IoT and cellular connectivity transform transport and logistics

Today, the fastest growing category of cellular IoT applications is tracking/localisation, which is being stimulated by companies’ needs to diversify their supply chains and gain greater visibility of the location of their assets and how they are behaving.

In this scenario, the transport and logistics sector was one of the first to adopt Internet of Things (IoT) technology to help increase efficiency and better serve customers. It soon realised the value of implementing management systems and extended them with connectivity. Since the 1980s, major transport and logistics providers have been using transport management systems (TMS) that help them plan, execute and optimise how physical goods are moved.

The adoption of these systems continues, but the wealth of data on which they now depend has increased enormously, as vehicles, packages and containers can communicate not only their locations, but also information such as shock, temperature and humidity, temperature and humidity.

Data from Berg Insight reveals that the European transport management systems (TMS) market reached around US$1.16 billion by 2022, with a projected compound annual growth rate (CAGR) of 11.4 per cent to reach US$1.89 billion by 2027, showing the industry’s rapid adoption of advanced management systems and the growing importance of robust cellular connectivity solutions.

Although there are various connectivity options, cellular connectivity, especially via 4G and 5G networks, is emerging as the ideal solution for most applications in this sector, due to its balance between cost, coverage, security and reliability.

Specific subsections of the transport and logistics sector have rapidly adopted IoT technologies to support sensitive and high-value cargo. ABI Research reports that revenue from cold chain tracking and monitoring for refrigerated containers in the pharmaceutical sector, for example, is expected to reach $2.9 billion globally by 2027, as companies seek to address the $35 billion worth of products lost to temperature-controlled logistics failures in the sector each year.

STL Partners has detailed some of the key trends enabling the next generation of transport and logistics in a recent report. The company highlights the automation and robotics that are being deployed in transport centres and warehouses to enable greater efficiency.

According to STK, transport and logistics companies are at the forefront of data-rich applications, ranging from digital twins of jet engines, wind turbines and railway locomotives, to optimised scheduling and packaging of goods in warehouses. Better connectivity underpins progress, as connected equipment, IoT sensors and video systems can improve response times, reduce shipping errors and cut energy consumption.

One of the main factors behind investment in connected systems is that transport service providers are in a capital-intensive sector. The cost of downtime for a critical vehicle or system in a warehouse or airport terminal can be enormous. STL Partners therefore identifies a great opportunity to use networked information and sensors to enable predictive maintenance.

There are three important factors that are transforming the sector:

1 – User expectations – End users now expect to be able to track their consignments in transit and obtain precise location information on demand. Similarly, service providers need accurate data to support their services. Deliveries of pharmaceutical or cold chain products, for example, depend on the transport service provider’s ability to prove that the products were delivered within an acceptable temperature range and timeframe.

Users are familiar with tracking dongles in the consumer market and expect to have at least the same functionality available for their products in transit. Users also expect their service providers to minimise their environmental impact. Therefore, the ability to demonstrate the minimisation of emissions through route optimisation and vehicle efficiency has become part of the transport and logistics business.

2 – eSIM and eUICC – Embedded SIM cards (eSIM) and embedded universal integrated circuit cards (eUICC) allow SIM functionality to be installed in devices at the point of manufacture so that a global SIM can initiate its own connection – known as bootstrapping – at the point of deployment. This means that vehicle manufacturers and the retrofit market can ship global products with a single stock-keeping unit (SKU) designation.

For transport providers, meanwhile, it means that their devices can be switched on and automatically connect to the best available operator, regardless of their location. This decouples the connection from the local mobile operator so that organisations are not tied into contracts and have the ability to switch operators if coverage is poor or terminated. Not having to replace the physical SIM therefore saves money and increases flexibility and scalability.

3 – Network performance – With the arrival of 5G and various categories of 4G, mobile phone connections now offer high speeds as well as resilience and security. For many basic tracking applications, this feature is neither necessary nor affordable, but for higher-value shipments, the ability to continuously track and monitor is a monetisable business opportunity. Low-cost offerings, such as narrowband IoT and LTE Cat 1 bis, offer ample capacity to enable simpler transport and logistics functions.

These three dynamics have come together to enable a new degree of data transmission for the transport and logistics sector. This extends from in-vehicle connectivity to advances in sensor technology that can monitor temperature, shock and speed, as well as tracking location down to centimetre level if necessary.

All IoT applications are variations of asset tracking (i.e. “where is something?”) or condition-based monitoring (i.e. “how is something?”), in combination with specific use case characteristics that distinguish them as markets. Monitoring has consistently accounted for between a third and a quarter of all cellular IoT connections, strongly driven by automotive applications including: original equipment manufacturer (OEM) telematics, after-sales telematics and fleet management. However, this robust share will account for less than 10 per cent by 2026.

The post-COVID-19 economy will depend on automated supply chain management more than ever to ensure that business operations are not disrupted by similar events again, protecting their liquidity, guaranteeing people’s jobs and strengthening society. The concept can be extended beyond fleets and goods to reusable packaging and other returnable business assets that reduce waste and provide capital expenditure (CAPEX) savings.