Logistics Technology LogTech

Freight Innovation and the Lesson from a Dead Remote Control Tech Play

In this article, we review how carrier and forwarder fragmentation remains one of the most significant hurdles for modern freight, how freight standardization and platformification are posed to change that, and why innovation we can’t even imagine might be around the corner. This article originally appeared in Eric Johnson’s excellent newsletter, The LogTech Letter.

 


 

In mid-April, Logitech pulled the plug on Harmony, a universal remote control company it had acquired a few years back. Harmony remotes, if you never had one, compacted remote control proliferation by letting you combine all your remotes – DVDs, stereos, TVs, Xboxes and VCRs(?!) into one device that could be programmed to trigger workflows. As an early Harmony owner, I was bummed. But as a freight technology junkie, it made sense.

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Bear with me – We’ll get to the freight in a second.

Not such a remote problem after all

Harmony remotes aimed to solve a fragmentation problem. To play Tony Hawk’s Pro Skater 2 on my Playstation, turn my TV and stereo system on, and choose the right input, I needed way too many remotes. Harmony brought that all together, which was fun (and geeky).

It was an elegant solution, stitching together disparate systems, where even the right thing happening in the wrong order could doom my PlayStation session.

To some extent, it was global freight in a nutshell. At this point, carriers have their own automation and data under control. The point of failure is always on coordinating between systems. This is one of the main raison d’etres for freight forwarders. Doom, whether shorter video game sessions or lost cargo, lurks in the handoffs.

Wait, what happens to Harmony?

Before we talk about what this has to do with the future of global freight, let me go back to my remote control for a second.

Over the past few years, a standard – HDMI Arc – has progressively ensured that your devices can talk with each other. It’s how your Amazon Fire or Xbox can wake up your TV. It’s how your TV can raise your sleeping stereo. And while most of us don’t pay attention to it, it spelled the death of Harmony.

Video killed the radio star, standards killed the video’s remote. Just check out this timeline of Google searches for Harmony Remote and HDMI Arc.

blog (Source)

Back to freight

In an excellent article a few weeks ago, Jan Philipp Harnisch of Rhenus shared his thoughts on where disruption in freight is at (or, more accurately, isn’t). I wanted to double click on what he shared about a major drive for innovation – the need for platforms. I also want to nitpick a small component of his claim, which is that logistics isn’t an industry that can truly be disrupted.

With dozens of ocean liners, hundreds of airlines, over 100,000 forwarders, and millions of truckers, global freight is inherently fragmented. Again, the problems typically lie in the handoff. The physical aspect of fragmentation has been slowly bridged with better IOT integration and tracking, which means that each company generally (and I use that liberally) knows where their goods are.

High school-level probability underscores exactly how necessary this is. If every player involved in an eight-player shipment provides accurate data 97% of the time, 20% of all shipments will still have problems. In a shockingly high number of cases, the root cause is data sharing, not physically lost goods. image2-300x253 This digital integration challenge has been bridged with a hodgepodge combination of jerry rigged integrations with carriers, third-party tools, and manual updates. It is a realm where EDIs and APIs reign supreme. This is one of the biggest IT projects that any forwarder undertakes. Having the right architecture from the get go, together with the ability to share updates with customers, may actually be one of the biggest differentiators that “digital forwarders” have.

The Solution

As Harnisch rightfully points out, platforms are one answer to this:

The undeniable future is an industry-wide master data management structure that compiles and analyzes data so we can use it for automation, coordination and insight. It will be a platform for major logistics companies and small players alike. And while this isn’t a reality yet, one of the ways to get there would be to build an underlying platform and provide access to as many players as possible in the market at no or low costs.

I love platforms.

Freightos and WebCargo have put out a unified global freight booking platform, connecting carrier pricing, capacity, and ebooking with forwarders (that’s WebCargo), while connecting forwarders with importers (freightos.com). No, it’s not the tracking piece but it’s enough for me to give Hanisch a hell yea. Of course, we’re not the only solution. To some extent, cross-industry standards can help resolve some improved integration. Take DCSA’s standards for ocean container tracking, a move to roll out one standard across key players. It could help, but ocean tracking may be an edge case, giving the rarity of consolidation of 65% of global capacity across the top five ocean carriers.

But what about disruption?

Clayton Christensen, the father of innovative disruption in the tech world, defined disruption as:

a process by which a product or service initially takes root in simple applications at the bottom of a market—typically by being less expensive and more accessible—and then relentlessly moves upmarket, eventually displacing established competitors.

Harnisch makes some excellent points about why innovation, not disruption, is what’s necessary. But then he jumps to:

But so long as cargo still needs to be moved from A to B, logistics can never be replaced or truly disrupted.

And that’s where I disagree.

Yes, until teleportation or viable large-scale 3D printing, physical logistics disruption is unlikely. But a huge component of logistics is the digital layer – the connectivity, tracking, booking, and coordination. And many of the cases of disruption we know, where new business models or markets emerged, were based on new ways for information to travel, not physical products – things like internet piping for streaming TV or digitization of accommodations for Airbnb.

The Digital Layer of Global Freight

It is the digital layer unifying global freight – standards, platforms, or both – that I’m excited about. And it’s where I think potential disruption lies. Think of how incredible the new Apple AirTag tracker tag is. The ability to find anything using a distributed network of global iPhones is the kind of innovation that can only be unlocked across global data platforms.  image3

(Source: Apple)

When extrapolated across a global network of carriers and logistics providers, the potential for disruption is even more real. I don’t know what it looks like. Real-time capacity availability, flexible rerouting, consolidation, and deconsolidation, agile 3PL last-mile fulfillment center routing… there are so many efficiencies for an increasingly stratified user base of logistics consumers that the sky’s the limit.

That flexibility can radically lower the cost of shipping goods, make it more viable for different businesses, and create new opportunities that we can’t even comprehend.

It’s kinda exciting.

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