.2% in 2017, while FedEx and the US Postal Service had on-time delivery rates of 98.9% and 97.9% respectively.

Despite perhaps not seeing the same consumer spending levels as in the US, European providers must deal with the same issues. Whereas Black Friday in the US is nothing new, European providers are having to manage volumes in earlier parts of the year than they were previously used to. The effects have been significant.

DHL’s parcels business has been under stress in recent years, and as of January 1, 2019, Deutsche Post DHL Group restructuring changes will come into effect. The Post – eCommerce – Parcel division is to be divided into two parts; ‘Post & Paket Deutschland’ (Germany) and ‘DHL eCommerce Solutions’ (International). The move aims to deliver long-term sustainable growth as well as cutting costs and increasing profitability. DHL Chief Commercial Officer of DHL, Katja Busch, has explained the difficulties at this time of year; “Perhaps the biggest clash we face is between the expectations of the consumer and the expectations we have of ourselves.” She continued to say, “Even now, it is still incredibly hard to earn anything as a logistics operator active in the e-commerce market.”

Across Europe, logistics service providers have been preparing for peak season since the start of the year. Royal Mail hired 23,000 seasonal staff and opened six temporary parcel sorting centres this year. DHL launched a Europe-wide driver recruitment initiative in November and Yodel invested in a new semi-automated technology which will process 17,000 out of gauge parcels an hour, at the centre in Wednesbury, UK, in time for the peak period.

It’s not just providers that have been stretched though. Over the last few years European airport capacity has often been pushed during peak season. At Schiphol for an example, in late 2017 and early 2018 it ran out of space and slot restrictions are expected to be in place until 2020. 

The peak season poses significant challenges every year and planning usually begins straight after the previous year ends. The exponential growth of e-commerce has created an increasingly difficult operating environment, which requires substantial capital expenditure to be able to handle additional peak season volumes. By now, LSPs have accepted that this is a price worth paying.

Source: Transport Intelligence, December 18, 2018

Author: Holly Stewart

]]>
<![CDATA[ DHL faces pressure on JLR contract ]]> The rumours that DHL Supply Chain will be forced to make hundreds of its employees redundant as a result of Jaguar Land Rover’s cost control project illustrates the pressures on the automotive sector and the logistics service providers that support it.

]]>
The rumours that DHL Supply Chain will be forced to make hundreds of its employees redundant as a result of Jaguar Land Rover’s cost control project illustrates the pressures on the automotive sector and the logistics service providers that support it.

A report in the Financial Times over the weekend outlined what it described as ‘Project Charge’, an initiative by JLR to reduce the cost base of the company, in part by shrinking its workforce of both permanent and contract staff. DHL Supply Chain has an unusually close relationship with JLR, providing line-feed operations as well as transport planning services. DHL staff work alongside JLR employees and in most UK plants are an important part of the labour force. If the rumours are true it will be inevitable that DHL Supply Chain will have to make substantial lay-offs.

In the short term, JLR’s problems are due to falling demand in its major markets, including China. However, this is has been compounded by the role that the collapse in demand for diesel engines and the bottlenecks caused by the need for new WLTP emissions test approvals have had. In European economies especially, many vehicle manufacturers now offer the wrong models for a market that has changed almost overnight.

The underlying issue is the shift in propulsion technology. For JLR, the iPace electric vehicle has been very successful and accounts for much of the company’s sales growth over the past year. The rest of its diesel dominated product line is struggling. JLR now faces the need to push out as many new hybrid and electric vehicles as it can manage. This will be an expensive process.  

JLR is far from the worst hit. General Motors has just announced that it would shut six assembly plants in the US in order to release resources for electric vehicle development. Ford, which is under fierce pressure in Europe, is closing a transmission plant in France. These represent the beginning of a violent restructuring of production capacity.

As with DHL Supply Chain, the danger is that the logistics service providers will get caught in the middle. Faced with large scale restructuring at assembly plants, vehicle manufacturers may be tempted to squeeze their logistics supplier before making their permanent staff redundant, making them suffer disproportionately.

Source: Transport Intelligence, December 18, 2018

Author: Thomas Cullen

]]>
<![CDATA[ Brazil’s truck drivers are still restive ]]> The problem of Brazil’s truck drivers is still bubbling away in the background.

