International voyages with handoffs from different parties
Supply chain network is more unpredictable than ever
Now, we are going a layer deeper, unpacking one of the hot topics (and often mis-used phrase) that has permeated the international freight market over the past several years — any guesses? Hint, it’s not AI…
VISIBILITY is the name of the game this time, and in typical PeakSpan fashion, we have chosen an analogy to drill the point home. This time around we have chosen the holy grail, a recurring theme in Arthurian literature, and the longed-for item of choice for Indiana Jones and antagonists in the third movie in the series, Indiana Jones and the Last Crusade.
For ‘Indy’, King Arthur’s Knights, and many historical suitors, the long lost holy grail was promised to deliver powers like eternal youth, healing, and/or happiness to whoever recovered it. However, most of these treasure hunters fail to find the grail, perish along the journey, or reach the grail’s presumed home only to find a faux relic.
Nowadays, we think we have a modern search for the grail. Many companies rumor to have “found the grail” — e.g. Project44 proudly claiming the ‘Leaders’ spot on G2’s quarterly grid report — but is this really true visibility, or a faux relic? More importantly, what does “real-time” visibility even entail nowadays, and why does it matter to shippers (BCOs) and logistic service providers (LSPs)?
Put simply, what’s the problem here, and why do these folks care so much about it?
It’s an age-old problem, but the solution has become a recent phenomenon — the freight visibility space emerged to viral prominence in the aftermath of COVID-19 (i.e. the rapid shift to international e-commerce that brought subsequent waves of disruption) — unveiling the fragmented, archaic and inadequate state of international freight shipping and logistics processes.
Freight visibility claims to deliver a single source of truth for global container shipments that consolidate and standardize ocean carrier, rail carrier, AIS satellite, drayage, and port data for both shippers and logistics service providers in real-time (or at least, as frequently as software can report based on the multiple handoffs and stops that occur during a container’s journey).
Moreover, ocean containers account for 95% of world trade and a single shipment can change hands over 20 times — this is where the going gets tough, and errors, mis-timed ETAs, and disruptions occur frequently.
Combined with i) consumer expectations becoming increasingly demanding and ii) supply chains continuing to grow in complexity, visibility platforms have become table stakes to enable BCO’s and LSPs to manage international shipments.
Consider the case where a global brand (think Nike, Ikea, Best Buy, etc.) will ship over 20,000 containers a week. All the while using a network of LSPs to transport items from:
- Manufacturing facilities → ocean carriers → port terminals → drayage transporters → warehouses → rail carriers → last mile delivery all the way to the retailer or customer.
That’s a long journey…
For every single shipment, BCOs and LSPs are tasked with managing customer purchase orders, cargo readiness, booking ocean carriers, tracking and managing delays across any of the modes of transport, customs clearance, scheduling transfers all while relying on inconsistent data from every single ecosystem participant.
To add to the complexity, every major ocean carrier, railroad carrier, airline carrier, international port, railroad carrier has their own data systems, reporting structure, data format and even terminology. Put simply, what one carrier may say as their ETA may be completely misalignedwith what a port claims as an ETA due to something like a port backlog (as we saw for over 2 YEARS at the LA ports).
As a result, the need for data normalization across this entire ecosystem has become mission-critical for BCOs and LSPs. In short, there’s a data overload (i.e. millions of disjointed and irreconcilable data points daily) and data translation (i.e. need for integration with internal systems of record — ERP and TMS platforms) problem that needs solving.
In our eyes, this category has MANY market drivers (see below) that have effectively catapulted visibility platforms to the top of the tech stack, and in short, kickstarted the search for the holy grail.
10 Key Market Drivers:
1: Majority of Shipments are International
11 billion tons of goods are transported by ship each year, which represents an impressive 1.5 tons per person based on the current global population¹ with roughly 250 billion parcels sent internationally every year.²
2: Delivery Expectations and Predictability
It comes as no surprise that consumer expectations continue to skyrocket and brands, as well as LSP’s are both tasked with achieving the perfect delivery experience.
Without a high level of freight visibility there’s a greater risk that something will go wrong (product quality, count, delivery deadline, etc.) — which translates to an unhappy customer and lost $$$.
3: Providing a Differentiated Customer Experience
Brands are facing immense marketplace competition as consumers, now more than ever, have ample options to choose from. Given that 96% of consumers consider delivery an essential factor when making an online purchase, brands must rely on supply chain resiliency and reputation as a key differentiator.
4: Archaic Manual Management of Logistics Process
On average, an international ocean shipment takes 20 days, requires between 9 and 18 documents, and often requires upwards of 200 emails exchanged between parties to complete.
According to a FourKites survey of senior supply chain leaders, 50% of survey respondents used a completely manual process for their freight management.
5: Reducing International Shipping Costs are Critical to Profits
In the United States alone, the average annual cost from supply chain disruptions amounted to $228 million dollars,³ and 32% of companies report overpaying for logistics services.⁴
Most retailers saw serious margins compression from rising costs last year and are looking for ways to increase profits and shore up cash reserves given the surge in capital costs.
6: Reducing Detention and Demurrage Fees
Demurrage and detention fees can cost up to 20 times the price of the container and rack up millions of dollars of unnecessary costs for carriers.
For context, between April 2020 and March 2023 the nine major global carriers have amassed roughly $12.9 billion in detention and demurrage charges.⁵
7: Real Time Collaboration Required Within Complex Ecosystem
On average, cargo changes hands 20 times and touches 20 different companies before it reaches the receiver’s doorstop.
Consider the case where one shipper will do one million loads per year — nearly 20,000 per week — across 40 locations…and it quickly becomes very clear why excel sheets, phone calls, and manual labor are insufficient to solve this problem.
8: Ecosystem Infrastructure is Highly Fragmented
There are around 55,000 merchant ships trading internationally, across 835 active ports around the world, with over 400,000 shippers, and more than 100,000 freight forwarders or non-vessel operating common carriers.⁶
9: Difficulty in Data Aggregation
The shipping industry generates roughly 100–120 million data points every day, from ports, carriers, data feeds, vessel movements, the list goes on… and without integrations into each mode of the international journey (such as creating integrations/relationship with each of the global 835 ports) — companies rely on siloed, incongruent data sources that are often delayed and incorrect.⁷
10: Complexity of Data Standardization
When you add in the thousands of drayage trucking companies, railroads, and port operators which all have different data and communication standards it becomes abundantly clear why the need for freight visibility has reached virality!
In order to enable efficient communication, information relay and collaboration there needs to be a data normalization layer that standardizes all of the data inputs and enables the ecosystem participants to speak the same language!
Players from Project44, FourKites, Gnosis, Vizion, Terminal49, Wakeo, BlueCargo, SeaVantage, Portcast and more have claimed to have solved the visibility problem (some better than others)! Regardless of whether you think we have found the grail or not, one thing is clear — shippers need visibility more than ever, and for visibility software providers, it’s a race to the treasure.