Podcast: IoT and Maritime Container Tracking with Erik Lund

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In this episode, Erik Lund, Managing Director Maritime & Logistics at Nexxiot, joins Host Brian Glick, CEO of Chain.io, to discuss:

• The tech behind real-time visibility like the IoT and tracking devices
• Boosting time to value for large shipping lines
• Container shipping innovations and their efficiency impacts
• The potential of data across global trade, especially in trade compliance

Erik serves as the Managing Director of Maritime and Logistics at Nexxiot, a provider of sensors, hardware, software interfaces and analytics to optimize transportation on a global scale.

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Episode Transcript

This transcript is auto-generated and may contain slight errors. We've edited lightly for clarity.

Brian Glick  00:05

Welcome to Supply Chain Connections. I'm Brian Glick, founder and CEO of Chain.io. On today's episode, we are going to go very deep on the logistics of rolling out IoT, specifically in maritime and container tracking. It's one of those topics that seems like this magic thing that's going to be out there someday. And it's really happening and there are live products in the market. And we are right at that inflection point for being able to actually know where containers are, and the health of those containers beyond just the reefers. So we're going to be chatting with Erik Lund. Erik is the managing director for maritime and logistics Nexxiot, one of the leading solutions for deploying IoT devices onto containers. So I hope you enjoy the episode.

Brian Glick  01:03

Erik, welcome to the show.

Erik Lund  01:05

Thanks very much. Great having me.

Brian Glick  01:07

Yeah, it's good to see you. And looking forward to chatting. Why don't we start by just giving us a little bit of your background in the industry.

Erik Lund  01:15

Yeah, so in my case, you need to define the industry, I've been having a path across a few industries. But in the context of logistics and transport, or logistics and maritime, I have an original background from Maersk, started out at the headquarters in Copenhagen, and spent a total of 12 years around the world with Maersk building, the organization in Indonesia was part of what became Damco at Maersk. When Maersk entered into three peel back in two days. And I spent quite considerable time also in Africa from us before I went into technology, but you know, lock tech and other technology areas, but made it back to what we're doing now, through a period of maritime and transport innovation, that consultancy, ultimately ending up in supply chain visibility, driving a business unit within Sony. And now joining since almost a year, next year, but looking to you know, put every single logistics asset online, make all the non powered assets, containers, share C's, rail, cars, whatever you have it smart with a Nexxiot device, being able to send information about what am I doing, and starting to work with this data together with our customers.

Brian Glick  02:50

I am curious. And I do want to get back to some of the IoT and device things. But you're one of the very few people I know in the industry who got out and came back. So what was that, like? What prompted you to do other things and what prompted you to kind of come back into logistics,

Erik Lund  03:05

say, My Life Path turned away from logistics for a number of years. But I'm one of those guys that gets excited when he sees a container when he sees a ship when I'm standing at a 45 degree angle with my nose into a storm. And I have maintained my network from days and have always enjoyed the complexity, the adversity, the undervalued impact politicians have on particular case maritime transport has on global transport. And you know, as I made my way back to the industry, it has truly been a true pleasure for me to come back to address, you know, the same challenges that remain as when a left to a certain extent and trying to address them with you know, these technologies that we're bringing to the market before next. When I was focusing on you can see the supply chain visibility part of it and more looking at what's happening with shipments, goods cargoes moving about rather than necessarily the acids, the containers, the chassis the rail cars you had ever given stuck in the Suez Canal and does basically something like one or $2 billion of cargoes being clogged up behind ever given that could not pass the vessel and the Suez Canal. And it is such a beautiful picture of how impactful this industry is. It's like the plumbing in your walls. You couldn't care less when it works, but when it doesn't, and when it starts to smell, then it does become top of mind. And during that period of time during the pandemic time with all the supply chain disruptions. You did see, you know the logistics managers, the supply chain managers, you know being taken out of the base meant being put into the boardroom, because it was, you know, of critical importance for companies to actually efficiently manage their supply chains.

