T42 IoT Tracking (LON: TRAC) shares are up 25%. This might well be a little premature for TRAC shares but the announcement does seem to get around one of the basic problems the company was having. The basic idea is that being able to track shipping containers is a good idea. Knowing, exactly, where they are at any one time has benefits for those either managing the flow, or with goods inside the flow that they want to know about. So, yes, the basic idea makes sense.
But as we mentioned about T42 IoT, there has been a problem: “It helps to understand the basics here. So, the internet of things means adding connectivity to everyday items. Your ‘fridge can order milk for you, that sort of thing, you can alter light levels from your phone. OK - but an obvious use of such connectivity is adding a tracking device to something and then being able to track where it is. Apple AirTags are an example of this idea. The use case then becomes anyone with a logistics problem to solve. Of which a container port is a good ideal. They have thousands a day up to tens of millions a year of containers flowing through them. Each of which must be delivered to the one exact right person - whether the right guy to truck it away or the right ship to sail with it. However, note what the agreement actually says - and what this implies. It doesn't say that T42 will now be used to track all shipments through Ashdod. Not at all. What it says is that T42 will wire up Ashdod (the readers for the tags) so that it can be used. The port will run a trial and also the port will recommend to shippers that they tag their shipments so as to be able to use the new system.”
T42 IoT share price from Google Finance
The problem? As we mentioned about TRAC, this means selling to each port. And then hoping that users of the port also buy in. Thus the 60% rise on that first announcement faded away.
Which is what makes this announcement different: “t42 intends to incorporate 5G-IoT communication modules into its existing and future devices deployed in containers for its more than 50 logistics partners across the Globe, connecting them to Sateliot's satellites, thus eliminating the problem of lack of coverage on the high seas. This will ensure secure control of merchandise at all times, as these modules monitor location, acceleration, temperature, humidity, impacts, tilt, light conditions, and container damage, among other parameters, providing intelligent detection of these variables anytime, anywhere.”
This now becomes a single sale. Anyone - large or small - who wants to be able to track their container is a potential buyer. It’s not necessary to sell to a port then also sell to users of that port.
Now, obviously, this still needs to work, they’ve still got to find customers and so on. But it is a much easier sale - and therefore this is indeed value additive.
