Professor D John Mangan writes for The Conversation about the 'behind the scenes' factors that are enabling the boom in global trade.
A glance at the objects around you at home or work will reveal objects brought from across the world, from the bagged salad in your fridge (Kenya), to the computer or smartphone upon which you’re reading this article (Taiwan, China, the US), or the table upon which it rests (Sweden). The enormous volume of global trade that brings us products from all over the world has been made possible by a profound technological revolution occurring behind the scenes.
The world’s biggest container shipping firm, Maersk, estimates the cost of transporting an apple from a field in New Zealand to a cold store in Europe is eight US cents. Logistics experts talk of “landed costs”, the sum of all of the various costs associated with freight. There is also an environmental cost, of course, for example bringing vegetables from afar rather than from local farms. But the landed costs of many products have fallen such that it’s usually cheaper to transport many items halfway around the world than to produce them locally.
Much of this fall in costs comes from the efficiencies ushered in by containerisation which, since it was introduced in 1956, has had a greater effect on globalisation than all the trade agreements signed in the past 50 years.
The largest container ships today, such as the CSCL Globe and MSC Oscar carry around 19,000 TEUs (20ft equivalent unit – a standard 40ft container is two TEUs). But ships are not likely to greatly grow beyond 20,000 TEUs for the foreseeable future – much as the Airbus A380, currently the world’s largest passenger aircraft carrying up to 853 passengers, is probably as big an aircraft as we will see. If a ship or aircraft is so big and expensive that nobody can operate it (in terms of costs and system constraints) then it’s of little use. So while there have been remarkable achievements in speed and scale, today it is the communication technology that links systems together that has the greatest logistical impact.
The network is the unseen hero
The internet of things (IoT) refers to small, internet-connected sensors that can detect and transmit information. Network technology company Cisco extended this idea to the “internet of everything” (IoE), in which the sensors talk not to a central hub but to each other, exchanging data and making decisions autonomously based on that data. The four components are data (how it is gathered and used), people (how they are connected), things (network-connected devices providing data for intelligent decision making) and process (delivering the right information to the right person or machine at the right time).
Increasingly it is not just control processes that are growing in intelligence but DHLTrendReport_Internet_of_things. For example: by law, ships above a certain size are obliged to transmit updates on their position via Automatic Identification Systems (AIS). It is possible to see this information online, a real-time snapshot of global shipping.
Connected ships perform better. For example, by taking smart routes around bad weather, and allowing remote monitoring of ships for safety. Smart container technology can monitor temperature and humidity of containers for changes that could damage the contents, or to change the environment so as to, for example, prevent the spoiling of fruit in transit due to delay.
Details concerning individual shipments are transmitted before the ship arrives at port, allowing customs authorities time to profile and sometimes pre-approve incoming cargo. To the same end, eFreight initiatives cut down the paperwork associated with freight: the International Air Transport Association (IATA) once estimated that there can be RC_2011_INF_10_Annex_VIII_E accompanying an air freight shipment.
Better data brings more automation
An improvement is the “single window” online portal approach to which all those involved have access. This is regarded as the key to making freight movement easier, giving those across the supply chain the data they need, meaning product deliveries can be sped up or slowed down so that cargoes arrive at the time and place they’re needed – the “gearbox approach”. Why have a warehouse at the arrival end? Just deliver the product exactly when required, straight into waiting trucks.
On arrival, container handling is done by automated cranes, which are cheaper and safer than human operators. Better cargo tracking means freight is traceable from setting off through to final destination. Less product is lost and damaged thanks to more accurate handling, which means lower incidental costs. Many warehouses now use automated pick-and-pack systems based on barcodes and RFID radio transmitting smart tags rather than human handlers. Once considered science fiction, robots in the warehouse are becoming affordable, while warehouse staff are equipped with augmented reality applications and smart glasses.
Technology improvements have also found uses in the trucking industry – and convoys of wireless-linked, semi-autonomous, driverless trucks (known as “platooning”) are a possibility in the near future.
So next time you receive the wrong delivery it’s quite likely to be your fault (for ordering the wrong thing), and the company who sold the item will have the data trail to prove it. On the other hand, whether we need and can afford the vast array of goods that global logistics systems deliver cheaply and efficiently to our door – fresh fruits and flowers all year round, for example – is another conversation worth having.
D John Mangan is Professor of Marine Transport and Logistics.
published on: 18 August 2015