While technology drives the containerized supply chain and is responsible for stunning efficiencies and cost reduction, it’s another story with breakbulk. Many in the industry continue to resist investing in information technology, even as the needs become more obvious and the benefits become more apparent. But slim margins are warranting a closer look at IT.
While technology drives containerized freight and logistics and is responsible for stunning efficiencies and cost reduction, it’s another story with breakbulk. Many in the industry continue to resist investing in information technology, even as the needs become more obvious and the benefits become more apparent.
“The environment is completely different than with container terminals where implementing technology is absolutely accepted,” said David Trueman, a director at DBIS, a solutions provider for bulk and breakbulk terminals. With breakbulk, “we’ve been in this for 15 years and we still feel we are evangelists. It’s getting better but it’s still difficult.”
To be sure, breakbulk presents some unique challenges, problems and issues. After all, it’s one thing to move, monitor, store and control 500 40-foot containers, whose contents have long since been identified, tallied and checked before being transported. It’s quite another to keep tabs on 5,000 steel rebars of various lengths, thicknesses, alloys and weight.
“A box is a box and it’s got a number,” said Trueman. “It’s very straightforward.” Breakbulk, by contrast, “is so disparate,” in type, size, weight, shape and value.
That can require some different software-based solutions. Breakbulk-associated software can be “quite difficult from a technology standpoint,” said Keith McSwain, vice-president client services at Jade Software Corp., which specializes in logistics-related IT. “It’s an operational challenge.”
A complexity and lack of uniformity is one reason why breakbulk-related IT has lagged behind the technology related to containers.
The breakbulk-related logistics industry is “climbing the technology ladder,” said McSwain, whose company has been developing cargo-related software for 20 years. “I’d say over the last five or six years, you’ve seen the [breakbulk-related] technology products really mature.”
There’s a Catch 22 at play, however. Using state-of-the-art technology to improve efficiency is more important than ever for the industry. But that doesn’t mean the industry is ready to spend. “Many breakbulk operators don’t have the appetite for IT investment,” said another specialty software provider.
IT’s Important to Breakbulk
Part of this is just resistance from an old guard to new ways. But many breakbulk-related shippers and terminal operators are simply unwilling to spend in hard times. While better IT saves money, it also costs money to install these systems.
“It’s getting the industry to accept that technology has real value,” said Trueman. “You need to make a business case, that [IT] will reduce administrative costs and improve operational efficiencies.”
Just who will push more technology is also an open question. Terminals are an obvious leader, but the actual owners of the cargo may be necessary to pressure a thrust in technology. After all, better identification and tracking means the cost of transport will come down.
“The whole supply chain needs to get together,” said Trueman.
As often chronicled, breakbulk rates have plummeted and its market share steadily eroded. The consultancy Drewry predicts the breakbulk market will remain weak at least until 2017.
Those that have invested in breakbulk-related IT have demonstrated some dramatic results. Last year, for example, Georgia Ports Authority inaugurated a new tracking system aimed specifically at breakbulk. The General Cargo System software enables the Port of Savannah to monitor where a particular breakbulk shipment is en route to the port. This, the authority said, allows better preparation, including railcar availability and order stuffing. According to a press release quoting Bill Sutton, the director of information technology, railcar ordering, which had taken two hours of manual processing, is reduced to 15 minutes. This system uses electronic data interchange (EDI) that transmits and receives automatic status updates and automated shipping instructions. It also uses bar code scanning to identify individual items.
When it comes to breakbulk, technology must touch several key points along the logistical chain. It begins with a manifest. Unlike with containerized freight, where electronic manifests are pretty much standardized and universal, breakbulk manifests are still often transmitted in paper, fax or email form. “People have learned to survive with paper and pen and spread sheet,” Trueman said.
That complicates the process considerably. The terminal, for example, has a more difficult job in preparing for and tracking the cargo, unless it reenters the data into its own system, a process itself open to errors.
According to Trueman, DBIS is now working with one general cargo terminal in the Mideast that is requiring agents to enter manifests into the terminal’s electronic data and tracking system. That has the added benefit of enabling agents to see where the cargo is as it goes through the terminal.
Document storage and retrieval can be daunting and especially voluminous for breakbulk, said Symcha Bergman, vice president with Logistical Data Solutions, which offers electronics document system software to customs brokers and freight forwarders. Yet, many continue to rely on paper, which is both extraordinarily time-consuming and prone to error.
Tracking those items as they’re unloaded from a vessel, moved into storage and eventually retrieved and shipped out is absolutely essential. Terminals are increasingly reliant on hand-held, mobile devices. Tagging technology is critical.
Take that rebar example. Locating, identifying and pulling particular rebars in a storage area that contains thousands can be a nightmare. Even the initial unloading of breakbulk from a ship’s hold and transferring to a storage area can easily result in misplaced items or defeat any designs for first-in, first-out. Yet, amazingly, rebars could have no more identification than color-coded paint that is sprayed on.
“A lot of decisions are made on the fly,” said McSwain.
While anything but cutting edge, bar code identification, scanning and tracking is one widely used, go-to technology. It’s cheap and universal. Trueman reports that some operators will even apply their own barcodes, if necessary, to allow them to track within their terminals.
The problem with barcodes is that they are easily damaged, the labels could fall off in transit or they are located on a part of the item that can’t be reached. What’s more, the amount of information stored on a barcode is limited.
One newer technology using radio waves to track cargo is radio frequency identification, or RFID. It can track items at a further distance with greater accuracy and more data input. But while its price tag has been coming down over time, its still costs quite a bit more than barcode technology. So, it’s proving attractive in higher value breakbulk.
Trueman reports one interesting project now underway. The exporter of recycled newspaper bales and plastic bottles is turning to RFID because of trouble with compensation claims from customers. RFID identification will enable the exporter, who also operates a terminal, to document and demonstrate the condition of the bales as they’re loaded on the ships.
The high cost of compensation is just one compelling argument for better technology. Just one bad delivery or incorrect shipment can wipe out meager profits. Then, the return on investment for IT becomes a lot more obvious.