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By Ken Mark
Today, transportation and logistics professionals are all starting to realize that data, not products, have become the most important part of any shipment. Advanced IT systems such as digitization are emerging to help them monitor, measure and soon pay for 21st century supply chain transactions.
This article will provide an up-to-date overview of the systems involved, an introduction of the benefits and advantages of emerging solutions as well outline the major risks and shortcomings involved. For the most part, the comments will come from current practitioners about their hopes and fears of the digital revolution that has shaken up all of our business and personal lives.
The major subjects include artificial intelligence (AI), blockchain, the Internet of things (IOT) etc. that will boost the efficiency, effectiveness and productivity of global transportation and logistics systems and players.
Job One for the recently-launched, Amsterdam-based Digital Container Shipping Association (DCSA) is to ensure that all current and future members sing from the same song sheet.
According to a recent Loadstar article, Thomas Bagge, its recently appointed inaugural CEO and statutory director stated,
“Carriers may use the same vocabulary, but the meaning behind it is different – for example, defining a vessel arrival – and so is the data architecture. These differences are holding the lines back from benefiting from the new technology.
“We all use EDI at the moment, and that is relatively standardized. But each EDI connection is bespoke to the user and we are trying to sit down and go through all the events in a shipment to standardise them and build up a new API for our work.
“The second thing is to create an industry blueprint for container shipping – if we don’t define these events the same way, we are just confusing customers.” His aim was not to dismantle carriers’ legacy systems: “It’s up to the individual member to decide what to adopt, but our hope is that our work will allow carriers to eliminate a lot of differences as they progressively adopt the new standards.”
The DCSA is off to a great start. Its initial roster includes CMA CGM, Maersk, MSC and Hapag-Lloyd, which held the first DCSA meeting in April 2018. They were joined later by ONE and most recently Zim, Evergreen, Yang Ming and HMM. Currently, the only deep-sea carrier outside this is Cosco/OOCL.
A recent McKinsey report outlined its views on how the future will unfold:
The pressure on traditional forwarders will surely increase as digitization continues its long march through the world economy. They must now consider their strategic choices carefully.
First, embracing digital technology in customer-facing and back-end processes is a no-regrets move for them. Second, they must place strategic bets on building or buying marketplaces or partnering with emerging digital platforms. But they should also emphasize the things they themselves excel at-offerings based on people and expertise, which are hard to turn into commodities. If these companies succeed in all this, they will continue to play a major role in the forwarding game. Otherwise, they may well face a future of constant and accelerating decline.
Here is one plausible scenario for 2030. By then, air-freight forwarders will automate their operations significantly, digitizing much of their business model. They will collaborate extensively with adjacent value-chain partners—for instance, providers of intermodal services.
3-D printing won’t have a major effect on air-freight cargo. The role of intermediaries will contract, and consolidation will threaten many smaller forwarders that struggle to digitize.
The more comprehensive digital forwarders will act as catalysts for the new technologies, but, increasingly, successful companies will be specialists, offering advanced data-based solutions. All surviving forwarders will be more digitized by 2025 than they are today. By 2030, they will likely be totally digitized. The better they leverage these technologies to reduce their internal costs and improve the customer experience, the better their chances of keeping or extending their share of the profits.
Blockchain technology is on everyone’s lips today. How will it affect existing logistics players and practices? Here is a brief outline of what may lay ahead.
Simply put, blockchain is a distributed digital ledger. Although multiple people can be given access to the data — or parts of it — they cannot change or delete information. One day, its data structure will form the basis of a digital data ledger whose contents can be shared across a network of independent parties. At its heart is the “smart contract” – a technology that seeks to replace traditional paper-based transactions requiring signatures.
Consumers now pay for many of their purchases by swiping their phones unlike years ago when the cashier filled out a credit card slip which you had to sign before getting an imprint on your card, yielding a receipt for both buyer and seller for record-keeping.
Besides simplifying transactions, blockchain also creates valuable business intelligence.
- Improving Shipping Efficiency
Blockchain will enable users to track inventory to improving their capacity to track inventory more accurately. In 2018 Maersk and IBM announced their intention to form a joint venture to develop TradeLens that will use blockchain technology to replace today’s peer-to-peer and often unreliable and paper-based information exchanges with a digital platform to enable participants to digitally connect, share information and collaborate across the entire shipping supply chain ecosystem.
- Strengthening Inventory Tracking
Why does inventory tracking receive so much attention in the business world? It’s because most companies have huge of amounts money tied up in it. So of course, it’s only normal to know where it resides at all times.
Blockchain technology enables businesses to monitor their products more efficiently even at micro levels.
Several leading food retailers including Unilever, Nestle, Walmart and others have recently teamed up with IBM to deploy blockchain technology to track food shipments and their higher quality items. They will now be able to identify infected batches faster and more accurately and destroy them if needed. The new tools will help pinpoint which specific items, rather than the entire stock need to be destroyed. As well, such targeted alerts will protect consumers’ health.