]]>
The problem of Brazil’s truck drivers is still bubbling away in the background. Reports emerging from Brazil on Monday describe unofficial action by truck drivers blocking the BR-116 highway between Rio de Janeiro and Sao Paulo, with fears that it could spread in the near future.

The background is negotiations between the government and large agri-businesses over a minimum tariff for truck rates. The agricultural commodity producers have lobbied the new government of president-elect Jair Bolsonaro to get rid of the minimum rate and return to an unregulated market. They have also taken legal action to block the enforcement of the minimum tariff. This risks the ire of the truck drivers.

The concept of a minimum tariff was introduced by the previous administration of Michel Temer as a means of ending the truck drivers strikes. 

The new government finds itself stuck between the two sides, with both the truck drivers and the agri-business important constituencies for President Jair Bolsonaro. So, in response, the government is proposing a middle way of retaining minimum prices but at a lower-rate. The news agency Reuters quoted Tarcisio Freitas, who the new government has nominated as the future infrastructure minister, as commenting that: “At first, we are going to deal with the minimum freight table with care. We plan to revise the prices, but we are going to encourage the market to use it”. Unconvinced, some truck drivers are threatening renewed action.

The strikes earlier in May brought Brazil to a halt, not only damaging the economy but asking questions of the country’s political stability. The issue of prices for trucking services was complemented by anger over increases in price due to the withdrawal of subsidies to the State oil producer Petrobras. The subsidies were restored but the question of how to pay for them has not gone away.

The problem illustrates the difficulty of both economic reform and the necessity of the improvement of infrastructure in Brazil. The two are connected as different interest groups traditionally have used political pressure to defend their economic interests, as is the case with both the truck drivers and the agri-businesses. This is particularly the case in the logistics market, where the development of new ports, airports and railways has been resisted by incumbent providers.

Source: Transport Intelligence, December 13, 2018

Author: Thomas Cullen

]]>
<![CDATA[ Pressing challenges face global logistics industry, says Ti’s CEO ]]> The significant operational challenges presently faced by logistics managers are far removed from the world of autonomous vehicles, delivery robots and drones.

]]>
Although there has been considerable focus on innovative and disruptive trends likely to impact the logistics industry in the years ahead, most companies in the sector face more pressing challenges. Speaking at the Credit Suisse Investors Conference on the Future of Global Logistics in London, Ti’s CEO, John Manners-Bell, prefaced the panel discussion by highlighting some of the key issues impacting upon logistics operators.

There is no doubt that the industry will undergo a period of transformation in the coming decade and we are already starting to experience changes in the structure of the sector. However, the operational challenges presently faced by logistics managers are far removed from the world of autonomous vehicles, delivery robots and drones.

Let me quickly run through some of the key issues which are being highlighted by our clients.

  1. Driver shortages. The road freight and trucking industry throughout Europe and North America is struggling to recruit enough drivers. This is playing out in higher input costs and threatens the longer term stability of the market. With a growing economy, workers have many options which provide a more attractive lifestyle – and better pay – than entering the logistics sector.
  2. e-commerce. Not only are many companies struggling to cope with the volatility resulting from the e-commerce promotions, such as the likes of Black Friday and Cyber Monday, but the level of returns is spiralling. This may be viewed by some as an enormous waste, but for others, such as the postal operators, as a major opportunity. However, for all operators in the Last Mile sector, flexing cost structures to cope with spikes in volume will be key to success.
  3. Fuel costs. Of course, this is a perennial risk of doing business in the logistics industry. However, the last year has seen significant rises in the cost of fuel, which has squeezed margins for those operators unprepared.
  4. Low sulphur fuel. In 2020, new fuel regulations will be imposed on the shipping industry which will mean, if implemented, significant hikes in shipping rates. One shipping line, CMA CGM, has said it will mean an increase of, on average, $160. This could result in a migration of shipping volumes to air, sea or rail and changing patterns such as greater use of China’s Belt and Road and the US West Coast Ports instead of Panama canal.
  5. US-China trade wars. So far the impact of tariffs has been softened by the strength of the US dollar but the longer this issue remains unresolved, the greater a headwind it will provide to global growth. Already supply chains are morphing with Chinese suppliers looking to find customers outside of the US benefiting intra-regional flows of goods.
  6. Consolidation/acquisition. The development of innovative technologies is leading to a two tier market of the technology ‘haves’ and ‘have nots’. Many medium-sized companies which miss out will find themselves pressured by larger and smaller (lower overhead) competitors. You have to ask where these companies fit in the marketplace and what would make them attractive to acquisition?
  7. Brexit. The biggest challenge facing the UK at the moment is Brexit, of course. What will happen to cross channel volumes? Are there alternatives actively being developed by logistics operators such as changing to unaccompanied trailers via non-Dover routes? What will the squeeze on UK warehousing property mean for shippers and logistics operators? These are important questions, but unfortunately there are still few answers even though the leaving date is now only a few months away.

