The Benefits of Digitizing Freight & Logistics Processes

Digitalizing freight and logistics processes is easier said than done. It requires more than simply moving from paper to electronic formats or the ability to find and send information online. Today’s logistics teams must evolve and adapt to the current freight environment where emerging technologies play a fundamental role.

In this article, we'll explore why digitizing freight and logistics processes remains such a challenge at a time when everything else in the world has gone digital and then dive into why the benefits of digitizing freight and logistics processes make overcoming these challenges well worth the effort.
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Top challenges in digitizing freight and logistics processes

Digitalization is transforming industries worldwide by creating efficiencies through automation, collaboration, and visibility. Logistics and supply chain is no exception, but there are specific challenges to digitizing freight processes, including:

Outdated manual practices

As with all industries before the Digital Age, freight and logistics historically relied on manual processes for day-to-day tasks such as booking, tracking, and managing international shipments. Unlike many other industries, however, freight and logistics teams have been slower to adopt digital processes, and many still manage a substantial amount of business over email and in spreadsheets. Considering international shipments require a large amount of documentation and paperwork, these manual processes are highly inefficient. They take substantial time and are prone to human error and lack oversight.

Fragmentation in the freight and logistics industry

The wide range of parties involved in international freight processes is perhaps the largest source of complexity when it comes to digitalization. Several dozen entities can be involved in a single shipment, including transport carriers, freight forwarders, shippers, suppliers, factories, terminals, dray providers, and customs brokers. And most of these entities operate across a variety of communications channels and a number of systems. 

This fragmented, global network presents several challenges, including:

• Suppliers, agents, and transportation providers operate worldwide in various time zones, making communication and timely transfer of documentation difficult
• The various parties might utilize any number of technology solutions in an attempt to simplify their business processes and this network of disconnected systems creates a complicated web of information for forwarders and BCOs to navigate
• Each party has a different interest in the movement of goods, and each seeks to maintain margins in the process, often with limited cost transparency
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Lack of visibility

Outdated practices and fragmented networks lead to poor communication between partners and create substantial obstacles to achieving supply chain visibility. Without a comprehensive view of order status and location, shippers and forwarders cannot identify underlying issues or hold vendors and carriers accountable for missteps. Additionally, they cannot proactively address problems or communicate potential delays without visibility, leading to customer dissatisfaction and deteriorating relationships. Freight forwarders and shippers must understand the value of complete supply chain visibility when considering logistics processes digitalization.
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Getting started: digitizing information and digitalizing processes

Digitization and digitalization are more than buzzwords for logistics technology—they are solutions designed to help logistics teams and freight forwarders manage international shipments more efficiently. While the two words sound and look similar, organizations considering digitization and digitalization solutions need to understand what each offers.

Digitization is the process of converting analog data to a digital format. Think of scanning a photograph or PDF—digitization solutions read and encode the data into editable, workable formats, but they do not change or alter the actual data. Digitization increases labor efficiency and decreases human error by automating data entry tasks, but it does not provide data insights.

Digitalization is the use of digitization and other digital technologies (like blockchain, artificial intelligence, and machine learning) to transform business processes. Digitalization leverages digital information technology to optimize processes by analyzing and reengineering how a company does business. More than extracting data to a digital format, digitalization evaluates digitized data to establish trends and inform better decision-making. Digitalization drives long-term process efficiency by collecting, digitizing, and analyzing data in real-time to provide actionable insights and mitigate risk.

Here is another way to explain it: Digitization applies strictly to information and data, while digitalization applies to the transformation of processes and business operations. In freight and logistics, this might include:

• Leveraging digitization to automate data entry tasks and collect information from bills of lading, packing lists, purchase orders, and vendor invoices to upload into an existing TMS, ERP or other management platform
• Leveraging digitalization to improve freight pricing, booking, documentation, and carrier performance tracking to drive collaboration and synchronization
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Data digitization is an important prerequisite to digitalizing logistics processes. Once you can organize all of your organization's data into digital formats (including unstructured data like emails, spreadsheets, WhatsApp, and WeChat), creating automated digitized processes to boost the efficiency and transparency of your supply chain becomes a much more feasible goal.