The supply chain’s digitalization has been underway for at least three decades. That’s not surprising. Moving freight, especially moving freight internationally, has always engendered complexities that demanded technological solutions. Technology is simply in the DNA of the business, and always has been.
However, through most of the technological history of the supply chain, tech existed in silos directed along highly specific avenues of problem solving. If it was a warehouse problem, it was a warehouse solution. If it was an international freight forwarder issue, the solution was designed for forwarders. If it was with a terminal or ocean carrier challenge, or rail or road, the solution was designed for the problem.
Software wasn’t a service, but the mechanism to solve a specific set of problems. With the advent of the worldwide web in 1989, the digital toolbox grew exponentially but much of the early focus was still siloed. That began to change as the business began evolving technological-based enterprises. It seemed suddenly that a company like C.H. Robinson wasn’t a trucking firm, freight forwarder, or a warehouse operator but something new - a 3PL, a third party logistics provider. And a great deal of that providing was supplied through the deployment of web-based technology. Now we have not only 3PLs, but 4PLs, 5PLs and beyond [up to 10PLs by some measures], each provider adding a layer of technology, and in many cases digital technology, to the totality of the service.
The Brave New World of Digitalization
Despite the fact that nearly every employee working in the industry owns the omnipresent smartphone, digitalization is far from being as industry-wide as one would expect.
Recently, Magaya, a provider of logistics and supply chain automation software, released a State of Digitization in Freight Forwarding. Magaya based the report on a survey completed by 70 freight forwarders, 3PLs, and NVOCCs of varying sizes from around the world. And Magaya summed up their findings as “The pace of digitization in freight forwarding has accelerated since 2020 with companies increasingly investing in technology solutions to streamline operations. However, the industry as a whole still has a long way to go to capitalize on evolving technological advancements, with many organizations still relying heavily on inefficient manual processes.”
It would seem odd, that repetitive “manual processes” would still be feature of the global supply chain — a movement that is often portrayed like a phalanx of freight moving with conveyor belt efficiency from one part of the world to another.
For example, the report noted, “Automation and digitization: 24% of respondents still have completely manual processes, as in no ERP or specialized freight forwarding software.”
Still, in fairness to the industry, the widespread digital innovation led many practitioners to create their own WMS or TMS systems. And moving on from legacy systems was often both expensive and burdensome to integrate into their operations. With the adoption of portals and platforms and the SaaS business models [which has expanded to other fields such Raas – Robotics-as-Service and DaaS – Drones-as-a-Service], it has, over the last decade, become much easier for logistics companies and their clients, to not only work with their “own” systems but to network in ways once unimaginable.
Early on digitalization was deployed to create track and trace and visibility in the supply chain. The level of data gathering has vastly improved and as telematics have gained a foothold in the various moving parts in the supply chain. Everything from containers, trucks, trailers, ships, and planes, along with the actual items being shipped with RIFD tags, are now visible — there now are fewer and fewer holes in the coverage for both shippers and carriers…and the expectations of visibility within the supply chain have grown as a result.
E-commerce and digital forwarding are very much spinoffs of global digitalization. And daily, more adaptations are being introduced.
For example, routing systems and software (which were derived from the digitalization of GPS data) is growing at an astounding rate, driven by both the need to be more efficient to improve visibility, to reduce expenditures, and also to address the growing need to come to grips with a company’s carbon footprint.
And the technology reaches beyond the movement of goods. For example, even the hiring of truck drivers has become a feature of digitalization processes, as drivers now find jobs with digital headhunters matching drivers and companies. And once in the cab, the truck drivers are increasingly becoming digital extensions of the information flow of the supply chain — more pilot than truck driver.
Ai, and All the Rest
With the many diverse aspects of digitalization in the supply chain, there is a question of where it is all leading, what is next. Ai (Artificial intelligence), Blockchain, Big Data and Telematics are all part of the mix.
Ai is often used interchangeably with Machine Learning (ML), although technically while all Machine Learning is Ai, not all Ai is Machine Learning — which in the case of the supply chain is important to recognize as most of what is referred to as Ai in the supply chain is ML. Nonetheless, the application of ML in the supply chain is forever altering how things are shipped and where the human fits into the process.
In a March 21st article in the AJOT.com, James Coombes, chief executive officer and co-founder of freight platform Raft, commented “This is a unique moment in time where automation technology is finally at a place where it can impact the traditionally human-centric operations of a freight forwarder.” Adding, “The future of freight forwarding relies on human expertise augmented by technology and Ai applications, putting automation and transparency up front and center.”
With the application of Ai to shipping data, where the supply chain begins, and where it ends…or in turn, begins again, could be as big a change for the industry as the introduction of the container shipping over six decades ago.