Hapag-Lloyd Demonstrates Opportunity for IoT-Enabled Services with Launch of Live Position

At the end of April 2024, international shipping company Hapag-Lloyd announced the launch of Live Position, a service providing real-time visibility into the location of Hapag-Lloyd containers. Live Position is designed to improve the quality of service for customers by providing more transparent visibility into shipping processes.

Live Position relies on data from Internet of Things (IoT) devices attached to each container. Hapag-Lloyd, like many Logistics Service Providers (LSPs) and carriers, has already equipped its refrigerated container fleet with IoT technologies for some time now. At the end of 2022, Hapag-Lloyd pulled the trigger on the next step, namely adding IoT devices to 95% of its dry container fleet (totaling 1.5 million tracker units) at an approximate cost of US$250 million. Installed tracker units had reached 700,000 in October 2023 and 1 million in January 2024, showing a remarkable deployment speed and making this the largest IoT deployment on dry containers globally. The Live Position announcement noted that “more than two thirds” of the dry container fleet is equipped with trackers, so the deployment seems to have reached a sufficient critical mass to allow it to expand beyond internal-facing use cases and toward offering value-added customer-facing services.

In the deployment, Hapag Lloyd works with two IoT solution providers, Nexxiot and ORBCOMM. The devices cost around US$100 for ORBCOMM trackers (significantly more for Nexxiot trackers), connect over cellular networks (LTE-M and GSM), are powered by internal batteries supported by solar power for an estimated lifespan of 8 to 10 years, and support peripheral Bluetooth® devices. Using cellular networks means the solution is effective inland, but less so at sea. This is where ORBCOMM’s VesselConnect solution comes into play: VesselConnect deploys on-ship network infrastructure to allow ORBCOMM’s and third-party devices to continue to transmit data over GSM while at sea. These data can both be used locally using ORBCOMM CrewView software and being backhauled via satellite to onshore users, creating true “live” visibility.

The launch of Live Position marks a significant change from internal-facing use cases toward customer-facing use cases. This is a natural part of an IoT deployment, where the value of the solution evolves based on finding additional ways of using the data. In Hapag-Lloyd’s case, the company has been using the deployment internally to help better manage containers and flows; the launch of Live Position marks a start to offering value-added services to customers.

These services are still clearly in the very early stages. First, the solution is currently only available as a web browser, rather than through Application Programming Interfaces (APIs) to be integrated into customers’ enterprise software. Hapag-Lloyd notes that making these data accessible via APIs will be a crucial next step in its journey. Helping customers integrate the data within their enterprise software environments makes it easier for them to use data within existing applications, and helps them build new value-added applications based on this new stream of data, rather than requiring them to access yet another detached system.

Second, the full range of functionality is not entirely clear: while Hapag-Lloyd’s website notes that Estimated Times of Arrival (ETAs) are available, the announcement appears to imply that this is a future milestone. Third, “visionary” use cases remain in the future; using IoT data for sustainability, traceability, or customs use cases (anything beyond simple track & trace) remains a goal, rather than an actuality. Killer use cases, such as the ability not only to offer visibility into where the container is, but also to help optimize the turnover rate of containers (referred in the announcement as “allowing a more efficient steering of our fleet of boxes”) are planned, but not yet operational.

Still, Hapag-Lloyd is aware of this, referring to Live Position as the start of a “journey to further develop the product.” As IoT solution providers know, high-quality and plentiful data take a long time to collect, but become a treasure trove in the long term, particularly as Machine Learning (ML) techniques today allow for more advanced trend-spotting.

The proposed value of the Live Position service is to enable customers to track the location (and potentially, the condition) of their shipments at the container level throughout the multimodal journey. In other words, visibility will be provided not just on one leg of the journey, but from the moment of container pickup to the point at which it is dropped off at the receiver’s terminal. Software providers such as FourKites or Vizion offer some of these capabilities by using a software-only carrier data-aggregation approach, but crucially, the quality of these data is only as good as the data that the carrier makes available in the first place. These solutions are also frequently manual, requiring customers to input the container ID or Bill of Lading (BoL) number into a system. As Hapag-Lloyd uses the IoT to provide better “ground-truth” data on the container and to integrate these data automatically into customer systems, customers and application providers alike can build better applications using these data—ultimately making Hapag-Lloyd’s shipping services more attractive.

Additionally, software-only vendors often struggle with providing visibility beyond the port (the drayage leg), and this is an important area where Hapag-Lloyd will provide value. Hapag-Lloyd’s IoT solution will, of course, provide visibility into dry containers being shipped over the ocean, but the IoT for this purpose alone is overkill because ship automatic identification system (AIS) data and data aggregation approaches are usually sufficient to meet this need. Where Hapag-Lloyd’s IoT solution goes further is in enabling visibility from the pickup to the drop-off—in other words, including inland legs of the journey like the complicated drayage leg. While offering visibility and ETAs on containers crossing the ocean is not a major breakthrough, helping to overcome the drayage problem is.

This brings us to the pricing of Live Position. The solution is priced per shipment, at a rate of US$15 for Merchant Haulage (drayage legs are not performed by Hapag-Lloyd) and US$0 for Carrier Haulage (drayage legs are performed by Hapag-Lloyd). In effect, the service is provided for free for all parts of the ocean and inland process carried out by Hapag-Lloyd, while a charge is applied for third-party LSPs who want to provide a better customer experience to their own customers. The revenue associated with providing this service will make little dent in the US$250 million initial investment, but as noted, the impact will be found more in the less readily quantifiable applications than in the immediate revenue-generating services.

The Hapag-Lloyd IoT solution for dry containers is a good case study for a massive IoT deployment. In particular, it highlights how the value of an IoT solution should not be directly pegged to the value of the asset in question (in this case, a dry container), but to the value of the data generated for the service provider (in this case, Hapag-Lloyd).

It will be interesting to see how the major competitors respond. The expectation is usually that once a household name has embarked on a journey like this, the capability becomes a standard requirement across the industry. Indeed, pilots and investments have been ongoing for years among Hapag-Lloyd’s carrier competitors, Maersk, CMA CGM, and MSC, are investing in and starting to adopt French company Traxens’ solution. Other customers of Traxens included freight forwarders like DB Schenker, Kuehne+Nagel, and DSV.

While these companies are making noises in dry container tracking, announcements of massive deployments remain elusive—partly, as Traxens’ Chief Executive Notes (CEO) notes, due to the requirement to ramp up tracking device production, as well as the ability to manage all the data coming from these devices. This is not a simple task, and adopters and solution providers alike must think years ahead to build the back end data infrastructure capacity to support these deployments. Once this is done, building applications and enabling the broader application ecosystem takes years again. IoT solution providers will provide access to some of these applications, but the LSPs will need to build ecosystems of partners—from insurance companies or customs brokers—who accept and trust their data. In other words, building an IoT solution requires more than throwing technology at a problem.