Kuehne + Nagel’s CargoSphere deal reflects challenges of shipping IT

Kuehne + Nagel’s CargoSphere deal reflects challenges of shipping IT

CargoSphere will make it easier for Kuehne + Nagel to collect and utilize data.

Kuehne + Nagel’s adoption of the freight rate management platform CargoSphere is another sign that the type of technological disruption that has taken place in other sectors of the economy will occur more gradually and less destructively in shipping.

The collaboration is also an admission of sorts that the technology and shipping businesses are so complex and resource intensive on their own that it is difficult for a shipping company to develop the type of systems needed to capture, manipulate, and make sense of the vast flows of data moving through a supply chain. Likewise for a purely technology focused company, the intricacies and unique challenges of the shipping industry are a huge barrier to being an effective actor in the market.

“We share a common vision with CargoSphere that encompasses using technology to improve the time-consuming, inefficient aspects of seafreight rate management,” said Thorsten Meincke, the senior vice president of global seafreight at Kuehne + Nagel. "By further enhancing our seafreight operations with CargoSphere, we will achieve a faster, better process for managing seafreight rates and better data quality.”

The move will eliminate the manual process of entering ocean carrier rate data for Kuehne + Nagel’s datasets, provide faster access to current rates, and improve data quality, the companies said in a statement.

The decision is likely to save money for Kuehne + Nagel, as the developing of IT systems can be costly, and their failure even costlier. DHL learned this lesson the hard way in 2015 when it had to abandon a botched IT development program at a cost of $378.3 million.

On the flipside, tech companies that have tried to break into shipping have had to deal with the industry’s legacy systems, which can include outdated technologies such as electronic data interchange, or an overreliance on faxes.

Because so many data points in a given supply chain have yet to be fully digitized, it is nearly impossible to use software to automate the majority of shipping tasks, although that will change as newer technology is adopted more widely.

Contact Dustin Braden at dustin.braden@ihsmarkit.com and follow him on Twitter: @dustin_joc.