Commentary Trading Places

By Peter Tirschwell

Will smart containers be accurate and consistent enough to drive more meaningful decisions than traditional milestonebased visibility?

Hapag-Lloyd is testing whether a major investment in sensors deployed on its fleet of 2 million containers can take visibility, a longtime source of frustration for shippers, to the next level.

This bet comes as container lines struggle to commercialize such investments by charging shippers for more accurate and continuous location and condition data.

“ The smart container industry has faced challenges in scaling due to [ the ] lack of customer’ s willingness to pay for the additional service, and carriers’ difficulties in justifying the internal [ return on investment ],” said a study by consultancy Roland Burger published in November.

Hapag-Lloyd is trying to break the mold in trying to extract value through smart containers, improving fleet utilization and de-risking the uptake— or lack thereof— from customers.

“ What carriers do with visibility operationally will justify their investment initially, enabling the subsequent pursuit of the other commercial use case categories,” said Erik Lund, managing director for maritime and logistics at Nexxiot, which supplies the IoT devices used by Hapag-Lloyd.

The ROI for a carrier, excluding revenue from customers, can also come from reducing empty repositioning costs if boxes are more easily redirected to the next user instead of through a depot.

A carrier can use smart containers to better position empties where they expect demand to materialize, arguably improving their spot bookings’ competitivity because they don’ t need to move that empty after receiving a request.

“ If I have much more accurate information about where my empty is, I am going to get greater utilization out of my container fleet overall,” said Curtis Spencer, CEO of Bloodhound Tracking Devices, a subscription-based IoT device provider.

But even with an acceptable ROI through improved asset utilization, the question remains of whether smart containers can produce a breakthrough in visibility valuable enough for shippers to willingly pay for it in significant numbers.

Will an IoT device attached to the outside of a container create an accurate and consistent data flow driving more meaningful decisions than milestone-based visibility methods long criticized for inaccurate and incomplete data?

With Hapag-Lloyd having installed tracking devices on 90 % of its container fleet and this summer rolling out a predictive ETA service for shippers, the premise will soon be put to the test.

Even if the data is good enough, scale is still a limitation. Zim Integrated Shipping Services and Ocean Network Express have announced similar plans, while Mediterranean Shipping Co.( MSC) is using smart containers selectively in reefer and to combat drug smuggling. However, standards don’ t exist for smart containers to transmit while aboard the ships of alliance partners, according to the Digital Container Shipping Association. Ocean visibility made progress in recent years with the advent of niche specialists like project44 and FourKites, which aggregate data feeds from multiple sources for customers. Yet they have recently de-emphasized visibility as their core product amid larger questions about overall value creation. The more than $ 1.4 billion of venture capital invested into freight visibility providers over the last five years has not translated into transformative outcomes for users.

A different approach— sensors attached to the cargo or the pallet inside the container— has found a market in specific scenarios for high-value or sensitive cargoes, including electronics and pharmaceuticals, but faces a reverse logistics challenge, requiring removal and redelivery after each transit.

“ We have not seen a mass scale adoption for broader logistics [ beneficial cargo owner ] use cases,” said Nexxiot’ s Lund.“ We’ re still at the foot of the mountain as an industry.”

According to Hapag-Lloyd, its product will be differentiated in a few ways.

“ The material difference lies in two main dimensions: first, our inland ETA prediction will use the container GPS data— which is available independent from which route the container is travelling on or which trucker / rail company is currently moving the box,” said Olaf Habert, who leads the program at Hapag-Lloyd.“ Second, we are deploying purpose-built prediction algorithms for container transportation across all modes of transport. Therefore, we are targeting for our ETA prediction for inland destinations to be accurate within a couple of hours.”

The bigger question is whether smart containers will help ocean carriers to break into what for them has been an elusive value-added logistics market. Maersk has embraced this fully through its integrator strategy, albeit with mixed results.

According to the Roland Burger study,“ The shipping industry, characterized by highly volatile freight rates, has struggled to monetize valueadded services, often absorbing their costs into global ocean freight.”

Will IoT containers meet the same fate?

Senior Editor Eric Johnson contributed to this column.

email: peter. tirschwell @ spglobal. com

62 Journal of Commerce | June 2, 2025 www. joc. com