Brian Glick  05:12

So given all of that, and given how important all of this is, I think one of the things that has struck me about asset tracking and about the kind of the space you're living in now, it seems a little bit like self driving cars to me, in that for my whole career, next year is the year when it's going to explode. Right. And what I've noticed in the last two years, is actual news about actual things happening, right. So the actual deployment of devices, ocean carriers seem to be getting on board, you know, but what was the inflection point for that momentum really getting going?

Erik Lund  05:52

You're absolutely right. This is a topic that has been ongoing. You know, this was a topic about 20 years ago. Can we put a barcode on the containers? Can we put a QR code on containers to rescan and can we do this? And that, right? If you look at where we and our competitors were coming from, certainly, you're seeing the emergence of a number of logistics IoT companies coming out 10 years ago? No, look, all of us, we have room B, you name it, more or less founded at Kevin take the same time as seeing that this technology is starting to become mature enough for what we want to do, you know, battery lifetime, global connectivity and stuff like that understanding of what we want to do with and maturity, or being ready to do something, I think those are some of the key points. And all of us did have discussions. Now we talked in the maritime space with shipping companies at that time. And they were not really ready to roll multiple aspects of it. There is certainly a pricing aspect, there was a perceived value of what the technology could do versus what they were trying to do at that point in time. They're built to take in the information from the devices. I can very much question the technological maturity of the shipping industry and of the individual players within the shipping industry. And three, four years ago, you did have a concerted effort by a couple of the players, basically focusing on IoT as a part of a security play. We all, you know, hear about the dismantling issues, bananas, with complimentary cocaine pouches, and so on and so forth, coming up from various origins in Central America, that were true problems right. And you had a grouping of three of the largest carriers, so MSC CMA, CGM and MERS starting a project together, a project ever started CMA CGM, at the same time when they were trying to come together on electronic appeals, a bill of lading with trade lens. At that point of time, I was convinced that this would be the inflection point. Will it be when they will see an industry wide adoption? And it didn't? Because while the safety cargo safety, security, illicit trade issues are very real, the ability to justify the business case for bringing you know a total fleet of you know, what is it CMA CGM give and take three and a half 4 million containers online was not really there by getting greater visibility into no risk full behaviors with out of Central America out of other risk origins. And then you saw during the pandemic time where, you know, carriers obviously had a quite substantial increase in earnings and profitability, where you know, each carrier we're taking sort of a different path. MSC took an opportunity to massively increase their fleet. Maersk was investing in logistics infrastructure for them to pursue their integrated logistics play. CMA CGM did a little bit of both. And Hapag-Lloyd said that, you know, we believe that this technology can bring us something and I'm now talking from my own interpretation of the case, we have an assumption that this technology can do a number of things for us that can improve our productivity in the proof our operational efficiency can improve our customer value proposition, and we believe that we have to surplus to take a qualified bet on this and of course, Hapag-Lloyd as the first carrier made the commitment to go go fleet wide on the dry containers and We As Nick said, we've been fortunate to be selected as one of the two partners that are supporting them on that journey. And generally for the industry, that well, two things, it meant that there's a reference point now. And it also meant that the discussion was starting to be broader than what it was before in terms of creating insight for certain security related use cases. And that is a game changer. Because certainly, if you look at the operational efficiency opportunities carriers can have there you find, that is our very much our very strong belief, and a very strong assumption, based on the insight that we have that most carriers, those that are seen as the operational benchmark, as well as others that have yet further opportunities to grow, that for all of them, they are able to find the best of cases based on further fine tuning calibration, to justify this investment, the moment that you do have a fleet wide deployment, then not only what you can do operationally, you know how you can turn your containers more efficiently, how you can deploy other assets more efficiently, how you're going to make decisions on the optimal infrastructure, you can also start to truly look at what are the customer value drivers, where they really bring a differentiation to our customers. And coming back, again, to the highly important, you know, cargo security asset and cargo security use cases, whether it is combating illicit trade, whether it is to manage risk cargo, whether it is to get a better insight into a no theft, or loss prevention on a broader scale.

