Point of View

How Smart Containers could contribute to Customs operations efficiency

18 October 2023
By AELER Technologies SA

One of the chapters of the innovation white paper[1] recently published by the International Association of Ports and Harbours (IAPH) is titled “Innovation in ports – not only about technology”. It argues that innovation is also about process efficiency, and this includes how data flows among stakeholders and how it is used. Today, thanks to IoT technology, information flow can be generated by cargo containers themselves and be shared across many actors, improving the quality of transport and logistics performance by enabling collaboration among stakeholders.

Smart Containers

Smart Containers are shipping ISO containers equipped with IoT technologies and a range of sensors and devices They can detect door opening or an impact event, provide precise GPS positions and container orientation, measure temperature, pressure, humidity and luminosity, establish the presence of volatile organic compound gases, and much more.

The data collected by the Smart Container’s sensors is transmitted to a central monitoring platform, called the Smart Container’s control tower, which provides a holistic perspective on the container and its contents, using additional information sources such as AIS (Automatic Identification System) data, as well as freight forwarders’ and other shipping partners’ data.

A regular steel container can be turned into a Smart Container by having devices and sensors installed in it. At the end of the contract with the IoT service provider, they will be dismounted. There are also containers with IoT hardware embedded into the original design during the manufacturing process. In some cases, these Smart Containers are owned by the service provider and are rented together with the monitoring services.

In April 2022, the German shipping Line Hapag-Lloyd announced that it had fully digitalized its fleet of three million TEU containers. It first introduced the technology in 2019 in reefer containers, and steadily continued installing IoT devices in all standard containers.[2] In 2023, Ocean Network Express, the Japanese container transportation and shipping company, decided to do the same.[3]

Drewry, an independent maritime research consultancy, has updated a previous estimate of 8.7 million smart containers by 2026 and forecasted that, by 2027, almost one third of all containers will be equipped with telematics hardware.[4]

Smart Containers are mainly used by shippers who need to apply special security measures to their cargo and to have full visibility on their integrity (high-value goods, goods sensitive to environmental changes, etc.). Shippers access data generated by the devices through the central monitoring platform and could also grant access to some information to other parties, including Customs administrations, by enabling them to connect to the platform or to pull the information into their IT system using an API.

Sharing the data generated by Smart Containers with Customs administrations can enrich the information they collect and analyse. Two events are of specific interest to them: unauthorized door opening, and route deviation when the container crosses previously defined geofences. Geofences are created by defining virtual boundaries around a location and by developing algorithms to identify any breaking of the fences and the average time required for a container to go from point A to point B. Thanks to geofencing and IoT hardware connected through GNSS antennas and global GSM roaming, deviations from the planned routes or delays can be reported immediately by the Smart Container and add a risk score to a container.

The following data can be transmitted when one of these events occur:

  • Container BIC number;
  • Door status: open/close;
  • Geographical location (latitude/longitude);
  • Time stamp;
  • Modality (truck, rail, idle, moving, etc.); and
  • more if required.

One of the key advantages offered by Smart Containers to shippers is the enhancement of the features provided by some types of electronic seal. The sensors can detect the opening of the container not only by the door but by any of it sides. Unauthorized door opening, together with geolocation, time stamping and additional sensor information could be pulled into the Customs risk management system of a country of import, transit or transshipment, driving substantial change in Customs operations.

Smart Containers offer other advantages compared to electronic seals:

  • for containers with IoT hardware embedded into the original design, there is no need for storing, sending, receiving and returning IoT devices, or for charging them as they can be powered by solar panels placed on the exterior of the containers or by electrical connection in the case of reefer containers;
  • data management, data transfer, monitoring and even the virtual sealing is done in one place, the Smart Container’s control tower;
  • the operating cost is low and included in the price paid by shippers; and
  • there is no operational cost for Customs as the shipper is paying for the service.

What’s next?

To explore how data generated by Smart Containers could benefit Customs operations, there is a need for Customs administrations and Smart Container developers to conduct pilots.

Such experiments should address the following points, among others:

  1. the data elements to be transmitted from the Smart Container to the Customs administration;
  2. the communication method by which the data from the Smart Container to the Customs administration will be transmitted; and
  3. the time intervals in which the data from the Smart Container to the Customs administration will be transmitted.

More information

[1] https://sustainableworldports.org/wp-content/uploads/IAPH-The-mindset-shift-towards-Innovation-White-Paper.pdf

[2] https://www.hapag-lloyd.com/en/company/press/releases/2022/04/hapag-lloyd-first-mover-in-equipping-all-containers-with-real-ti.html

[3] https://www.one-line.com/en/news/one-announces-project-sony-network-communications-europe-create-smart-container-solution

[4] https://theloadstar.com/use-of-smart-containers-speeds-up-as-more-ocean-carriers-get-onboard/