So, what are the solutions for these challenges? Obviously, some of these problems have been created by government policy, whilst some are as a result of changing demand and supply-side dynamics. There is no doubt that some of the technologies being developed will have a very important role in addressing these risks. For example, freight platforms can increase the efficiency of the sector by increasing truck utilization. Network planning, presently a labour intensive function, can be improved by Artificial Intelligence. Digitization can provide more visibility throughout the supply chain which will enable companies to be much more responsive to the changing and volatile market environment. Whilst the industry in ten years’ time may be unrecognisable, the stand out logistics companies are using technologies available now to cope with – and thrive – in today’s complex market.

Source: Transport Intelligence, December 12, 2018

Author: John Manners-Bell

]]>
<![CDATA[ Strikes on Deutsche Bahn add to German logistics problems ]]> The workers of the EVG union that represents a number of different types of employees in Deutsche Bahn have staged a one-day strike over pay and conditions, compounding recent problems in German logistics.

]]>
More problems for Deutsche Bahn and Germany… The workers of the EVG union (Eisenbahn und Verkehrsgewerkschaft), that represents a number of different types of employees in Deutsche Bahn, staged a one-day strike over pay and conditions.

The effect was to bring much of the rail network to a halt, especially cargo services but also long and short distance passenger operations. By late on Monday the workers had ended their industrial action and Deutsche Bahn’s described the condition of their network as stable, however some effects are expected to continue into Tuesday and Wednesday.

Rather ominously the action was described as a ‘warning strike’, with the union making it clear its action is designed to run alongside negotiations with Deutsche Bahn. Amongst other demands, the union is asking for a 7.5% increase in salary for its members. Deutsche Bahn has offered 5.1%. It also appears that in addition to issues around wages there is a general sense that the workforce is suffering from the state of the rail system which is perceived to be lacking in investment.

Combined with the issues on the Rhine, the German freight transport system is suffering problems. The effects of the former have been seen in the chemical producer BASF’s profit warning issued this week. It was due in part to interruptions in production caused by the restrictions in freight on the Rhine. Problems on the railways can only compound such issues.

In terms of the wider macro-economic picture Germany is facing questions over both the labour situation in the economy and the effectiveness of its infrastructure. Somewhat higher demand in the economy has changed the balance of both over the past few of years, after a couple of decades of deflationary conditions that drove down real wages and led to lower levels of capital spending. Deutsche Bahn is at the centre of this issue. It needs higher investment and re-invigorated direction if it is to match the logistics demands of its freight customers. Whether Germany is up solving such questions is unclear.

Source: Transport Intelligence, December 11, 2018

Author: Thomas Cullen

]]>
<![CDATA[ Emerging Markets’ Online Future ]]> As 2018 draws to a close, emerging market e-commerce is forcing its way onto the agenda.

]]>
As 2018 draws to a close the focus for many in e-commerce is how retailers and last mile providers are going to deal with the demands of peak season as consumers gear up for the holidays and look to make the most of seasonal sales. As with all things e-commerce, however, there are always many challenges on the agenda, and one forcing its way onto the list is emerging market e-commerce.

Those that have spent time watching emerging markets in the post-Great Recession era will have noticed their remarkable ability to innovate and implement new solutions at rapid speed, often leapfrogging straight past major development steps seen in developed markets. Examples of this include the rapid adoption of smartphones and mobile internet which have empowered both consumers and e-commerce entrepreneurs to meet online without the need for fixed internet infrastructure or store-based retail networks from which to fulfil orders, a common approach for developed market retailers in the early days of e-commerce growth.