Brian Glick  11:59

So it sounds like there's when you're building a business case for this, then it's a very layered set of values, right? There's the security layer, there's the kind of operational layer, there's the, you know, the cost savings side of it, there's the creating new products for the customer, kind of all of these different things that have to come together, you know, and aggregate this is worth doing, but maybe not any particular one of them doesn't pay for it on day one, I would imagine. And I'm thinking back to my career for, you know, trying to justify the budget for something like this years ago, and I was sitting with the CFO, and I said, you know, let's do an ROI on renewing our subscription to Outlook, like some things are just once you have them, they become so embedded in the value of everything you do in the organization that you can no longer pick apart like what the company would look like without this. Is this one of those inflection things where, you know, 10 years from now, you just won't even be able to think about a world where this didn't exist, that good way to think about us.

Erik Lund  13:02

Absolutely. And you're very right in saying that this is a layered process. You know, if you look at telematics for a vehicle that's relatively straightforward, you know, you want to understand, of course, you'd like to see where it's going from A to b2c, you're looking at the vehicle performance, you're looking at maintenance, you're looking at insurance use cases, no driver performance data, that straightforward. Looking at the telematics adoptions for reefer containers, also straightforward, you found to understand if the compressors working, you know, you're bound to understand that the cold chain is respected for these types of transports, maintenance, so on so forth, whereas for dry containers, ultimately, you don't care. Would you care less, what might happen to a $2,000 container right, right in s for acid itself, but then start looking at what are the respective opportunity areas where the respective use cases in your network, in your operations towards your customers and so on so forth. So truly bringing that patchwork and to documenting and justifying that patchwork of use cases that will bring your ROI is extremely important. And force you know, it is also a part of our journey per se. Because if our no commercial approach will say here's a device that can give you a ping is the best thing in the world. Nobody will ultimately buy it right? Of course having the best thing in the world is important. But if we cannot true our insight into activity, you know developer drivers, if we cannot bring that into the mix, if when I can help to, you know, educate and support customers with that journey, then it will be a commodity. And then I'm sure there are Chinese manufacturers that could ultimately do it at volume at a different price point at some point in time that we might. So first, it's the foundational technology of the devices onto the containers, or onto any logistics assets, but also very much, first, building a business and supporting a business to help realize the no operational commercial safety and security values that this technology can bring. And that is certainly how to say it in a non-trivial part of the discussion.

Brian Glick  15:46

And that's really interesting to me, as I had that over the last, say, five, seven years, I've seen that conversation evolve here in the US around after we got the telematics mandate in trucking, right, that it was a less sophisticated conversation at the beginning, it was let's get the device on the truck. And we will be the company that sells the device. And then I watched a number of those, my friends at those companies say oh my god, now we're in a position where we're just in a price war, right where we didn't, and they've now gone back to market and say, Okay, we actually need to be the company that tells you what to do with this information, or sells you the geofencing solution or sells you the analytics solution on top. So you guys have made like sort of a preemptive decision that that's a valuable thing that that has to be part of your service offering and that I hear that properly.

Erik Lund  16:40

very much. So at the end of the day, then any of the large shipping loans, with very few exceptions, would be doing a multi sourcing when it comes to the hardware, it is extremely important that the devices that go out on the containers have the quality that allowed them to perform in a relatively an unfriendly environment for the duration of our containers lifetime. And from a hardware development point of view, that is challenging, when a container is fitted with a device, the next time you want to touch that device is when the container is taken out of service. And it is as this right now then it the average lifetime of a dry container within shipping is 10 to 12 years, and certainly any touchpoint anywhere in the world has a cost to it and test, it has a disruptive effect on the business case. But when that is done, then it's really making sure that the understanding boat of what is happening with the container or, or the situational awareness and actionable insight, both for the container server and ultimately what's on the inside of the container that we help to support and qualify what it means for carriers. And DD large carriers of course have massive IT organizations themselves. However, without exposure to the market now inside, then we can help them accelerate time to value for a number of these use cases, also through you know, the technology that we are bringing in play under solution sides, with them or towards them.