- Boosting Transparency
Besides improving supply chain transparency, blockchain can also help increase data integrity and credibility. Supply chain players are now focusing more attention on determining if business information they are receive is indeed accurate, trustworthy and reliable.
As a result, blockchain’s major contribution to this technology is to boost data transparency to helps build trust between companies. It will also boost B2B logistics’ visibility and credibility – the cornerstones of business relationships. More important, blockchain systems will help minimize invoice disputes, cut auditing costs and prevent the exploitation of ground-level workers.
London-based Project Provenance Ltd. has conducted several case studies using blockchain systems to increase the transparency of global logistics. One of them involved helping an international brand that wanted to import coconuts from Indonesia to develope a system to ensure local farmers received fair compensation for their efforts. What’s more, the system also holds companies responsible for the validity of their claims so that consumers are better informed about the products they buy.
- Modernizing Invoices and Payments
Many companies find it hard to develop efficient and secure systems for invoicing and payments. Blockchain technology can create smart contracts that ensure efficient, transparent and error-free payments. For example, Tallysticks (an international trade solution) has built a blockchain-based platform to process invoicing and payments for logistics firms and other businesses. It uses smart contracts to approve a payment that corresponds to valid and accurate invoice.
As well, credit card giant Visa recently launched its blockchain-based Visa B2B Connect network on June 1. It will enable financial institutions to quickly and securely process high-value corporate cross-border payments globally. The launch covers more than 30 global trade corridors that will be expand to as many as 90 markets by year-end.
- Settling Disputes
This remains a major challenge in cargo transportation, taking a heavy toll on companies which often requires them to seek external help to solve. FedEx together with Precision Software, a division of QAD Inc. has introduced a blockchain solution to settle customer disputes. In essence, the sender and receiver are informed about the process before pickup and after delivery. Before, if any dispute arose, the third party or better still, independent auditors were called in. Today, FedEx’s blockchain-based ledger on its own can settle the issue. In this way, blockchain can help establish integrity, reliability and transparency in supply chain business dealings.
TradeLens is an API (application program interface), a creation of applications that access the features or data of an operating system that has been launched to help modernize the world’s supply chain ecosystems. Many transporting and trading goods processes are costly, in part, due to manual and paper-based systems. Replacing these peer-to-peer and often unreliable information exchanges, the platform enables participants to digitally connect, share information and collaborate across the shipping supply chain ecosystem.
Says Vincent Clerc, Chief Commercial Officer, A.P. Moller – Maersk: “The addition of more leading carriers to TradeLens will help global supply chain customers expand and explore the benefits of digitization and deliver new opportunities to the increasing number of TradeLens ecosystem participants across the global supply chain.
“As a neutral industry platform, it offers supply chain visibility, ease of documentation and the potential of introducing new products on top of the platform. These attributes bring new opportunities for the Maersk transformation towards becoming an end-to-end container logistics company improving the experience and services we offer to customers.”
Members of TradeLens gain a comprehensive view of their data and can collaborate as cargo moves around the world, helping create a transparent, secured, immutable record of transactions.
The Internet of Things, or IoT, is an evolving trend that is growing by leaps and bounds. Experts and forecasters anticipate the IoT market to and reach nearly 50 billion connected objects by 2020. Though the technology has not reached its full potential, its adoption rate continues to rise across industries. The logistics industry is embracing IoT heavily to streamline its business operations.
Delivery, the heart of logistics, can only get better by improving operational visibility to perform efficient and faster actions. IoT offers real-time fleet tracking that includes monitoring fuel costs, diagnostics and faster deliveries. Moreover, as a real-time system, it can also help logistics companies keep a check on their drivers’ performance and vehicles. It also increases safety and reduces inventory damages.
- Predictive analytics
That will be a key to future growth in the logistics and transportation sector. It is not just about obtaining large amounts of data from multiple connected devices. The key is using that collected data to improve logistics practices This so called “big data” can help businesses discover better routes for their fleet and boost driver efficiency. Moreover, they can also identify inefficiencies which can be eliminated to improve business processes.
IoT has revolutionised the logistics industry by enabling users to track goods in real-time. For example, Amazon uses RFID tags to allow customers track their ordered goods from the time they send in an order until the time it arrives at their doorstep. These tags are embedded with an integrated circuit that transmits data to the users, which enables customers to track the location of their order without having to call customer service.
Predictive analytics can also help cut operation costs. They can help shippers create more precise staffing schedules to match anticipated consumer demand to reduce labour costs and improve related to overstaffing and understaffing.
- Real-time tracking
IoT has quietly revolutionised the logistics industry by enabling users to track goods in real-time. For example, Amazon uses RFID tags to allow customers track their ordered goods from the time they make a purchase until it arrives at their doorstep. Embedded in the tags are integrated circuits that transmit data to users, enabling customers to track the location of their order without calling the customer service. The RFID Journal states that the IoT can increase stock-keeping accuracy up to 95 per cent.