It’s typical of IT projects to ber late or never get finished. Here we seem to have an example that is severely impacting everyone else in the supply chain.
Here at Felixstowe, you can’t return empty containers. You have to return them inland, at considerable extra cost and expense. It’s England, so the truckers are companies, and they can pass their costs along.
If this were the US, the individual owner-operators would have to take the expense, because they get a piece rate for a trip, regardless of where they have to return the container. they would have no way to pass on the cost. We see similar debacles occasionally at US ports.
Gene Seroka, Executive Director of the Port of LA, is calling on people to cooperate and share data on logistics activities. He wants to see a bold information transformation, for the maritime industry and also for on-shore logistics. He was put in charge of coronavirus-related logistics by the Mayor of Los Angeles, a very big job in addition to his own.
In the video you get to hear him directly.
He makes great claims for the Port of LA logistics information systems. But the port has needed to be dragged kicking and screaming into the digital age. It’s taken much longer to get them to act than it had to. Scholars and also logistics participants such as forwarders, shippers, and NVOOCs (Non-vessel-owning ocean carriers, sort of freight forwarders for ocean cargoes) have been screaming for coordination of systems ever since the 2000’s. It’s just very hard to do without standards. And it takes forever to negotiate standards that don’t place some participants at a disadvantage.
The role of standards could be a lot like their role in the PC market. Used to be, when you bought a PC you had to buy the disk drive, and memory from the same vendor– it had to be compatible. Software also must be compatible with the operating system. Nowadays, these parts are made to standards, and you can go buy any replacement or upgrade memory or disk that are compatible, You can even replace your hard drive with a matching SSD that is transparent to the computer. The adoption of standards allowed computers to become affordable, software to work on all the hardware, and be useful for all. It’s called a network effect. The same is true for logistics software. To connect partners together they need to each conform to standards of data structure (schemas, we call them) and standards of transmission. Nowadays the buzzword for this is APIs, but the concept has had lots of names over the years. My favorite was ‘middleware’.
And the need to share has to be seen by the prospects as more important than preserving the confidentiality of their company data. That is perhaps the largest barrier. So participants have to see tangible economic benefits to sharing, and that is sometimes hard to get direct evidence of. Even the economic network effect is hard to justify economically with hard numbers.
Gene Seroka is a good leader, and for coronavirus, we hope he is able to pull together what’s needed for the job.
Kim Link-Wills, Senior EditorWednesday, September 16, 2020
Sam Whelan, Asia correspondent of the Loadstar has a short article about a vision DPWorld has for integrating data and logistics. He describes some innovative activities. In Yiwu, China DPWorld has an agreement for a project that allows customers to clear cargo through customs before it leaves for Jebel Ali. The DP World representative also pointed out that in the future, each item in a box may carry a sensor. Box handling equipment could make use of the sensor data (eg, promised delivery dates) to route boxes by a faster or slower route.
It isn’t clear to me how the second method will work out– I’m reminded of the old Fedex cartoon where the delivery man is swimming ashore to a client on a desert island with a wrapped package, but the stranded client says “But my birthday is tomorrow!”. Rerouting a collection of cargo on the basis of, say, average due date, is fraught with problems. Are the partners in each supply chain ready for early delivery, or do they want it, or will they actually pay to have it delayed? I used to have a copy of this cartoon which I showed to my logistics and operations classes, but it’s gotten lost over the years.
There’s no question that improving customs clearance and in fact throughput at any stage will benefit from accurate and easy data interchange. But for that, you need some standardization, and for it to transform the industry the standards need to be common for the whole industry. I’m reminded of the effort it took to translate US freight codes to the Harmonized codes used in international traffic.
Standards need to be set, and where they deal with complementary processes they need to be set broadly so that everyone can participate. That requires some joint standard setting. It happened for INCOterms, it happened for disk drive interface standards, it happened (more or less) for EDI; but it takes a village. One or two firms can’t do it.
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Supply Chain and Logistics 