Brian Glick  18:22

So one of my favorite things to say about this entire global trade space is that every time you see what looks like a very simple problem, there's a 1000 foot hole that you don't see underneath the complexity. And under every one of those holes is another 1000 foot hole of complexity. This is a really interesting one of those situations where I think a lot of us in the industry who don't think about this problem every day, you know, you see an article in the journal commerce say, Oh, this device, and you go oh, well, they just slap a device on the side and move on. Why is this so hard? And you don't think about maintenance? You don't think about touch points or, you know, can someone in the field service a battery or, you know, like all of these things. And it's just, I think a constant reminder to all of us that every other piece of this business is as complex as a piece that we particularly work in.

Erik Lund  19:19

Truly, right. The IoT devices, they don't serve a purpose if they stay in the box. If you take one of the large shipping lines with three, four or 5 million containers, time to value is imperative. So how do we get 3 million containers, 4 million containers fitted within let's say 18 months, that means that you are out onboarding installation sites all over the world. In our case between maritime and rail, we're supporting something like 450 service points right now, across all geographies in the world. Just take the journey that hypochlorite did, they brought a million containers online in not much than a year, which again, talking about the complexity, as you said, then it becomes imperative if it takes one minute, or if it takes five minutes to install the device onto the container, because five minutes times 5 million containers is a lot of manuals, right? Yes, all of those things come together. It's not only what's inside the device and stuff like that. But it's truly the ability to Operation execute lifting devices out on the containers, getting them working to get in compared to getting them pinging. When that is done, then, you know, you can start the journey of harvesting the value from the pings, right?

Brian Glick  20:48

So I'm gonna ask you to make a little bit of a prediction. Nobody will hold you to this. But if I'm sitting as a shipper, right now, I'm import managers sitting in an office somewhere in the world. And you know, I've read these articles, and I've seen this progress. When and how do you think shippers are going to start feeling this? Is it direct data feeds into the TMS? Is it oh, they're gonna have, you know, websites like, what's this gonna mean to me

Erik Lund  21:15

Hapag-Lloyd loans they're light processing service a month and a half ago, two months ago, now they have the feel that comfortable having a so large percentage of the fleet faded, that taken off a consistent service to bcos. But those are the only ones. And everybody else today, of course, offers checkpoint, bass track and trace. But besides a very few, then checking on pace track and trace means that you're blind when it leaves the gate out, or when it gets out. Whereas with a tracking or a telematics solution on it, then you covered the critical first mile, and particularly critical last mile from it gated out until it's arriving at its final destination, with everything that relates to that as a consistent service. And then you can say, well, you know, trucks have telematics, there are other ways of acquiring, we're putting a type device inside it, that can be true. But if you're looking really on a global scale, then you cannot guarantee that every truck driver will participate, or every truck has telematics and Ted you can acquire this. Similarly, I can, of course, decide to put an in-cargo device-monitoring device with my goodness. But again, we are certainly seeing a struggle that is not a consistent service. You also have other challenges when it comes to that. I think a wake up call for other carriers was certainly when Hapag-Lloyd, besides announcing their light persistent service, was that they announced that they will have a 15 minute monitoring frequency with that, because most of the other discussions have been circling around acquiring an upload every hour every second hour, stuff like that when the container is moving, which potentially is not sufficient. But actually now have a cloud is offering 15 mins monitoring frequency. And that certainly does make a difference. It certainly means that when you are looking at the security situations, no deviation from Route, unscheduled stoppages, containers, doing things that are not supposed to do the opening events or intrusion detection and so on so forth, you start to maybe not necessarily act in the moment, but you start to be able to recognise risk patterns and take protective actions towards them. And it also means that you start to having a predictive ETA that you can rely on that you can plan for, that you can have your warehousing staff ready for, and stuff like that, means that when it goes into TMS and stuff like that, as you said that you need to start to include into your logistics and supply chain planning. And that means that the operational efficiencies will then extend from the carrier discussing, we have to also look at what are the real PCO measures taken to be delivered here. And I think one of the main things in our point of view that this brings towards the bcos from shipping lines is a regularity. Trustworthiness is what we've been told. It's not a question of getting an ETA that will be here. You know, give and take tomorrow, the day after tomorrow, but you are starting to actually come to your 15 Minute 30 minutes, 60 minutes windows and for those that can offer that earlier than others, for them, it is a competitive advantage. It's known as the quality of service reliability aspect that they can offer to customers that other shipping lines will have to work harder to document.