Similarly, online banking services have been enabled by mobile internet access, allowing online retail to flourish in markets that either don’t have, or have a deep distrust of, traditional banking and financial services. The availability of such services is helping to drive down the share of cash payments in e-commerce transactions in emerging markets – research by Credit Suisse, for example, found the proportion of cash-based online retail transactions in China fell from 61% in 2010 to 38% in 2016.  

Looking ahead, developments such as these are adding the layers of capability needed for emerging market e-commerce to become an evermore significant opportunity in 2019 and beyond. And even at a more fundamental level, the drivers are converging around the same theme. Urbanisation is one such driver. Urbanised populations are key in generating the density needed to make online retail’s logistics solutions efficient. In India, some 200m people are expected to move from rural to urban areas by 2030, for example. Not only will that provide massive additional economies of scale for last mile providers to unlock, but also increased productivity and higher GDP per capita in the economy, longstanding benefits associated with higher urban populations and a relationship which reinforces the development of online retail.

As with much of the conversation around emerging markets, it makes sense to treat China somewhat differently from many, if not all, the other markets. This is certainly the case when it comes to e-commerce. Reasons to do so when talking e-commerce are numerous, but there are two especially relevant to this discussion.

Firstly, we’ve seen the development of vast and sophisticated fulfilment and last mile networks and operations in China’s domestic e-commerce market in order to meet demand. This has been driven by a number of local players, with none more significant than Alibaba and JD.com, both of which are not only developing online retail platforms, but an infrastructure on which an entirely New Retail can run.   

Secondly, we’ve seen heavy investment from international express and last mile providers in China to meet the demand for cross-border e-commerce transactions. Nielsen’s Online Shopper Trend Report revealed that 64% of online consumers in China had purchased goods from international websites, around double the number that did so in 2014. Trends such as these are drivers behind initiatives like the UPS-S.F. Express joint venture, and DHL Express investments to expand its network in the country.

We can be sure of a number of developments in 2019 and beyond. Emerging markets will continue to provide significant opportunities for logistics service providers, online retail sales will continue to grow, and new innovations create new channels that connect retailers and consumers in the digital world. Connecting those retailers and consumers in the real world will also continue as the key challenge in 2019 and beyond.

Source: Transport Intelligence, December 11, 2018

Author: Nick Bailey

]]>
<![CDATA[ Uncertainty bites despite apparent thaw in Sino-US relations ]]> Reports of easing tensions between the US and China following the G20 summit have been welcomed, but the costs have already been significant.

]]>
Reports of easing tensions between the US and China following the G20 summit have been welcomed, but the costs have already been significant.  

President Trump has agreed to postpone an increase in tariffs on $200bn of Chinese goods from 10% to 25%, initially planned for January 1, until March. In a statement, the White House Office said “President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both parties agree that they will endeavour to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.”

There was plenty of confusion following their meeting. Stock markets jumped on the possibility of the pair striking agreements on trade, but were soon dashed as this showed not to be the reality. Trump for instance tweeted that China had agreed to end 40% duties on imports of US-made cars. No such concrete agreement took place. However, a number of automotive manufacturers tentatively welcomed the discussions following meetings with the President.

The news is welcome to Chinese exporters to the US. The data to September 2018 shows this part of the trade lane thus far hasn’t been hit that dramatically overall by the imposition of tariffs. Data from the US Census Bureau shows air and sea freight volumes have grown in single digit percentage terms year-over-year for the first nine months of 2018. The same is true in value terms. It is in the other direction where trade has slowed, specifically in sea freight. In the first nine months of 2018 containerised freight volumes fell 14.2% year-over-year. However, we are yet to see the full impact of the vastly more substantial September 24 tariffs in either direction in the data.

The uncertainty around the issue is continuing to have a drastic impact on trans-Pacific supply chains. Many shippers had already booked space with carriers in a rush to get goods to the US before January 1. Likewise, carriers have increased capacity on certain routes, and will now likely see demand growth easing.  Those shippers that have already booked space must now take on the additional burdens of inventory storage costs within the US. With an extension of the deadline until March 1, shippers will be faced with tricky questions. Do they repeat the stockpiling exercise once again ahead of this date? Can they afford to hold excess inventories for a further few months? Is it worth seeking out non-Chinese suppliers if the imposition of increased tariffs may not come to pass anyway?

