Inadequate securing of cargo and the resulting damage is a constant, although undesirable element of any kind of transport, including intermodal transport. In an increasingly competitive business environment even a small optimization of costs can have a significant impact on the company's financial results. Improvement of the cargo securing process is therefore one of the factors that can have a large impact on building a competitive advantage.
Cargo securing - challenges of the current state of affairs
The cost of lost cargo, due to inadequate securing, can be enormous. Given the low margins that dominate the shipping industry, a single loss of shipment can represent a significant drop in revenue.
Statistics show that the damage rate in transport is found to be between 1 and 4%, depending on the type of transit. Globally, cargo damage losses amount to €4 billion each year. Most importantly - almost 70% of cargo damage in global transport is classified as avoidable.
Apart from the obvious, huge financial losses related to the destruction of the cargo, its improper securing carries another risk - the risk of receiving financial penalties. The EU Directive 2014/47 / EU on the technical roadside inspection of roadworthiness of commercial vehicles has been in force for more than a year, which imposes not only higher penalties, but also even the risk of revoking a license to operate, in case of repeated failure to secure cargo properly.
The COVID-19 pandemic also has an impact on cargo securing, potential damage and financial losses. The turmoil hit small and medium-sized players hardest, allowing global giants to take over an ever-larger piece of the transport market pie. Under these conditions, cost optimization becomes absolutely essential to be able to remain competitive on the market. Correct and efficient load securing is one of the most important elements of reducing operating costs.
Efficiency in cargo securing affects the competitiveness of any company from the very beginning of the fight for a customer. The valuation of transport and cargo securing costs has an enormous impact on the efficiency of catching new deals on a freight exchange.
It is also worth noting that in the case of intermodal transport, these estimates are particularly complex due to different requirements of cargo securing for different modes of transport. Intermodal transport is also often associated with intercontinental travel, through a large number of countries - which leads to the increased number of regulations and requirements that the cargo securing must meet.
So how do transport companies deal with minimizing the financial risk related to cargo damage? Insurance of cargo in case of damage is the main tool to transfer risks. However, insurance requires a cargo securing plan from the carrier, together with documentation confirming its implementation. This presents transport companies with another challenge.
Cargo securing plan - how do transport companies deal with this task?
The cargo securing plan and documentation confirming its implementation is another factor that puts small and medium-sized companies under huge pressure. Large transport concerns do not have a problem with this task, as they use their extensive internal resources or hire expensive cargo securing companies. Smaller companies usually can’t afford these kinds of solutions. So they do either one of these two things:
Some companies secure their cargo intuitively, not relying on precise calculations or plans. This usually means they secure their cargo excessively, wasting material and time. This type of approach involves constant and significant financial losses - completely avoidable losses.
The second way to get a cargo securing plan is to have this type of calculation and documentation created by a person who creates them based on spreadsheets or autocad. This is a time consuming and inflexible approach. It often happens that the incoming load is packed or divided differently or with different parameters than set in the contract. In such a situation, a quick response and change of the security plan is required, and it is not always possible when a company relies on autocad calculations or spreadsheets.
These imperfect solutions create space for the use of digital solutions that would allow relatively cheap and quick creation of complete documentation necessary for the safe transport of cargo. The first digital products of this type are already appearing on the market. Most of them however, turn out to be inaccurate, which results in incorrect calculations and, consequently, potential penalties for the carrier. It is therefore important to take a look at conditions that we believe should be met by apps that would solve the problem of cargo securing and its documentation.
What criteria should a digital tool for building a cargo securing plan meet?
One of the basic conditions for the success of any app is whether it will be a trusted tool that works with global standards. It must therefore be a tool that can easily comply with the most important cargo securing standards (CTU-Code 2014 and EN 12195-1: 2011). This type of app should allow for quick and standardized calculations to create a cargo securing plan.
Another of the key requirements is the flexibility of the app and the ability to adjust its tools to specific needs of any kind of client. The apps available on the market generate an automatic proposal of cargo securing, but do not allow the use of expert knowledge and optimal matching, which means that their calculations do not work for more complicated loads.
A good example here is, for example, an oversized transport, which the currently available apps are not able to handle. The goal should therefore be to create an application that covers all the needs of a transport company, regardless of the complexity of their orders.
Moving cargo securing to the digital world should also mean that the entire process should not require extensive expert knowledge. The app should allow you to enter the input data easily. In such a case, you don’t need to engage any experts, because the planner in the company, without deep knowledge of the standards, will be able to design cargo securing, and the app will provide calculations and verify their compliance with global standards.
Digitization also significantly increases the accessibility of documentation. Right now, it is common to use technical drawing that requires experience in reading. Moving the experience to the digital world, we can show everything on 3D objects, which are much easier to understand. This benefit is absolutely crucial as it ensures cargo securing documentation is available and easy to read at all stages of transport - for the planner, packing team, driver, forwarder, cargo controlling services, insurer, etc.
Increasing the availability through digitization also means, for example, the ease of downloading the report anywhere in the world. This is especially crucial for the intermodal transport industry. All you need is a QR code and full documentation can follow the cargo all over the world.
The main advantage of digitization is cost optimization. The goal is to properly secure the cargo at the lowest possible cost. The digital app should be able to recalculate each binding or blockage on the fly, informing the user that the requirements specified by the standards are met, so that there is no waste of materials for securing the load excessively.
Cost optimization is also associated with the optimization of time spent by employees on cargo securing. The time to build a cargo securing plan thanks to digital solutions is around 15-30 minutes, instead of the standard 1-2 days. As a result, transport companies don’t need to hire as many experts as before.
Our project at Setapp
Responding to the challenges mentioned in this post and the lack of efficient tools on the market, we at Setapp conduct research and development work aimed at creating a digital solution that meets the requirements of the market. We create this app in cooperation with Dr. Jarosław Soliwoda from the Department of Ship’s Operation at Gdynia Maritime University,
The main goal of our project is to create an app that allows companies to quickly and repeatedly build industrial cargo security plans, for a fraction of the price of the traditional approach.
Thanks to special algorithms, each cargo securing plan will (amongst other things) verify loads mass, forces and moments affecting the load to ensure its compliance with world standards. To learn more about this project, leave your e-mail below and we will contact you with all the details!
The original (Polish) version of this article was first published on IntermodalNews.