Stop Looking At Flashy Logistics Technology

In 2011, UPS trucks drove 20.4 million fewer miles in the United States than they did in 2010. The result? A 20,000 metric tons reduction in emissions. And it didn’t take any flashy technology – just a bit of data and a bit of insight. More on that later.

But first, let’s talk about the shiny drones, futuristic augmented reality and 3D printing.

Working at a logistics startup means attending a lot of logistics and freight conferences, most with the same technology panels talking about the same technology again and again.

The future of drone deliveries is still up in the air (pun intended) and limited almost completely to last mile. Major logistics companies are only experimenting with augmented reality glasses and 3D printing won’t compete with bulk manufacturing for at least the next ten years.

Which isn’t to say that drones, wearables and 3D printers won’t eventually change the world. But for all the talk (including our own), it’s time to reintroduce a different front into logistics innovation. And it doesn’t involve robotics or “Minority Report” gadgets.

Bringing the Data Back to Logistics

The ten US startups with the highest valuations are worth a collective $170 billion dollars. But only three have a core of defensible “shiny” technology to differentiate from competition.

Top 10 US startups
Six of the top ten most successful startups in the United States focus on liberating information, making it easier to create, share and access information in a trusted environment.

These platforms rely on three core tenets (via @sanguit):

  1. A critical mass of producers and consumers
  2. The ability to find and match the right products with the right users
  3. Trust in the quality of the network participants

Or, in the words of Freightos CEO Zvi Schreiber:

“The value of a marketplace is in aggregating supply and aggregating demand. It’s all about providing the information so suppliers and customers can find each other, establish trust, and transact. Technology simply takes a back seat.

The astronomical valuations of these companies are the result of better data movement within a trusted environment, not the result of incredible technology. The platforms create new value by increasing available consumption (ie keeping cabs full) and ensuring that consumers find the information they want. A Pinterest or Snapchat website without content or users is just an empty website.

Logistics Lessons from the World’s Largest Startups

There’s no shortage of problems plaguing the logistics industry – overcapacity and eroding margins, to name a few. But the broader tech world has found that squeezing more value out of existing systems with better, more intelligent data movement can be far more lucrative than adding more hardware.

In the logistics world, enthusiasm for technology tends to focus on flashier ways to move goods, like drones and blimps, instead of how to move the information that moves the goods.

Setting aside the critical importance of trust for a moment, let’s take a look at trends in enabling data movement. Freightos’ VP of Architecture, Noam Fraenkel, who has led Big Data and technology teams at Hewlett-Packard and Mercury, splits data trends at large companies into two categories: data analysis and data functionality.

Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it…

Dan Ariely

Big Data Analysis

Most large companies rely on disjointed technology platforms. While these platforms are impressive, they rarely talk to each other. It’s the equivalent of many highways without interchanges.

To Noam, Big Data is about creating “an internal process within an organization to drive more efficiency out of existing capabilities.” Better data availability, coupled with the ability to analyse said data, is what helped UPS discover that specific routes (or left turns) can have a profound impact on emissions.

Obviously, connecting data sources isn’t enough. A 2013 Gartner report found that 64% of enterprise companies deploy Big Data projects but even more don’t know what to do with it.

Big Data Functionality

Uber’s success isn’t (only) due to the fact that they know where their cabs are. Their success stems from connecting cab availability with passengers who need a ride, with both the driver and passenger trusting the platform’s decision .
Similarly, the second data trend focuses on multi-vendor management – services that connect diverse technology platforms for functional purposes within an organization. Once these multiple vendors are connected, the resulting unified data can be be made accessible to other customers, enabling efficient internal and external operations.

For example, some forwarders use Freightos to integrate freight rate management across their entire company. After automating internal freight quoting, it can be made customer-facing, for instant online freight booking.

Going Forward

Combined, internal data visibility, improved data functionality and customer-facing data interactions have the capacity to revolutionize the way every single container and box is shipped. The profit potential from increased capacity utilization, reduced labor costs and more intelligent pricing stand to far exceed reduced costs from “shiny” technology.

There is, of course, a place for hardware in logistics. Malcom McLean’s shipping container is the best example of that. Looking to the future, everyone loves a fancy toy…but with inefficiencies and lower revenue in the crosshair for carriers, shippers and forwarders, data may have a much more immediate and profound impact on a logistics industry struggling to stay in the black.