In this article, Eytan Buchman, Freightos’ CMO, discusses the importance of data and context in global freight and logistics. The article presents findings from a survey conducted across over 200 global supply chain professionals to highlight how the pandemic has increased the need for freight market intelligence and how it continues to be relevant even as supply chain issues resolve. The future of global freight data lies in real-time information, contextual insights, and aggregated data that can help companies make better decisions and adapt to a rapidly changing industry.
Real world, meet data.
A couple of years ago, I came across a podcast from Patrick O’Shaughnessy, a fantastic tech podcaster, who discussed the concept of legibility. In short, more and more of the physical world can now be observed and quantified by computers. This creates new opportunities for both automation and improved decision-making.
Just to break this down, when a car’s LIDAR can see what’s happening on a street in front of it, it makes it possible for artificial intelligence to steer. When a smart container at home sees that your coffee grounds are running low, it can order more coffee itself, keeping you caffeinated.
I actually touched on what this means for international freight with Biju Kewalram, who, at the time, was Agility’s Chief Digital & Transformation Officer, in an interview you can see here. But even since July 2020, much has changed.
As more data sources get legible, whether it’s container ship movements, eAWBs or carrier rates, it can have incredible ramifications. Legibility, followed by analysis and the ability to take action can literally change industries.
As Brad Slingerlend of NZS Capital recently pointed out in his excellent newsletter, using algorithmic investing as an example:
“an information edge is knowing something before others; an analytical edge is having similar information but coming to a different conclusion; and a behavioral edge is acting differently than others despite a similar analysis of similar information… I suspect analytical advantages rose over time (perhaps even fed by the rising use of technology and availability of information), but then they too began to lose value as the machines took over and algorithmic and quantitative strategies rose in both prominence and share of assets, arbitraging away many seeming advantages.”Brad Slingerlend of NZS Capital
In other words, data usage follows a cycle in which it becomes an edge…and then quickly becomes table stakes.
But let’s get back to global freight data
Global logistics has always had a dual relationship with data.
On the one hand, it’s mission critical. On the other hand, too much data, without insights or context, has people chasing spreadsheets at the expense of managing shipments, convinced that looking at dashboards is productive work. And even getting that data is hard. Freight is inherently physical, spanning many different players and systems. This makes legibility fragmented in the best case and, more commonly, simply offline. That is changing, gradually and then suddenly.
I’m not saying that we need to swim in data. After enough swimming in something, you simply can’t see anything useful. But the pandemic was a wakeup call, with COVID having a dramatic effect on supply chains and suddenly prices and transit times became a flagship focus for board rooms.
Here at Freightos, we saw tens of thousands of supply chain professionals hungry for data, which led to coverage from every 2-3 letter organization in the world, from the WTO to the UN, the White House to the World Bank to the Bank of England, McKinsey to BCG, and, more importantly, tens of thousands of organizations.
But was that thirst for information a blip? Was the Black Swan of rates the only pull towards market intelligence, here today and done tomorrow?
Take a look at how website traffic to our data portal at fbx.freightos.com changed and how it is impacted by changing freight rates. The bottom line is that interest rose with freight rates but did not subside nearly as dramatically as rates did afterwards. COVID supply chain issues increased the need for freight market intelligence but its resolution did not end the interest. In fact, 92% of respondents to our recent survey report are likely to remain at least as engaged with freight data as supply chains normalize, with over 60% expecting to increase engagement.
So what’s next for global freight data?
A wise way to approach this is by starting with what companies actually need, not what data companies can get. So in a recent freight market intelligence survey conducted by Freightos, we asked over 200 BCOs, forwarders and carriers about needs, use cases, and interest. Here are some interesting highlights:
Justification Is Key
Interestingly enough, one of the most important drivers for market intelligence is justifying procurement decisions or operational decisions to internal stakeholders, like executive teams, or to customers.
While this isn’t news to me, the importance it took on was. I’ve heard anecdotes from the past two years of SVPs at multinational companies needing to sign off on spot procurement but the degree of interest executives are now showing is impressive. In fact, 70% of BCOs use market data for internal justifications, outperforming the use of market intelligence platforms for negotiations. The justifications for executives naturally lean more towards holistic overviews provided to executives, rather than operational updates explaining delays or issues (54%).
Market Intelligence Guides Real-time Decisions
Let’s look back to how data is used in investments. As interesting (or depressing) as it is to use stock market data to see how devastated our pensions are, descriptive data will never rank as high as prescriptive data. Don’t tell me how much I lost; tell me how I can improve investments today.
This was, of course, an extremely popular use case for market data. 76% of respondents said that operational updates were a key type of market intelligence. This was followed closely by ocean spot rate intelligence (72%). Surprisingly, likely due to the urgency that overrides costs, the importance of air spot rates hovered at a measly 40%.
If there’s been one constant recently, it’s that global freight moves fast. We tend to focus on pivotal events like COVID supply chain issues or the Russian invasion of Ukraine as game-changing events. And they are.
But a strike at a port in Germany or a typhoon off the coast of Vietnam, while temporary, can have major implications for supply chains.
This, I believe, sets the stage for the next generation of market intelligence drivers:
- Real-time – or near-time – freight data to make better decisions that leverage inputs from around the world.
- Contextual insights that surface what matters, finding the needle of input in the haystack of data
- Aggregated information that recognizes that global supply chains can be impacted by a mind-bogglingly broad spectrum of events, from trade policies to natural disasters, requiring intelligent aggregation of the right data sources
With more data out there than ever, there is one guideline that sticks out. We must fight the temptation of Big Data and, instead, focus on The Right Data…at the right time.