Trucking appears to have been squeezed as well. It is no secret that capacity in the US is tight. On the demand side, the US economy is performing extremely well. On the supply side, driver shortages are becoming more apparent. This has made it much more difficult for shippers to secure space. This will really start to bite if the majority of shippers seek to avoid additional tariffs by moving goods earlier.

These are the costs of trade wars that don’t hit the headlines. They are painful nonetheless.

Source: Transport Intelligence, December 6, 2018

Author: Andy Ralls

]]>
<![CDATA[ US Government report recommends more aggressive USPS business model ]]> Amazon has been one of the targets of Donald Trump’s twitter ire, specifically the suggestion that the freight rates that that the e-retailer pays to the United States Postal Service (USPS) are too low.

]]>
Amazon has been one of the targets of Donald Trump’s twitter ire, specifically the suggestion that the freight rates that the e-retailer pays to the United States Postal Service (USPS) are too low. To deal with this issue Mr Trump set up a Treasury Department ‘task-force’ to “evaluate the operations and finances of the United States Postal Service”.

The result has been a recommendation that the USPS has a greater capability to increase charges, especially for parcel deliveries related to internet retailing. The problems outlined in the report are those familiar to any postal market. Traditional mail volumes are falling and internet-retailing parcel volumes are rising, yet the costs of delivering the latter make profits low. The task force “recommends that the USPS and Congress work to overhaul the USPS’s business model in order to return it to sustainability. Both administrative and legislative actions are needed to ensure that the USPS does not face a liquidity crisis, which could disrupt mail services and require an emergency infusion of taxpayer dollars.” In other words, the business model must change or the USPS will go bankrupt.

The options the task force recommends are interesting, if unsurprising. Concerning the ‘Universal Service Obligation’, it suggests that there should be a difference between “types of mail and packages for which a strong social or macroeconomic rationale exists for government protection in the form of price caps and mandated delivery standards” and “those types of mail and packages that are commercial in nature, and therefore would not have a basis for government protection”. Over the issue of charges, the task force recommends that “The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed “essential services.”

What is clearly being suggested is for the USPS to have the ability to differentiate between different types of customers and to charge some of them higher rates.

These two recommendations alone, if implemented, would result in quite a different service profile.  A USPS able act in a more aggressively commercial manner would have implications not just for Amazon but other e-retailers and indeed for logistics service providers such as UPS and FedEx.

Source: Transport Intelligence, December 6, 2018

Author: Thomas Cullen

]]>
<![CDATA[ Schenker’s new automated truck is a pointer to greater on-site productivity ]]> Cutting through all of the hype around autonomous trucks, the latest development from DB Schenker and its technology partner Einride, is an interesting step forward in automation for on-site materials handling and warehousing.

]]>
Cutting through all of the hype around autonomous trucks, the latest development from DB Schenker and its technology partner Einride, is an interesting step forward in automation for on-site materials handling and warehousing.

Schenker has started what appears to be an advanced pilot project, utilising a robot tractor vehicle for pallet movements and cross-docking activities at its transhipment facility in Jönköping in Sweden. The vehicle is described by Schenker as travelling “continuously to and from a warehouse” and this appears to entail moving on public roads, although the size, location and volume of traffic on these roads is not made clear.

The vehicle is called a ‘T-Pod’ and has both autonomous guidance systems and an option for remote-control.  The vehicle is electrically powered with a range claimed to be 200km on one charge. The T-Pod can carry 15 euro-pallets.

Ironically in the video released by Schenker and Einride, the ‘T-Pod’ electric vehicle arrives at the cross-dock and then the pallets it is carrying are unloaded by a man with a pallet truck. The logical extension of the ‘T-Pod’ technology is greater automation within the transhipment depot itself, this certainly being a less hostile environment than the public road. This might suggest the unloading process could be automated more easily than road movements.

Although the press release from Schenker and Einride talks about this pilot project as a move towards autonomous trucks, it does appear that the T-Pod is some way from being capable of being a viable ‘on-the-road’ commercial vehicle for long-distance movements of cargo. However, this should not distract form the potential of such vehicles for the management of large logistics facilities. Automating movement as well storage operations is now a real option leading to a dramatic reduction in requirement for labour but also an increase in the speed and precision of handling containers, trailers and even items as small as tote boxes.

