During the 2019 Parismat conference the main players in French maritime, aviation and transport insurance organized a roundtable discussion dedicated to the question of accumulation and tracking of containers. Innovative technologies bring a precious aid to the whole of the supply chain, even if psychological and financial barriers remain.
In the transport insurance sector, as elsewhere, professionals must juggle with the rapid explosion of new technologies which can either be a source of risk or opportunity. In maritime transport for example the use of smart sensors on containers is expanding fast in the unprecedented context of the accumulation of value of goods onboard ship and in ports.
Billions of euros worth of goods, onboard and on land
The strong growth of exchanges and the expansion of the size of vessels have effectively and substantially modified the stakes. In his opening speech at the Parismat May 14th conference on the accumulation and tracking of containers, Sylvain Gauden, the director of Souscription Marine & Energy at SCOR Global P&C stated: “Despite the fact that we can have a fair idea of the average value of containers for a given sector, it is much more difficult to evaluate precisely the accumulations. The value of the container, according to the nature of the goods, can vary from tens of thousands of euros, to tens of millions of euros. We estimate that onboard the largest vessels, the 20,000 or so containers carried can represent a value of around 1 billion euros.”
Staggering though these figures may be, they are nothing compared to the accumulations on dry land as was proved by losses incurred in 2015 in Tianjin. “According to Russel Group, the total risk at any one time can come close to 900 billion euros in the port of Hong Kong, 580 billion in Singapore and 200 billion in Rotterdam”, says Sylvain Gauden.
Tracking still below par
These estimations are made possible because of a better understanding of the flow, the real time position of the vessels, and by the estimation of what has been loaded and unloaded in the port by comparing draught at entry to that leaving port. New technologies such as Big Data or blockchains bring their lot of extra information.
However, according to Sylvain Gauden there is still a considerable margin for improvement. The representative of SCOR Global P&C made the following observation: “The means of measurement along with the data transmitted to, and made available to, the different actors along the chain of risk is patchy, the models vary as does their interpretation.”
Barriers to taking on certain technologies
Maxime Ambourg, Head of Marketing, Offer, Digital & Innovation at AXA XL Risk Consulting stated: “The subject of container tracking during transport is not a new one and not specific to maritime transport. However, new technologies offer an almost limitless ability to collect and analyse data. The problem is then to find a use for this data.”
It is therefore necessary to combine this data with solid professional expertise. This is the main target for the creation of added value rather than the tools with which to collect the data which only amounts to 15 or 20% of the cost of the solution according to Maxime Ambourg.
Françoise Carli, the co-founder of the maritime insurance services start-up, SICEMC (Suivi informatisé crypté des marchandises en conteneurs or Digital Encrypted Tracking of Goods in Containers), identified another of the pitfalls: overcoming the reluctance to share data, both from the carrier and from the shipper. “One of the key factors is ensuring that the system is secure in terms of information security and confidentiality.” Then the real value comes from the capability to make the information available to the client at the exact moment that they need it. “Too much information leads to information overload” is the reminder from Françoise Carli.
The cost of the solutions may be a barrier to their expansion. AXA XL Risk Consulting in partnership with the data analysis company Contguard, has recently brought onto the market a digital solution that tracks goods in real time, they admit that this kind of offer is generally limited to a particular kind of goods and only on certain routes. “When taking into account the economic model it is difficult to expand such a solution to all containers and for all clients. Some goods are obviously more suitable; goods with a high added value, a target for thieves, fragile, under controlled temperatures or those that are at risk from counterfeiting. Furthermore, we are working to identify the routes which are most likely to present a problem and it is on these routes that we will concentrate the rollout of our solution of real time tracking of goods in transit,” explains Maxime Ambourg.
The volume effect which could lower costs
Stéphane Girardet, Insurance Director for Geodis Group shares this analysis. The freight forwarder has noticed that there is an increasing demand from today’s clients for this kind of tracking for certain types of goods, such as high-tech for security issues, or pharmaceuticals where the problem is more one of accountability. The automobile sector is showing a greater interest particularly for shipments leaving China. For the moment, taking into account the profit margins of approximately 2,000 dollars for a freight forwarder on a container that is shipped from China to Europe (Consult our Benchmark and historical pricing tools to find out more about the rates), the tracking solutions using new technologies that cost around 50€ per container, remain expensive. “That said, this is something that can be adjusted with the volume effect and this is also a service that we wish to highlight to our clients,” explains Stéphane Girardet.
A need to educate
The move to a reduction in prices is already taking place according to Gautier Laubry, the founder and CTO of Evertrace. This Berlin-based start-up created in 2018 specialises in supply chain risk management that uses IoT and blockchain technology. “Our solution allows us to be under the bar of 50€. Taking all industries into account, 25 billion sensors are expected to be used in 2021 compared to 14.2 billion today. There is no reason why this move will not affect transport on a large scale.”
However, according to the company executive, we must be prepared to educate both the shippers and the freight forwarders, who are on the operational front line because they have the task of installing and managing the sensors. As it happens, Evertrace has already tested its solution with the transport organiser, Hellmann Worldwide Logistics.
Significant efforts are still required to set up effective real time tracking, both in operational and financial terms. According to the participants the benefits go over and above simple risk management. “Of course, we systematically send alerts to our clients when an abnormal situation is detected, but we are starting to be able to predict much more precisely the estimated time of arrival of the goods.” says Maxime Ambourg. And so, over and above risk prevention and management AXA XL Risk Consulting affirms that it accompanies its clients in the global reduction of supply chain costs. In addition to loss reduction, the utilisation of the data effectively allows gains in terms of stocking delays and optimisation of routes.
Photo: Anne Kerriou