Are you addressing the symptom or the disease behind global freight congestion?
The global logistics industry used to be as dependable as a bedside clock. You set the time, you set the alarm, and a short distance into the future it delivers the message that it’s time to wake up. You know, like clockwork.
But in the last few years, that clock began to run a little slow. Now it seems like the whole world is aware of what happens when the demand for logistics services outpaces the ability to deliver, and all throughout the supply chain, shippers, logistics service providers (LSPs) and carriers are looking for solutions. Ideas range from nearshoring and new inventory strategies to the use of new shipping lanes and modes, and go all the way to adding new physical capacity through the creation of more containers and vessels. Any one of these ideas will take a significant investment in money and time to achieve.
But what if the problems we’re seeing today are just symptoms of an even greater underlying disease? Perhaps it’s not a question of physical capacity, inventory, or design, but an issue of processes instead.
Want to know why ocean shipping is so backed up? Take a look at one of the most fundamental processes in securing freight: carrier booking confirmations. In a world where shippers and LSPs have pushed the boundaries of digital transformation, these key communications exist outside of any single organized system. Instead, container lines still send PDF copies of booking confirmations through an email or fax. And while there are valid industry reasons they continue to do so, it means that vital information about transport plans, equipment, itineraries and trackable booking orders fall outside of core systems.
As a result, operators need to manually reenter information into core systems, sift through emails to find exceptions, and are constantly working from behind to gather a single version of the truth. And when you add in the complexity of moving freight across a diverse set of carriers and non-vessel-operating common carriers (NVOCCs), who in turn book freight with their own set of providers, it becomes easier to see how small, inefficient booking processes can cause such massive slowdowns in the movement of global freight.
Ocean booking processes are unnecessarily complex
It’s time to bring ocean freight processes to the forefront. Logistics booking processes rely heavily on human interaction both within and outside of the enterprise — all of whom have different requirements and expectations for their work.
On average, every shipment in the supply chain requires around 200 documents shared between as many as 28 organizations, from terminals and forwarders to shipping companies and customs. Each day, global forwarders handle thousands of spreadsheets, Word documents, PDFs and images. And as it passes from one group to the next, all of this data leaves core planning and execution systems to be delivered on the wings of an email.
Around 50% of an operator's time is wasted copying and pasting data, looking up and re-keying information, checking the checker, or having to recover from situations that are caused by manual data errors or from overlooking vital information. The extra 10 minutes or so it takes to check an invoice might seem insignificant, but over time the cost can be calculated in hours or days. As in any human process, having to search email messages for documents and then re-enter data into your systems lends itself to missing or mistyped information.
The hidden cost of missing carrier data
If data is the new oil, then we can’t afford to let it spill. However, the way different organizations compartmentalize and silo information indicates that the industry is far off from sharing data efficiently and turning it into meaningful, immediate action.
With ocean carrier bookings, there’s one major leak. Electronic data interchange (EDI) standards are used both for shippers to send carrier requests and carriers to respond with booking acknowledgements — EDI 300 and 301, respectively. But as previously mentioned, carriers only send booking confirmations over email, typically with an attached PDF. Because this vital information exists only outside of structured TMS and ocean booking systems, these messages tend to fall through the cracks.
When data from structured internal systems is shared through unstructured, manual vehicles like an email or spreadsheet, vital information can be easily lost or misused. As massive amounts of data are produced, processed and consumed by a large number of parties each day, it increases the likelihood that important messages fall through the cracks. Few players have native integrations with one another and vastly different levels of data maturity and digitization. Considerable barriers exist to unlocking and using data to its full potential within the supply chain. The key lies not in any one single technology but in the information flows themselves.
Process harmonization benefits all parties involved
Logistics teams work around the clock to ensure valuable freight goes from origin to destination as efficiently as possible. It’s a high-stakes job, and yet operators are expected to do it with yesterday’s tools.
Although forwarders and shippers can’t directly control what happens outside of their own operations, it doesn’t mean they have to settle for the status quo when it comes to working with external parties such as ocean carriers, container freight station warehouses, and other partners responsible for handling freight at container terminals.
Enterprises can’t tackle the challenge with traditional systems alone, but there are new and emerging ways to bring all of the messy logistics data together, to automate the ingestion of email and PDF data, and to connect disconnected processes with digital systems to improve workflows and drive better customer outcomes.
By harmonizing information across core systems, external partners’ systems, email, Excel and other data sources, companies can quickly identify exceptions and issues as they arise to make faster decisions to keep cargo flowing. And by augmenting what’s already in place, shippers and LSPs can quickly add value — all without causing any disruptions to employees or having to enforce new standards with ocean carriers. Although it may not seem revolutionary at first glance, when you start by focusing on fundamental booking processes and information flows, it becomes possible to improve employee productivity, customer satisfaction, and carrier accountability.
The global supply chain industry is estimated to reach 37.4 billion U.S. dollars by 2027. In an era where massive disruptions have increased global scrutiny on logistics bottlenecks and disruptions, stakeholders can’t afford to wait for transformation to take hold. Now’s the time to find ways to increase interoperability between business partners, control and make sense of your data, and accelerate human processes to drive better business results.