Brian Glick  25:16

So let's pull back from the inner workings of all of this, what gets you personally excited, getting up and going to work every day and working in this space? Besides my mortgage, besides your mortgage?

Erik Lund  25:33

You know, as we've talked about before, I am truly passionate about this industry. You know, 40 tonne containers are cool for me. And everything that relates to that is cool to me. And it's truly exciting to be a part of this journey for shipping lines, being able to influence shipping lines. And taking this journey. We might, in many cases have a mindset for many things that date back to when we had the T clippers or steamships when we had the incident in Baltimore, there were a lot of people that woke up to trying to understand what general average is all about. Finding out that it's a maritime law today back to what 1840 Some are not. But that is, you see, we are an industry that is dating back hundreds of years, if not millennia, is maybe drawing a little bit too far. But it is also an industry that innovates carefully, right. But I do see that we as an industry, meaning global transportation, or American transportation is taking a number of quantum leaps right now, both in terms of the sustainability footprint, seeing a massive amount of things happening in terms of new fuels, new engine types and stuff like that. What we are being a part of, is to bring the cargo handling and utilization of our cargo carrying assets into a new millennium, and really fitting it out to achieve deficiencies that, you know, Malcolm hadn't even envisaged when he created the first shipping container back in the 50s.

Brian Glick  27:10

Right, yeah, and I think it's always a good reminder, especially on the maritime side, that the timescales that we're talking about here are more like building cathedrals than they are like building model cathedrals. We're doing big things, you know, that can be frustrating in the short term, but build for a very, very long term future.

Erik Lund  27:30

And, you know, what you and I have just been talking about now, only sort of the first part of the journey, two primary use cases. And certainly, if the data is democratized, one way, shape or form or the other, the immense opportunity for insight into global trade cannot be understated, and how it can be applied towards so many secondary use cases that we're all pursuing. That could be far from far beyond the core logistics scenarios that we've been talking about today.

Brian Glick  28:07

I think one of the things that always excites me about technology is that when you do things at the foundational level, right, like getting raw facts on containers, the only thing we know is that we don't know what the really great use cases were. They were the really interesting things. You know, you build the internet, e-commerce or telemedicine, we're not really you know, the thing. They were trying to just share academic papers back and forth, right. You know, for good or for bad. You go from that to TikTok, right? So, you know, I'm excited to see the carriers deploying this technology, because whatever comes from it, I'm sure it will be more interesting than whatever we're thinking of today.

Erik Lund  28:49

So not very much.

Brian Glick  28:53

So thank you so much for being on the show. This is a really, really insightful, deep dive into something that I think a lot of us just see as a headline every once in a while. 

Erik Lund  29:01

That's a great pleasure.

Brian Glick  29:04

So thanks again to Erik for a really fantastic conversation, again. And the reason that I do this podcast in the first place is because I love to learn and I love to talk about all of these topics. And you know, whether it's trade compliance, or IoT devices, or how pricing works in this industry, it's just so interesting to see how deep we all can go into these very, very specific topics sometimes. So I hope you enjoyed that content and have some optimism about how this is going to help make all of our jobs easier. We'll have some links to both Nexxiot and to some of the things that we were talking about. What happened is live service available in the show notes and thank you for listening.

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