The cost of ignoring emerging shipping tech

The cost of ignoring emerging shipping tech

At what point does it become imperative that a beneficial cargo owner or transportation provider get deeply embedded in the new wave of container shipping technology? And is it too late to start?

Those questions underlie JOC.com reports that take an in-depth look at how technology is penetrating the cargo industry, what it offers, and where prime movers are taking the cutting edge.

Shippers do not have to look far to see the consequences of arriving late to the technology party, with the retail sector a prime example of the punishing impact of technological change. As e-commerce races ahead, brick-and-mortar retailers are struggling. Same-store sales at four of the nation’s biggest — Kohl’s, JCPenney, Macy’s, and Sears — have declined this year versus 2016 as they fight the tide of consumer e-commerce preference.

Amazon, meanwhile, is one of the largest retailers in the nation and the talk of nearly every type of shipper, including toy importers who debated the pros and cons of the retail disruptor at a recent breakfast meeting of the Toy Industry Association. Although all agreed that Amazon required relentless logistical and financial demands for skimpy rewards, the table was split over whether it was worth the trouble or that the dramatic sales volume generated through selling through the giant could not be turned away. 

It is an evaluation many consumer goods importers are doubtless making. But what is clear is that meeting those demands will soon be — and perhaps already is — nearly impossible without a heavy dose of technology in a company’s system, and those of its logistics partners. The speed, efficiency, precision, and transparency required to play in Amazon’s sandbox only can be provided by technology. And, although resistance is possible, other retailers in the longer term soon will be making the same demands.

Amazon launched in the mid-1990s, not long before the container shipping industry experienced its first wave of online-based digital startups — mostly auction style marketplaces that soon ground to a halt. Why, as Amazon exploded, the shipping industry did not rapidly adopt technology, and why the sector is doing so now, is a much discussed topic. Different players voice diverging views on whether the industry will experience a slow or rapid revolution. But there is a growing sense that, as INTTRA said recently, the industry is at a “tipping point” in which “digitization is now a competitive necessity.”

Regardless of this inevitability, the shape and pace of technology’s penetration into the industry is far from certain. Consider that artificial intelligence has been discussed as playing a key role in shipping for three decades, and only now are the first practical uses emerging. Likewise, blockchain technology has been much discussed, yet the concrete uses are still few, and are considered by some analysts to be long shots for success. Meanwhile, Flexport, the self-styled “digital freight forwarder,” is taking what at first glance might appear a backward step, moving into bricks and mortar with plans for a slew of warehouses — an unorthodox step for a company known as one of the foremost of the technology startups targeting the industry.

Yet no one in the industry can afford to take this zigging and zagging by the prime technological movers as a sign the rest of the industry can hold off from embracing technology until the shakeout is clear. The supply chain is getting more precise; the “time” element in “just-in-time” shipping is getting shorter. Without technology, it will be tough to meet demands. And the predictions that the digital divide will separate the winners from losers are getting louder.  

Contact Hugh R. Morley at Hugh.Morley@ihsmarkit.com and follow him on Twitter: @HughRMorley_JOC.