Whilst this may well be a threat to the jobs of those working in on-site operations such as warehouses and cross-docks, the technology offered by T-Pod and others is still some way from offering even a reduction in the need for truck drivers. Meanwhile the shortage of drivers is now becoming a constraint for the growth of road freight. It would appear logical to suggest that the task that the logistics sector faces is shifting workers away from on-site operations and towards truck-driving. However, to do this the logistics sector may have to share benefits of lower costs that automation offers with its employees through higher wages and better conditions in return for becoming drivers. 

Source: Transport Intelligence, December 4, 2018

Author: Thomas Cullen

]]>
<![CDATA[ There may be trouble ahead ]]> The digital identification of items that can be read by machines and systems is starting to raise some fundamental questions about operational realities. Issues such as security, power consumption and longevity are all areas requiring greater collaboration and standardisation.

]]>
The digital identification of items that can be read by machines and systems is starting to raise some fundamental questions about operational realities. One example is with the recent announcement by a major shipping line (MSC), that they plan to augment 50,000 of their dry containers with sensor technology. Now it is not a surprise that fitting track and trace technology to containers may be a good idea, but more that this is for ‘dry’ boxes rather than ‘reefers’ that must be constantly monitored. The sensors will record a range of data over and above just location, date and time. They will also monitor movement, impact, temperature, pressure etc.

They will apparently do this as part of a ‘system’ that includes communications and power delivery. At first glance, it would seem that they have had to do this to ensure a consistent operating envelope. How compatible this may be when these boxes are moved by other shipping lines or carriers, remains to be seen. It is possible that they will only be used by MSC as part of a closed loop process, but if so that may have an impact on operating economics (i.e. cost).

Another instance occurred during a conversation with a close friend of mine, who mentioned that they were having to referee between vendors of differing bar code labels attached to vital samples in the healthcare arena. My friend and I have known each other for a long time, and many years ago had addressed similar issues related to bar code implementations. We were both staggered that simple issues with this technology were still appearing. I stress, this was not a problem with bar code technology ‘per se’, but more with the organisational and systemic infrastructure.

Ti has frequently highlighted the issues around the Internet of Things (IoT) and the volumes of data likely to be generated. We have also pointed out that many existing systems operated by companies in the logistics sector were never designed to handle the output from IoT devices at any scale. But the two examples I mentioned previously illustrate a more fundamental issue that needs to be addressed first. The issue of standards.

Now everyone is aware that standardisation has been hugely beneficial for the transport and logistics sector. From documentation standards to the advent of the shipping container. The acceptance and implementation of standards across the communications sector has also improved and accelerated global trade. But with regard to the IoT, this has yet to happen in any meaningful way. A recent article by the D2D advisory firm highlighted the challenges perfectly.

The authors point out that the IoT landscape actually involves multiple industries, technologies and definitions. e.g. Differing kinds of sensors used in domestic and consumer equipment vary from those required in the commercial sector. Because the logistics and supply chain management domain covers multiple industries and disciplines, the general adoption of IoT devices and technologies will be immensely challenging.

Standardisation has existed for decades for bar code technologies and as the technology has evolved, the relevant standards bodies have done a good job maintaining continuity. But this is no help when organisations choose to implement what they assume is a single ‘standard’ technology, which is then applied to a variety of incompatible situations. Specifically, two different bar code standards on the same product that can’t be processed by a system designed to handle only one of them.

The container tracking situation mentioned previously faces similar challenges. One of which is whether the operators expect that any other operator carrying the boxes must connect to their electronic monitoring system? They may already be using a competitive, but incompatible platform for track and trace which may not be able (or allowed) to read the related streams. But if the devices and related data conforms to an open standard, real benefits should result. It will be interesting to see how this develops.

Learning lessons from the experiences of multiple implementations of sensor technology across a range of industries, in a variety of environments, is important. As intelligent devices, sensors and custom chips are introduced into the market, issues such as security, power consumption and longevity are all areas requiring greater collaboration and standardisation – and the attendant education.

Source: Transport Intelligence, December 4, 2018

Author: Ken Lyon

]]>