The exact costs of shipping empty containers vary from line to line and from port to port but the impact is always the same: red ink on the P&L. Regardless of how big or how global you are, that is not sustainable for any business.
In 2012, Maersk estimated it was spending approximately US$1Bn each year transporting empty containers around the world. In Asia alone, this involved more than 2M containers. We’ve come a long way since then. If anything, however, the challenge has only grown. Even now it can take 10 steps and five middlemen to work out the location of a single container. Custody changes hands frequently, record keeping is often non-existent, and Excel spreadsheets are still considered cutting edge technology in many ports.
Two years ago, Boston Consulting Group calculated the costs involved to be around US$15-20Bn to shipping. These figures would correlate with around 5-8% of a line’s total operating costs. The problem predominantly occurs due to a combination of network inefficiencies, and structural trading imbalances. The latter of these two causes is affected by a wide variety of macroeconomic factors, including countries’ relative growth rates, currency value, and how much each nation’s citizens are saving and investing.
Investing in success
One of the dominant themes in Q4 2018 has been investment in digital technologies. Mediterranean Shipping Company (MSC)’s Diego Aponte in particular has been outspoken about the value of container tracking, announcing in October that, “…real-time tracking of containers is the future of the shipping industry.”
There is growing demand from shippers for tracking and security solutions, and by increasing the visibility of door-to-door cargo flow, MSC will also substantially boost its supply chain management.
But how would real-time tracking of containers work? By transforming a container via internet of things technologies, it becomes a smart, connected object. This allows it to collect and communicate live information on its location constantly throughout its journey.
And it all starts with reliable, always-available, satellite connectivity. As the leading provider in the industry delivering tailored and cost-effective global connectivity solutions to commercial vessels, SES Networks can flexibly offer the comprehensive support and managed services that shipowners, operators and shippers need to make better informed commercial decisions, and enable them to remain competitive in an increasingly challenging and commoditised marketplace.
Additionally, new service innovations, such as SES Networks Signature Commercial Shipping Solution, are making VSAT networks simpler to use, more cost efficient, and more powerful. This drives even bigger ROI for owners and operators through simple, straightforward access to customisable bandwidth; tailored service level agreements; scalable throughput options; and standardised pricing regardless of region or season of operation.
The future’s bright, the future’s connected
The 2020s will be shipping’s first fully data-enabled decade, but for the leading carriers that future is already their reality. BCG estimated in its 2016 report that the average savings per interchanged container is between US$200-$400. Individually these savings are a drop in the bucket for many of shipping’s behemoths; taken together millions of times, the potential savings quickly become must haves. In a cutthroat industry that competes for every cent, leaving easy money on the table is unforgivable. Following MSC’s example to remain competitive, the first step towards success will be ensuring the enabling connectivity necessary to compete.