DIGITALIZATION IS COMING

Disruptive technologies have been developed in the past and will continue to emerge in the future as and where the need arises to make logistics smart

The Shipping and logistics sector is undergoing massive transformation with digitisation stepping in at a larger scale.

For a watcher outside our industry, it could be seen as if a revolution is taking place these days.

I wanted in this paper to demystify the transformations that we are living now.

Should we fear these changes? What do they bring to the industry? Freight Exchange

They are inspired by the tradition of Freight Offices. It is places that match the demand and offer of freight. The formal organization of Freight Offices in France, as an example, dates back to 1939.

They are inspired by the tradition of Freight Offices. It is places that match the demand and offer of freight. The formal organization of Freight Offices in France, as an example, dates back to 1939.

Today, with the Internet, there are a multitude of platforms. None of them has been able yet to impose itself all around the world, as the platforms do not have the same success in all the continents and a local solution maybe stronger than a global one for this kind of services, which are more focused in local needs.

As an actor here, we can cite Uship, a company founded in 2003, which has a strong presence in the USA and in Europe.

Online freight marketplaces Finding rates online and booking is not new in the industry. Since 2006, Maersk Line developed its e-commerce platform, which allows checking the rates online, booking and issuing the documentation.

Today’s e-rates solutions allow comparing between carriers and between shipping modes.

The most known actor here today is Freightos, a portal founded in 2012 that allows calculating door-to-door rates and book with the carriers.

Xeneta, a start-up founded in 2012, is another actor here, which allows benchmarking the ocean freight rates. The Shipping portals .

The shipping portals appeared between 2000 and 2003. A shipping portal allows checking the shipping schedules, booking the cargo, issuing the documentation – i.e. the bill of lading and the vessels certificatestracking and tracing the cargo.

Tracking a shipment answers the question “what routing did my cargo take?”

Tracing a shipment answers the question “where is my cargo now?” The four main actors here are INTTRA, GT Nexus, CargoSmart and Elane. There is no single portal today that links the 250 shipping container carriers.

Online Slot selling It is the possibility of selling the surplus of space online. It is coming from the airline industry.

In 2008, Maersk was the first to introduce this concept when it launched youship.com. This site oriented to small clients wanted to make “shipping as easy as ordering a pizza online”. With this solution, the user was able to check the space, check the price, book and to issue the e-documentation. The sooner the booking was made, the less expensive was the cost. This experience lasted only one year, it seems that clients were not ready to this kind of solutions.

Online Supply Chain Management and Online Freight Forwarders Let’s suppose that I’m an importer of marble, and that I have 10 product references from 3 providers. Following my shipments by container number may not be a difficult matter for me, as usually I have only one or two references by container, so I do not request more visibility to my carrier.

To identify my blue canvas pant – size L, model 2016, from my vendor ABC – I’ll assign it a specific number; that is the Stock Keeping Unit (SKU). This number will be useful for me to communicate with my vendor, to follow my supply chain and to make my inventory.

In the past, the shipments monitoring by PO and SKU were reserved to large companies. They had to make an agreement with a large logistics company, to sign an agreement, to agree on operational procedures, etc. Now it has changed with the apparition of new actors. FLEXPORT, a company founded in 2013, is one of them. They have democratized the supply chain management to the SMEs.

These days, we hear a lot also about the famous Alibaba which is penetrating the logistics market. The solution developed by Alibaba is called OneTouch, it offers online customs clearance, logistics services; it allows also to book by different modes of transport. All those services are quite standards on the market. Why does Alibaba cause quite a stir in the logistics industry these days? Its weight: 423 million active buyers in 2016.

The Automatic Identification System (AIS)

The Automatic Identification System solution was developed in 1990s. It was originally created to avoid collision between vessels. It contains information like vessel identification number – known as IMO Number-, the vessel position, the speed, the itinerary etc. Since 2008, the AIS is using the satellite technology which is giving real time data and a better reliability.

Since 2007, the AIS is connected to the Internet and many vessels data are freely accessible to the public. This work is developed mainly by volunteers. Some of the actors known here are MarineTraffic and VesselTracker.

Online container exchange between carriers

 Due to trade imbalance between imports and exports in the majority of the ports, the shipping lines need to transport empty containers from one port to another.

The global cost of this inefficiency operation is estimated around USD 15 billion per year, as per the Boston Consulting group.

The online container exchange platforms allow the different carriers and also container leasing companies to match their offer and demand of empty containers.

One amongst the actors positioned here is the BCG Xchange, which belongs to the Boston Consulting Group.

The Blockchain solutions

Today in the supply chain, we have multitude of systems which are working separately, even if bridges are created between some of them. In one single transaction, i.e. delivering a Purchase order, each actor which intervenes has its own system: the vendor, the brokers at the origin and destination, the forwarder, the customs at the origin and destination, the carrier, the port operators, the buyer, etc. A lot of information is inserted manually many times in this process. A “Blockchain is a distributed database that maintains a continuously growing list of data records, chained together against revision and tampering.” That means that once a data is inserted in the process, it is not possible to revise it in the middle without notifying all the other parties.

In the transport and logistics industry, as per my knowledge, there are more projects developed here than finalized products for the moment. Cassandra is a project financed by the EU commission in 2014. It is a supply chain tool that allows an extended assessment of risks by both business and government. “The CASSANDRA concept improves supply chain visibility, efficiency of trade compliance and effectiveness of border control and supervision by combining E-Freight and E-Customs.” That means for example that the packing list prepared by the vendor at the origin will be accessible online by the consignee, the customs broker, the carrier, the customs authority; that will secure the supply chain by reducing the fraud and the lack of accuracy.

Another project more oriented to the ports and vessels operations is Sea Traffic Management, formerly known as Monalisa project. This project started in 2015, is also financed by the EU commission. It combines data from the ports, the vessels, the shipping companies, and all the stakeholders in the vessels operations. Example: if one vessel has delay in the port A, the port B and the other vessel in the area will be notified automatically which will allow better planning and improves the operations and the coordination.

The chaotic storage

What we know in warehousing normally is that the products should be stored by SKU. It means that in my warehouse, I’ll store all the same books of The Three Musketeersper volume and characteristics in the same area, my televisions by brand and model in another area, etc. This is the classic storage as we know it and practice it today in approximatively all the warehouses: same product, same area.

This storage has its limits as it leads to inefficient utilization of space: If I have a half pallet of The Three Musketeers volume 1 and another of volume 2, I’ll prefer not to mix both, so I’ll be using 2 locations in the warehouse instead of 1. If I have a large number of SKUs in my warehouse, there is a strong chance that I’m losing space with this method.

Amazon has developed the “chaotic storage”. This method, beyond its scary name is very efficient. Now each product can be stored almost anywhere. With the RFID technology, every product has a unique code; in my example, each single book of The Three Musketeers volume 1 will be identified separately. So now, I’ll be able to store where I have space, so I’ll be able to store my book of The Three Musketeers with a TV plasma and a spoon.